<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1994
REGISTRATION NO. 33
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 4841 23-2417713
State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
5 WEST THIRD STREET--P.O. BOX 472
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COLIN HIGGIN, ESQUIRE
DEPUTY GENERAL COUNSEL
ADELPHIA COMMUNICATIONS CORPORATION
5 WEST THIRD STREET--P.O. BOX 472
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
CARL E. ROTHENBERGER, JR., ESQUIRE
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
58TH FLOOR, 600 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8826
------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS TO BE OFFERING PRICE PER OFFERING REGISTRATION
OF SECURITIES REGISTERED PER SHARE OR PRICE (1) FEE
TO BE REGISTERED UNIT (1)
- --------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
9 1/2% Senior Pay-In-Kind Notes
Due 2004..................... $150,000,000 100.00% $150,000,000 $51,725
</TABLE>
- --------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating registration fee pursuant to
Rule 457(f)(2).
------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the Securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.[_]
------------
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>
ADELPHIA COMMUNICATIONS CORPORATION
CROSS-REFERENCE SHEET
CROSS-REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-4.
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER LOCATION IN PROSPECTUS
-------------------- ----------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page; Forepart; Outside
of Prospectus Back Cover Page
3. Risk Factors, Ratio of Earnings to Fixed Risk Factors; Selected Consolidated
Charges and Other Information Financial Data; Prospectus Summary
4. Terms of the Transaction Prospectus Summary; The Exchange Offer;
Capitalization; Description of New Notes;
Certain United States Income Tax
Considerations; Plan of Distribution
5. Pro Forma Financial Information Inapplicable
6. Material Contacts with the Company being Inapplicable
Acquired
7. Additional Information Required For Plan of Distribution
Reoffering by Persons and Parties Deemed
to be Underwriters
8. Interests of Named Experts and Counsel Experts
9. Disclosure of Commission Position on Inapplicable
Indemnification for Securities Act
Liabilities
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants Incorporation of Certain Documents
by Reference; Risk Factors; Recent
Developments; Selected Consolidated
Financial Data
11. Incorporation of Certain Information by Incorporation of Certain Documents
Reference by Reference
12. Information with Respect to S-2 or S-3 Inapplicable
Registrants
13. Incorporation of Certain Information by Inapplicable
Reference
14. Information with Respect to Registrants Inapplicable
other than S-3 or S-2 Registrants
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
15. Information with Respect to S-3 Companies Inapplicable
16. Information with Respect to S-2 or S-3 Inapplicable
Companies
17. Information with Respect to Companies other Inapplicable
than S-2 or S-3 Companies
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Inapplicable
Authorizations are to be Solicited
19. Information if Proxies, Consents or Inside Front Cover Page
Authorizations are not to be Solicited or
in an Exchange Offer
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 4, 1994
PROSPECTUS
LOGO ADELPHIA COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS
9 1/2% SENIOR PAY-IN-KIND NOTES DUE 2004, SERIES B WHICH HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT FOR ANY AND ALL OF ITS
OUTSTANDING 9 1/2% SENIOR PAY-IN-KIND NOTES DUE 2004, SERIES A
------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1994, UNLESS EXTENDED.
------------
Adelphia Communications Corporation, a Delaware corporation ("Adelphia"),
hereby offers upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal") (which together constitute the "Exchange Offer"), to exchange its
9 1/2% Senior Pay-In-Kind Notes due 2004, Series B (the "New Notes") for an
equal principal amount of its outstanding 9 1/2% Senior Pay-In-Kind Notes due
2004, Series A (the "Old Notes"), of which an aggregate of $150,000,000 in
principal amount is outstanding as of the date hereof. The form and terms of
the New Notes will be substantially the same as the form and terms of the Old
Notes except that the New Notes will be registered under the Securities Act of
1933, as amended (the "Securities Act") and hence will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes and will be entitled to the benefits of the same Indenture, dated
as of February 22, 1994 by and between Adelphia and The Bank of Montreal Trust
Company, as trustee (the "Indenture"). See "Description of New Notes." The New
Notes and the Old Notes are sometimes referred to herein collectively as the
"Notes."
Adelphia will accept for exchange any and all validly tendered Old Notes on
or prior to 5:00 p.m., New York City time, on , 1994 (if and as extended,
the "Expiration Date"). Tenders of Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. See "The Exchange Offer."
The New Notes will bear interest at a rate of 9 1/2% per annum from their
date of issuance. Interest on the New Notes will be payable semi-annually on
February 15 and August 15 of each year, commencing on August 15, 1994. Accrued
interest on the Old Notes that are accepted for exchange will be paid, on the
date of the first interest payment on the New Notes (August 15, 1994), to the
holders of the New Notes as of the first record date for the payment of
interest on the New Notes (August 1, 1994). Interest on the Old Notes accepted
for exchange will cease to accrue upon issuance of the New Notes. See
"Description of New Notes."
Based upon no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to third parties, Adelphia believes that
the New Notes issued pursuant to the Exchange Offer in exchange for the Old
Notes may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder that is an "affiliate" of Adelphia within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such holders'
business and such
(Continued on next page)
------------
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 LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
holders have no arrangement with any person to participate in the distribution
of such New Notes. Holders of Old Notes wishing to accept the Exchange Offer
must represent to Adelphia that such conditions have
been met. Each broker-dealer that receives New Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. Adelphia has agreed that, until the
earlier of 180 days after the Expiration Date or December 31, 1994, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
Prior to this Exchange Offer, there has been no public market for the Notes.
Adelphia does not intend to list the New Notes on any securities exchange. Any
Old Notes not tendered will remain outstanding. There can be no assurance that
an active market for the Old Notes or New Notes will develop. To the extent
that a market for the New Notes does develop, the market value of the New Notes
will depend on market conditions (such as yields on alternative investments),
general economic conditions, Adelphia's financial condition and other
conditions. Such conditions might cause the New Notes, to the extent that they
are actively traded, to trade at a discount from face value. See "Risk
Factors--Absence of Public Market."
Adelphia will not receive any proceeds from this Exchange Offer. Adelphia has
agreed to bear the expenses of this Exchange Offer. No underwriter is being
used in connection with this Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL ADELPHIA ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES LAWS OF SUCH JURISDICTION.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH INVESTORS SHOULD
CONSIDER IN CONNECTION WITH THIS EXCHANGE OFFER AND AN INVESTMENT IN THE NEW
NOTES.
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
OR THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF
TRANSMITTAL NOR BOTH TOGETHER CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES
IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL NOR BOTH
TOGETHER NOR ANY SALE MADE HEREBY SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
AVAILABLE INFORMATION
Adelphia 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
Commission. Such reports, proxy statements and other information may be
inspected and copied at the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at Room 319D Northwest Atrium Center, 500
West Madison Street, Chicago, Illinois 60661-2511, and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such reports, proxy
statements and other information can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
Adelphia has filed with the Commission a Registration Statement under the
Securities Act with respect to the securities offered by this Prospectus. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all of the information set forth in the Registration Statement. For
further information about Adelphia and the securities offered hereby, reference
is made to the Registration Statement and to the financial statements, exhibits
and schedules filed therewith. The statements contained in this Prospectus
about the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of each such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. Copies
of the Registration Statement and the exhibits and schedules thereto may be
inspected without charge and copied at prescribed rates at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C., 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Adelphia hereby incorporates by reference into this Prospectus the following
documents or information filed with the Commission: (a) Adelphia's Annual
Report on Form 10-K for the fiscal year ended March 31, 1993 (the "Form 10-K");
(b) Adelphia's Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1993; (c) Adelphia's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1993; (d) Adelphia's Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1993 (the "December Form 10-Q"); (e)
Adelphia's Current Reports on Form 8-K filed September 3, 1993 and January 18,
1994; and (f) Adelphia's Proxy Statement dated August 23, 1993.
3
<PAGE>
All documents filed by Adelphia pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act on or after the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
Any statement contained herein or in any documents incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for the purpose of this Prospectus to the extent that a subsequent
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS) ARE
AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST FROM MICHAEL C. MULCAHEY,
DIRECTOR OF INVESTOR RELATIONS OF ADELPHIA AT ADELPHIA'S PRINCIPAL EXECUTIVE
OFFICE LOCATED AT 5 WEST THIRD STREET, COUDERSPORT, PENNSYLVANIA 16915,
TELEPHONE NUMBER (814) 274-9830. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1994.
As used herein, the term "Consolidated Financial Statements" refers to
consolidated financial statements and the notes thereto incorporated by
reference from the Form 10-K, and the term "Management's Discussion and
Analysis" refers to Management's Discussion and Analysis of Financial Condition
and Results of Operations incorporated by reference from the Form 10-K and the
Forms 10-Q for the quarters ended December 31, 1993, September 30, 1993 and
June 30, 1993, as applicable, except to the extent updated by any filing made
subsequent to the date thereof.
4
<PAGE>
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated by reference herein. Prospective investors should carefully
consider the factors set forth herein under the caption "Risk Factors."
THE COMPANY
Adelphia Communications Corporation ("Adelphia" and, collectively with its
subsidiaries, the "Company") is one of the largest cable television operators
in the United States. As of December 31, 1993, cable television systems owned
or managed by the Company (the "Systems") served 1,294,230 basic subscribers.
John J. Rigas, the Chairman, President, Chief Executive Officer and founder of
Adelphia, has owned and operated cable television systems since 1952.
The Company's wholly-owned cable systems (the "Company Systems") are located
in eight states and are organized into seven regional clusters: Western New
York, Virginia, Western Pennsylvania, New England, Eastern Pennsylvania, Ohio
and Coastal New Jersey. The Company Systems are located primarily within the 50
largest television markets. As of December 31, 1993, the Company Systems passed
1,131,979 homes and served 831,880 basic subscribers.
The Company owns a 50% voting interest and nonvoting preferred limited
partnership interests entitling the Company to a 16.5% priority return in
Olympus Communications, L.P. ("Olympus"). Olympus is a joint venture which owns
cable systems (the "Olympus Systems") primarily located in some of the fastest
growing areas of Florida. The Olympus Systems in Florida form a substantial
part of an eighth regional cluster, Southeastern Florida. The Company is the
managing general partner of Olympus and receives a fee for providing management
services. As of December 31, 1993, the Olympus Systems passed 453,901 homes and
served 269,726 basic subscribers.
The Company also provides, for a fee, management and consulting services to
certain partnerships (the "Managed Partnerships"). John J. Rigas and certain
members of his immediate family, including entities they own or control
(collectively, the "Rigas Family"), control or have substantial ownership
interests in the Managed Partnerships. As of December 31, 1993, cable systems
owned by the Managed Partnerships (the "Managed Systems") passed 265,618 homes
and served 192,624 basic subscribers.
The Company's strategy has been to provide superior customer service while
maximizing operating cash flow. By clustering its systems in geographic
proximity, the Company has been able to realize significant operating
efficiencies through the consolidation of many managerial, administrative and
technical functions while maintaining a strong community presence in its
service areas. At December 31, 1993, approximately 642,000, or 50%, of the
Systems' basic subscribers were served from only ten headends and approximately
1,027,000, or 80%, of such subscribers were served from only 27 headends. In
addition, approximately 65% of the Systems' basic subscribers were served by
systems serving more than 50,000 subscribers while, nationwide, only 39% were
served by systems as large. Over 99% of the subscribers to the Company Systems
are served by systems with "addressable capable" technology.
Since April 1, 1988, the Company has invested more than $375,000,000 to
modernize and expand the Company Systems. In particular, the Company has
replaced approximately 18% of the total installed trunk cable for the Systems
with fiber optic cable. In addition, the Company has installed over 400 miles
of fiber optic plant for point-to-point applications such as connecting or
eliminating headends or microwave link sites. Through the use of fiber optic
cable and other technological improvements, the Company has increased system
reliability, channel capacity and its ability to deliver advanced cable
television services. These improvements have enhanced customer service, reduced
operating expenses and allowed the Company to introduce additional services,
such as impulse-ordered pay-per-view programming, which expand customer
5
<PAGE>
choices and increase Company revenues. The Company believes that the
installation of fiber optic cable plant will better position the Company to
deliver new or enhanced services in the future.
Management believes that the telecommunications industry, including the cable
television and telephone industries, is in a period of consolidation
characterized by mergers, joint ventures, acquisitions, sales of all or part of
cable companies or their assets, and other partnering and investment
transactions of various structures and sizes involving cable or other
telecommunications companies. The Company continues to evaluate new
opportunities that allow for expansion of its business through the acquisition
of additional cable television systems in geographic proximity to its existing
regional markets or in locations that can serve as a basis for new market
areas. Management also believes that the Company is well positioned to
participate in this consolidation trend due to its well-clustered cable
systems, the quality of its cable plant, its management strengths and its
relationships within the cable industry. The Company, like other cable
television companies, has participated from time to time and is participating
in preliminary discussions with third parties regarding a variety of potential
transactions, and the Company has considered and expects to continue to
consider and explore potential transactions of various types with other cable
and telecommunications companies. However, the Company has not reached any
agreements, in principal or otherwise, with respect to any material transaction
and no assurances can be given as to whether any such transaction may be
consummated or, if so, when.
Adelphia was incorporated in Delaware on July 1, 1986 for the purpose of
reorganizing five cable television companies, then principally owned by the
Rigas Family, into a holding company structure in connection with the initial
public offering of Adelphia's Class A Common Stock and its 13% Senior
Subordinated Notes due 1996 ("Senior Subordinated Notes"). The Company's
executive offices are located at 5 West Third Street, Coudersport, Pennsylvania
16915, and its telephone number is (814) 274-9830.
THE EXCHANGE OFFER
The Exchange Offer............. A principal amount of New Notes in exchange for
an equal principal amount of Old Notes. As of
the date hereof, $150,000,000 in aggregate
principal amount of Old Notes were outstanding.
Adelphia will issue the New Notes promptly
after the Expiration Date.
Based on no-action letters issued by the staff
of the Commission to third parties, Adelphia
believes that the New Notes issued pursuant to
the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise
transferred by holders thereof (other than any
such holder that is an "affiliate" of Adelphia
within the meaning of Rule 405 under the
Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that such New
Notes are acquired in the ordinary course of
such holders' business and such holders have no
arrangement with any person to participate in
the distribution of such New Notes. Each
broker-dealer that receives New Notes for its
own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus
in connection with any resale of such New
Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by
a broker-dealer in connection with resales of
the New Notes received in exchange for Old
Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making
activities or other trading activities.
Adelphia has
6
<PAGE>
agreed that, until the earlier of 180 days
after the Expiration Date or December 31, 1994,
it will make this Prospectus available to any
broker-dealer for use in connection with any
such resale. See "The Exchange Offer--Purpose
and Effect of the Exchange Offer" and "Plan of
Distribution."
Expiration Date................ 5:00 p.m., New York City time, on , 1994,
unless the Exchange Offer is extended, in which
case "Expiration Date" means the latest date
and time to which the Exchange Offer is
extended. See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
Interest on the New
Notes and Old Notes........... The New Notes will bear interest at a rate of 9
1/2% per annum from their issuance date.
Accrued interest on the Old Notes that are
accepted for exchange will be paid, on the date
of the first interest payment on the New Notes
(August 15, 1994), to the holders of the New
Notes as of the first record date for the
payment of interest on the New Notes (August 1,
1994). Interest on the Old Notes accepted for
exchange will cease to accrue upon cancellation
of the Old Notes and issuance of the New Notes.
Holders of Old Notes whose Old Notes are not
exchanged will receive the accrued interest
payable on August 15, 1994, on such date in
accordance with the terms of the Indenture and
thereafter interest on the Old Notes not
accepted for exchange will continue to accrue
in accordance with the terms of the Indenture.
The interest rate on the Old Notes was 10%
prior to the date of this Prospectus. From and
including the date of this Prospectus, the Old
Notes will accrue interest at a rate of 9 1/2%
per annum. On or prior to February 15, 1999,
interest on the Old Notes and New Notes may, at
the Company's option, be paid in cash, through
the issuance of additional Notes valued at 100%
of their principal amount, or in any
combination thereof. See "The Exchange Offer--
Interest on the New Notes" and "Description of
New Notes--Registration Rights Agreement."
Conditions to the
Exchange Offer................ The Exchange Offer is subject to certain
customary conditions. The conditions generally
are that the Exchange Offer does not violate
applicable law or any applicable interpretation
of the Commission. The Exchange Offer is not
conditioned upon any minimum aggregate
principal amount of Old Notes being tendered
for exchange. See "The Exchange Offer--
Conditions."
Withdrawal Rights.............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time on the Expiration
Date. See "The Exchange Offer--Withdrawal of
Tenders."
7
<PAGE>
Acceptance of Old Notes and
Delivery of New Notes......... Subject to certain conditions, Adelphia will
accept for exchange any and all Old Notes which
are properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on the
Expiration Date. The New Notes issued pursuant
to the Exchange Offer will be delivered
promptly following the Expiration Date. Any Old
Notes not accepted for exchange will be
returned without expense to the tendering
holder thereof as promptly as practicable after
the expiration or termination of the Exchange
Offer. See "The Exchange Offer--Terms of the
Exchange Offer."
Certain Tax Considerations..... For a discussion of certain United States
income tax considerations relating to the
exchange of New Notes for Old Notes, see
"Certain United States Income Tax
Considerations."
Exchange Agent................. The Bank of Montreal Trust Company, the Trustee
under the Indenture, is serving as Exchange
Agent in connection with the Exchange Offer.
TERMS OF NEW NOTES
The Exchange Offer applies to up to $150,000,000 aggregate principal amount
of Adelphia's Old Notes. The New Notes will be obligations of Adelphia
evidencing the same debt as the Old Notes and will be entitled to the benefits
of the Indenture. The form and terms of the New Notes are the same as the form
and terms of the Old Notes in all material respects except that the New Notes
have been registered under the Securities Act and hence do not include certain
transfer restrictions or certain rights to registration thereunder. See
"Description of New Notes."
Maturity Date.................. The New Notes will mature on February 15,
2004.
Interest Payment Dates......... February 15 and August 15, commencing August
15, 1994.
Interest Payments......... On or prior to February 15, 1999, all interest
on the New Notes may, at the option of
Adelphia, be paid in cash, through the issuance
of additional New Notes valued at 100% of their
principal amount, or in any combination
thereof. The New Notes will bear cash interest
from February 16, 1999 until maturity.
Optional Redemption....... The New Notes will be redeemable at the option
of Adelphia, in whole or in part, at any time
on or after February 15, 1999, initially at
103.56% of their principal amount, plus accrued
interest, and declining to 100.00% of such
principal amount, plus accrued interest, on or
after February 15, 2002. In addition, in the
event of a sale by the Company prior to
February 15, 1996 of at least $100 million of
its capital stock (an "Equity Event") to a
Strategic Equity Investor (as defined herein),
up to 33 1/3% of the aggregate principal amount
of Notes then outstanding may be redeemed, at
the Company's option, from the net cash
proceeds of the Equity Event at 109.50% of such
principal amount, plus accrued interest, upon
not less than 30 nor more than 60 days' prior
written notice to holders given within 30 days
after the Equity Event. See "Description of the
New Notes--Optional Redemption."
8
<PAGE>
Ranking................... The New Notes are unsecured indebtedness of
Adelphia ranking pari passu with other
unsubordinated indebtedness of Adelphia,
including Adelphia's $400,000,000 of 12 1/2%
Senior Notes due 2002 (the "12 1/2% Notes"),
Adelphia's $125,000,000 of 11 7/8% Senior
Debentures due 2004 (the "11 7/8% Debentures"),
Adelphia's $130,000,000 of 9 7/8% Senior
Debentures due 2005 (the "9 7/8% Debentures")
and Adelphia's $110,000,000 of 10 1/4% Senior
Notes due 2000 (the "10 1/4% Notes"), and
senior in right of payment to all existing and
future subordinated indebtedness of Adelphia.
The operations of Adelphia are conducted
through Adelphia's subsidiaries and, therefore,
Adelphia is dependent on the earnings and cash
flow of and distributions from its subsidiaries
to meet its debt obligations, including its
obligations with respect to the New Notes.
Because the assets of Adelphia's subsidiaries
constitute substantially all of the assets of
Adelphia, and because those subsidiaries will
not guarantee the payment of principal of and
interest on the New Notes, the claims of
holders of the New Notes effectively will be
subordinated to the claims of creditors of the
Company's subsidiaries. At December 31, 1993,
the total amount of long-term debt of
Adelphia's subsidiaries was $937,809,000. See
"Risk Factors--Holding Company Structure" and
"Description of the New Notes."
Certain Covenants......... The New Notes will be issued under the
Indenture which imposes certain restrictions
on, among other things, the incurrence of
indebtedness, mergers and sales of assets,
change of control, the payment of dividends on
capital stock, and the repurchase of
subordinated debt of Adelphia. In addition, the
Indenture restricts certain other payments by
Adelphia and its subsidiaries and certain
transactions with, and investments in,
affiliates. The convenants are substantially
similar to those set forth in the indenture
pursuant to which Adelphia's 10 1/4% Notes were
issued.
Original Issue Discount... For federal income tax purposes, each New Note
will be treated as having been issued with
original issue discount. See "Certain United
States Income Tax Considerations."
Exchange Rights........... Holders of New Notes are not entitled to any
exchange rights with respect to the New Notes.
Holders of Old Notes are entitled to certain
exchange rights pursuant to the Registration
Rights Agreement. Under the Registration Rights
Agreement, Adelphia is required to use its best
efforts to offer to exchange the Old Notes for
new notes having substantially identical terms
which have been registered under the Securities
Act. This Exchange Offer is intended to satisfy
such obligation. Once the Exchange Offer is
consummated, Adelphia will have no further
obligations to register any of the Old Notes
not tendered by the holders thereof, other than
the initial purchaser of the Old Notes (the
"Initial Purchaser"), for exchange. See "Risk
Factors--Consequences to Non-Tendering Holders
of Old Notes and Broker-Dealers."
Use of Proceeds........... Adelphia wil not receive any cash proceeds from
the Exchange Offer. See "Use of Proceeds."
9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AND PER SUBSCRIBER DATA)
The selected consolidated financial data as of and for each of the five years
in the period ended March 31, 1993 have been derived from the audited
consolidated financial statements of the Company. These data should be read in
conjunction with the Consolidated Financial Statements and related notes for
each of the three years in the period ended March 31, 1993, the Financial
Statements and related notes for the nine month period ended December 31, 1993
and "Management's Discussion and Analysis." The statement of operations data
with respect to fiscal years ending March 31, 1989 and 1990, and the balance
sheet data at March 31, 1989, 1990 and 1991, have been derived from audited
consolidated financial statements of the Company not included herein. Results
of operations for the South Dade Systems are reflected on a consolidated basis
up to the date of transfer (December 19, 1989) of such systems to Olympus. The
selected consolidated financial data with respect to the nine months ended
December 31, 1992 and 1993 are unaudited; however, in the opinion of
management, such data reflect all adjustments (consisting only of normal
recurring adjustments) necessary to fairly present the data for such interim
periods. Operating results for interim periods are not necessarily indicative
of the results that may be expected for a full year.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
-------------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $ 186,379 $ 228,643 $ 248,586 $ 273,630 $ 305,222 $ 225,921 $ 239,865
Direct Operating and
Programming............ 52,966 63,381 66,007 74,787 82,377 61,110 67,370
Selling, General and
Administrative......... 33,236 35,326 41,421 44,427 49,468 35,628 38,152
--------- --------- --------- ---------- --------- --------- ---------
Operating Income before
Depreciation
and Amortization....... 100,177 129,936 141,158 154,416 173,377 129,183 134,343
Depreciation and
Amortization........... 114,009 122,107(a) 79,427 84,817 90,406 66,145 67,516
--------- --------- --------- ---------- --------- --------- ---------
Operating Income (Loss). (13,832) 7,829 61,731 69,599 82,971 63,038 66,827
Interest Income from
Affiliates............. 1,257 933 1,596 3,085 5,216 3,960 3,755
Other Income............ 261 122 1,750 968 1,447 1,002 570
Priority Investment In-
come (b)............... -- 9,797 19,175 22,300 22,300 16,725 16,725
Interest Expense........ (111,331) (150,263) (163,637) (164,839) (164,859) (120,318) (136,757)
Equity in Net Loss of
Olympus................ -- (25,357) (61,975) (52,718) (46,841) (36,309) (23,408)
--------- --------- --------- ---------- --------- --------- ---------
Loss before Income
Taxes, Extraordinary
Loss and Cumulative
Effect of Change in
Accounting Principle
(c).................... (123,645) (156,939) (141,360) (121,605) (99,766) (71,902) (72,288)
Income Tax Expense...... -- -- -- -- (3,143) -- (2,601)
Extraordinary Loss (c).. -- -- -- -- (14,386) (14,386) --
Cumulative Effect of
Change in Accounting
Principle (c).......... -- -- -- -- (59,500) -- (89,660)
--------- --------- --------- ---------- --------- --------- ---------
Net Loss................ $(123,645) $(156,939) $(141,360) $(121,605) $(176,795) $ (86,288) $(164,549)
========= ========= ========= ========== ========= ========= =========
Loss per Share of Common
Stock before
Extraordinary Loss and
Cumulative
Effect of Change in
Accounting Principle.. $ (8.94) $ (11.36) $ (10.23) $ (8.80) $ (6.80) $ (4.77) $ (4.89)
Net Loss per Share of
Common Stock........... $ (8.94) $ (11.36) $ (10.23) $ (8.80) $ (11.68) $ (5.72) $ (10.74)
Cash Dividends Declared
per Common Share....... -- -- -- -- -- -- --
EBITDA (d).............. $ 101,695 $ 140,788 $ 163,679 $ 180,769 $ 202,340 $ 150,870 $ 155,393
Deficiency of Earnings
Available to Cover
Fixed Charges (e)...... $ 127,079 $ 134,612 $ 82,377 $ 70,385 $ 53,934 $ 36,515 $ 49,888
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------------------------------------------------------- ---------------------
1989 1990 1991 1992 1993 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and Cash
Equivalents............ $ 43,662 $ 15,287 $ 18,592 $ 11,173 $ 38,671 $ 113,992 $ 3,821
Investment in and
Amounts Due from
Olympus (f)............ -- 87,337 79,030 64,972 7,692 67,572 (7,129)
Total Assets............ 897,555 971,792 981,960 925,791 949,593 1,104,247 957,709
Total Debt.............. 1,121,796 1,355,330 1,495,025 1,554,270 1,731,099 1,790,551 1,798,284
Debt Net of Cash (g).... 1,078,134 1,340,043 1,476,433 1,543,097 1,692,428 1,676,559 1,794,463
Stockholders' Equity
(Deficiency)........... (293,640) (450,579) (591,939) (713,544) (868,614) (778,107) (1,033,163)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------------------------------------- ----------------
1989 1990 1991 1992 1993 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL RATIOS AND
OTHER DATA:
Total Debt to EBITDA (h). 9.87x 8.69x 8.85x 8.09x 8.41x 8.72x 8.66x
Debt Net of Cash to
EBITDA.................. 9.48x 8.59x 8.74x 8.03x 8.22x 8.17x 8.64x
EBITDA to Total Interest
Expense................. 0.91 0.94 1.00 1.10 1.23 1.25 1.14
Operating Margin (i)..... 53.7% 56.8% 56.8% 56.4% 56.8% 57.2% 56.0%
Capital Expenditures..... $58,501 $75,619 $77,851 $52,808 $70,975 $57,302 $48,248
Average Monthly Revenue
per Basic Subscriber (j) $ 25.07 $ 26.61 $ 28.63 $ 29.82 $ 32.40 $ 31.73 $ 32.22
</TABLE>
- --------
(a) Reflects an increase in the estimated useful lives of certain intangible
assets effective January 1990. See Note 1 to the Adelphia Communications
Corporation Consolidated Financial Statements.
(b) The Company's return on its priority investment in Olympus is based on a
16.5% return on its nonvoting preferred limited partnership interests ("PLP
Interests"), although the Company recognizes priority investment income
only to the extent received. At March 31, 1993 and December 31, 1993,
$68,702,000 and $95,930,000, respectively, of accumulated priority return
remained unpaid.
(c) "Extraordinary loss" relates to loss on the early retirement of the Senior
Discount Notes. "Cumulative Effect of Change in Accounting Principle"
refers to a change in accounting principle for Olympus and the Company.
Effective January 1, 1993 and April 1, 1993, respectively, Olympus and the
Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which requires
an asset and liability approach for financial accounting and reporting for
income taxes. SFAS 109 resulted in the cumulative recognition of an
additional liability by Olympus and the Company of approximately
$59,500,000 and $89,660,000, respectively.
(d) Earnings before interest, income taxes, depreciation and amortization,
equity in net loss of Olympus, extraordinary loss and cumulative effect of
change in accounting principle. The use of the term "EBITDA" is consistent
with the use of the same term in the Indenture under which the New Notes
will be issued and the indentures for the Old Notes, the 10 1/4% Notes, the
9 7/8% Debentures, the 11 7/8% Debentures and the 12 1/2% Notes. EBITDA and
similar measurements of cash flow are commonly used in the cable television
industry to analyze and compare cable television companies on the basis of
operating performance, leverage and liquidity.
(e) Earnings consist of operating income before income taxes and fixed charges
(excluding capitalized interest). Fixed charges consist of (i) interest,
whether expensed or capitalized; (ii) amortization of debt issuance costs
and discount relating to any indebtedness, whether expensed or capitalized;
and (iii) the assumed interest component of rent expense.
(f) Investment in and amounts due from Olympus at December 31, 1993 is
comprised of the following:
<TABLE>
<S> <C>
Gross Investment in PLP Interests and General Partner's
Equity................................................... $ 283,002,000
Excess of Ascribed Value of Contributed Property over
Historical Cost......................................... (98,303,000)
Cumulative Equity in Net Loss of Olympus................. (269,799,000)
-------------
Investments in Olympus.................................. (85,100,000)
Amounts due from Olympus................................. 77,971,000
-------------
Total.................................................. $ (7,129,000)
=============
</TABLE>
(g) Total debt less cash and cash equivalents.
(h) Based on annualized EBITDA for the quarter ending the period presented. The
Company believes that this presentation is consistent with the covenant
test which limits the incurrence of indebtedness in the Indenture under
which the New Notes will be issued and the indentures for the Old Notes,
the 10 1/4% Notes, the 9 7/8% Debentures, the 11 7/8% Debentures and the 12
1/2% Notes and that this ratio is commonly used in the cable television
industry as a measure of leverage.
(i) Percentage representing operating income before depreciation and
amortization divided by revenues.
(j) Average for the last quarter of each period presented, including revenues
and subscribers for the South Dade Systems up to the date of transfer to
Olympus. The Company believes that this presentation provides meaningful
trend information over the periods presented and is commonly used in the
cable television industry to present such data on a comparative basis.
11
<PAGE>
RISK FACTORS
Prior to making an investment decision, prospective investors should
carefully consider, along with other matters referred to herein or incorporated
by reference herein, the following:
REGULATION AND COMPETITION IN THE CABLE TELEVISION INDUSTRY
The cable television operations of the Company may be adversely affected by
changes and developments in governmental regulation, competitive forces and
technology. The cable television industry and the Company are subject to
extensive regulation at the federal, state and local levels. Many aspects of
such regulation are currently the subject of judicial proceedings and
administrative or legislative proceedings or proposals. On October 5, 1992,
Congress passed the Cable Television Consumer Protection and Competition Act of
1992 (the "1992 Cable Act") which significantly expands the scope of regulation
of certain subscriber rates and a number of other matters in the cable
industry, such as mandatory carriage of local broadcast stations and
retransmission consent, and which will increase the administrative costs of
complying with such regulations. The Federal Communications Commission (the
"FCC") has adopted rate regulations that establish, on a system-by-system
basis, maximum allowable rates for (i) basic and cable programming services
(other than programming offered on a per-channel or per-program basis), based
upon a benchmark methodology, and (ii) associated equipment and installation
services, based upon cost plus a reasonable profit. Under the FCC rules,
franchising authorities are authorized to regulate rates for basic services and
associated equipment and installation services, and the FCC will regulate rates
for regulated cable programming services in response to complaints filed with
the agency. The original rate regulations became effective on September 1,
1993. Amendments to the rate regulations, which were announced by the FCC on
February 22, 1994, are scheduled to become effective on or about May 15, 1994.
The text of these amendments is expected to become available within 30 days of
February 22, 1994. The FCC ordered an interim rate freeze effective April 5,
1993 which has been extended through May 15, 1994.
The original rate regulations required a reduction of existing rates charged
for basic services and regulated cable programming services to the greater of
(i) the applicable benchmark level or (ii) the rates in force as of September
30, 1992 reduced by 10%, adjusted forward for inflation. The amended
regulations apparently will eventually require a reduction of 17 percent,
adjusted forward for inflation, from the rates in force as of September 30,
1992. Rate reductions are not required to the extent that a cable operator at
its option elects to use an alternative cost-of-service methodology and shows
that rates for basic and cable programming services are reasonable. The FCC has
adopted interim rules to govern cost-of-service showings by cable operators.
Refunds with interest will be required to be paid by cable operators who are
required to reduce regulated rates after September 1, 1993, calculated from the
effective date of the FCC's rate regulations with regard to basic rates, and
from the date a complaint is filed with the FCC with regard to the rates
charged for regulated programming services. The FCC has reserved the right to
reduce or increase the benchmarks it has established. The rate regulations will
also limit future increases in regulated rates to an inflation indexed amount
plus increases above the inflation index in certain costs such as taxes,
franchise fees, costs associated with specific franchise requirements and
increased programming costs. Cost-based adjustments to these capped rates can
also be made in the event a cable operator adds or deletes channels. Because of
the limitation on rate increases for regulated services, future revenue growth
from cable services will rely to a much greater extent than has been true in
the past on increased revenues from unregulated services and new subscribers
than from increases in previously unregulated rates.
The FCC has adopted regulations implementing most of the requirements of the
1992 Cable Act and is in the process of completing certain additional
rulemaking proceedings before the 1992 Cable Act can be fully implemented. As
noted above, amendments to the rate regulations were recently announced and the
FCC is also likely to continue to modify, clarify or refine the rate
regulations and benchmark methodology. In addition, litigation has been
instituted challenging various portions of the 1992 Cable Act and the
rulemaking proceedings including the rate regulations. The Company cannot
predict the effect or outcome of the future rulemaking proceedings, changes to
the rate regulations, or litigation. Further, because the FCC
12
<PAGE>
has not yet issued its interim rules or adopted final cost-of-service rules,
the Company cannot predict whether it would be able to utilize cost-of-service
showings to justify rates.
Effective as of September 1, 1993, in accordance with the 1992 Cable Act, the
Company repackaged certain existing cable services by adjusting rates for basic
service and introducing a new method of offering certain cable services. The
Company adjusted the basic service rates and related equipment and installation
rates in all of its systems in order for such rates to be in compliance with
the applicable benchmark or equipment and installation cost levels. The amended
rules may require further adjustments to the Company's rates. The Company also
implemented a program in all of its systems called "CableSelect" under which
most of the Company's satellite-delivered programming services are now offered
individually on a per channel basis, or as a group at a price of approximately
15% to 20% below the sum of the per channel prices of all such services. For
subscribers who elect to customize their channel lineup, the Company will
provide, for a monthly rental fee, an electronic device located on the cable
line outside the home, enabling a subscriber's television to receive only those
channels selected by the subscriber. These basic service rate adjustments and
the CableSelect program have also been implemented in all systems managed by
the Company. The Company believes CableSelect provides increased programming
choices to the Company's subscribers while providing flexibility to the Company
to respond to future changes in areas such as customer demand and programming.
Certain programmers have taken the position that the Company's new method of
offering services is inconsistent with their programming agreements. The
Company disagrees and is in discussions with these programmers. Revenues from
regulated programming services and equipment, and revenues from CableSelect
services per subscriber for the quarter ended December 31, 1993 (the first full
quarter reflecting the impact of the implementation of rate regulations on
September 1, 1993) declined 3.0% compared to the quarter ended June 30, 1993
(the last quarter not impacted by the implementation of rate regulations on
September 1, 1993). The decline in revenue was partially offset by increases in
prices for HBO, Cinemax, TMC, Disney, Showtime, and Prism; and by increases in
the average number of basic subscribers. A letter of inquiry, one of at least
63 sent by the FCC to numerous cable operators, was received by an Olympus
System regarding the implementation of this new method of offering services.
The Company has responded in writing to the FCC's inquiry.
The FCC, in announcing the amendments to the original rate regulations,
stated that it was revising the rules governing such "a la carte" packages and
would be scrutinizing the regulatory treatment of such packages on a case-by-
case basis based on a number of factors. The FCC has indicated that "a la
carte" packages which are determined to be evasions of rate regulations rather
than true enhancements of subscriber choice will be treated as regulated tiers,
and cable operators engaging in such practices may be subject to fines and/or
further rate adjustments.
The Company is currently unable to predict the effect that the amended
regulations, future FCC treatment of "a la carte" packages or other future FCC
rulemaking proceedings will have on its business and results of operations in
future periods. No assurance can be given at this time that such matters will
not have a material adverse effect on the Company's business and results of
operations in the future. Also, no assurance can be given as to what other
future actions Congress, the FCC or other regulatory authorities may take or
the effects thereof on the Company.
Cable television companies operate under franchises granted by local
authorities which are subject to renewal and renegotiation from time to time.
Because such franchises are generally non-exclusive, there is a potential for
competition with the Systems from other operators of cable television systems,
including public systems operated by municipal franchising authorities
themselves, and from other distribution systems capable of delivering
television programming to homes. The 1992 Cable Act contains provisions which
encourage competition from such other sources. Additionally, recent court and
administrative decisions have removed certain of the restrictions that have
limited entry into the cable television business by potential competitors such
as telephone companies, and proposals now under consideration by the FCC, and
which are being and from time to time have been considered by Congress, could
result in the elimination of other
13
<PAGE>
such restrictions. The Company cannot predict the extent to which competition
will materialize from other cable television operators, other distribution
systems for delivering television programming to the home, or other potential
competitors, or, if such competition materializes, the extent of its effect on
the Company.
FCC rules permit local telephone companies to offer "video dialtone" service
for video programmers, including channel capacity for the carriage of video
programming and certain non-common carrier activities such as video processing,
billing and collection and joint marketing agreements. On December 15, 1992,
New Jersey Bell Telephone Company filed an application with the FCC to operate
a "video dialtone" service in portions of Dover County, New Jersey, in which
the Company serves approximately 20,000 subscribers. The Company opposed the
application. On July 28, 1993, the FCC sent a letter to New Jersey Bell stating
that the application appeared to be inconsistent with the FCC's video dialtone
requirements in that insufficient capacity to serve multiple programmers was to
be made available. New Jersey Bell was given the opportunity to amend its
application which, it subsequently did. The Company then filed a further
opposition to the application. The matter has not yet been decided by the FCC.
On December 17, 1992, the Chesapeake and Potomac Telephone Company of
Virginia and Bell Atlantic Video Service Company ("Bell Atlantic Video") filed
suit in U.S. District Court in Alexandria, Virginia seeking to declare
unconstitutional the provisions in the Cable Communications Policy Act of 1984
(the "1984 Cable Act") that prohibit telephone companies from owning a cable
television system in their telephone service areas. On August 24, 1993, the
court held that the 1984 Cable Act cross-ownership provision is
unconstitutional, and it issued an order enjoining the FCC from enforcing the
cross-ownership ban. The U.S. Justice Department has appealed this decision to
the U.S. Court of Appeals for the Fourth Circuit. Similar suits have been filed
in other federal district courts. In addition, legislation which would alter or
eliminate the cross-ownership ban has been introduced in Congress and is under
active consideration.
The Company cannot predict the outcome of the New Jersey Bell video dialtone
proceeding or the Bell Atlantic Video litigation. However, the Company believes
that the provision of video programming by telephone companies with
considerable financial resources in competition with the Company's existing
operations could have an adverse effect on the Company's financial condition
and results of operations. At this time, the magnitude of any such effect is
not known or estimable.
SUBSTANTIAL LEVERAGE/DEFICIENCY OF EARNINGS AVAILABLE TO COVER FIXED CHARGES
The Company is highly leveraged and has incurred substantial indebtedness,
primarily to finance acquisitions and expansion of its operations and, to a
lesser extent, for investments in and advances to affiliates. At December 31,
1993, the Company's total debt aggregated approximately $1,798,284,000 which
included approximately $937,809,000 of subsidiary debt and approximately
$860,475,000 of parent debt. The Company's total debt has varying maturities to
2005, including as of December 31, 1993 an aggregate of approximately
$584,724,000 maturing on or prior to March 31, 1998. The Company's financing
strategy has been to maintain its public long-term debt at the holding company
level while borrowing in the private debt markets (e.g., bank and insurance
company debt) through the Company's wholly-owned subsidiaries. The Company's
subsidiary financings are effected through separate borrowing groups, and
substantially all of the indebtedness in these borrowing groups is non-recourse
to Adelphia. The subsidiary credit arrangements have varied revolving credit
and term periods and contain separately-negotiated covenants relating to cross-
defaults and the incurrence of additional debt for each borrowing group. See
"Management's Discussion and Analysis."
The total stockholders' deficiency at March 31, 1993 and at December 31, 1993
was $868,614,000 and $1,033,163,000, respectively. However, the total
stockholders' deficiency has been reduced as a result of the Stock Offering
completed on January 14, 1994. See "Recent Development" and "Capitalization."
The stockholders' deficiency generally has resulted from the Company's reported
net losses which have been caused primarily by high levels of depreciation and
amortization and interest expense. The Company reported net losses of
approximately $141,400,000, $121,600,000 and $176,800,000, respectively, for
the years ended
14
<PAGE>
March 31, 1991, 1992 and 1993 and $86,288,000 and $164,549,000, respectively,
for the nine months ended December 31, 1992 and 1993. The increase in net loss
for the year ended March 31, 1993 and the nine months ended December 31, 1993
compared to the respective prior year periods was primarily due to the
cumulative effect of the change in accounting principle for Olympus and the
Company. Effective January 1, 1993 and April 1, 1993, Olympus and the Company,
respectively, adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." The cumulative effect
of adopting SFAS No. 109 was to increase the net loss by $59,500,000 and
$89,660,000 for the year ended March 31, 1993 and the nine months ended
December 31, 1993, respectively. The Company expects to incur significant
losses for the next several years. See "Management's Discussion and Analysis."
For the year ended March 31, 1993 and for the nine months ended December 31,
1993, the Company's earnings were insufficient to cover its fixed charges by
$53,934,000 and $49,888,000, respectively, and, in addition, after giving pro
forma effect to the issuance of the Old Notes and the 10 1/4% Notes and to the
Stock Offering (as defined herein) and to the application of net proceeds
therefrom as if all such events had occurred on April 1, 1992 and April 1,
1993, the Company's earnings would have been insufficient to cover its fixed
charges by $51,966,000 and $43,770,000 for the year ended March 31, 1993 and
the nine months ended December 31, 1993, respectively. However, such amounts
reflect non-cash charges totalling $90,570,000 and $67,570,000, respectively,
consisting of depreciation and amortization, and accretion of original issue
discount. Historically, the Company's cash generated from operating activities
and borrowings has been sufficient to meet its requirements for debt service,
working capital, capital expenditures, acquisitions, and investments in and
advances to affiliates. The Company believes that it will continue to generate
cash and obtain financing sufficient to meet such requirements. However, the
Company's ability to incur additional indebtedness is limited by covenants in
its parent company indentures and its subsidiary credit agreements. If the
Company were unable to meet its debt service obligations, the Company would
have to consider refinancing its indebtedness or obtaining new financing.
Although in the past the Company has been able both to refinance its
indebtedness and to obtain new financing, there can be no assurance that the
Company would be able to do so in the future or that, if the Company were able
to do so, the terms available would be favorable to the Company. In the event
that the Company were unable to refinance its indebtedness or obtain new
financing under these circumstances, the Company would likely have to consider
various options such as the sale of certain assets to meet its required debt
service, negotiation with its lenders to restructure applicable indebtedness or
other options available to it under applicable law. See "Selected Consolidated
Financial Data" and "Management's Discussion and Analysis."
HOLDING COMPANY STRUCTURE
As a holding company, Adelphia holds no significant assets other than its
investments in and advances to its subsidiaries. Adelphia's ability to make
interest and principal payments when due to holders of debt of Adelphia is
dependent upon the receipt of sufficient funds from its subsidiaries. Under the
terms of various debt agreements between the Adelphia subsidiaries and their
respective lending institutions, upon the occurrence of an event of default
(including certain cross-defaults resulting from defaults under Adelphia's debt
agreements) or unless certain financial performance tests are met, the Adelphia
subsidiaries are restricted from distributing funds to Adelphia. In addition,
because Adelphia's subsidiaries do not guarantee the payment of principal of
and interest on debt of Adelphia, the claims of holders of such debt
effectively will be subordinated to the claim of creditors of such entities. At
December 31, 1993, the total amount of long-term debt of such subsidiaries was
$937,809,000. See "Management's Discussion and Analysis" and "Description of
New Notes."
POTENTIAL CONFLICTS OF INTEREST
The Rigas Family holds substantially all of Adelphia's Class B Common Stock
and 93.7% of the combined voting power of both classes of Adelphia's Common
Stock and currently has the power to elect all seven members of Adelphia's
Board of Directors. John J. Rigas and the other executive officers of Adelphia
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(including other members of the Rigas Family) hold direct and indirect
ownership interests in the Managed Partnerships, which are managed by the
Company for a fee. Subject to the restrictions contained in the Business
Opportunity Agreement regarding future acquisitions, Rigas Family members and
the executive officers are free to continue to own these interests and acquire
additional interests in cable television systems. Such activities could present
a conflict of interest with the Company in the allocation of management time
and resources of the executive officers. In addition, there have been and will
continue to be transactions between the Company and the executive officers or
other entities in which the executive officers have ownership interests or with
which they are affiliated. The Indenture under which the Notes will be issued
and indentures under which the 10 1/4% Notes, 9 7/8% Debentures, 11 7/8%
Debentures and 12 1/2% Notes of Adelphia were issued contain covenants that
place certain restrictions on transactions between the Company and its
affiliates. See "Description of New Notes--Covenants: Limitation on
Transactions with Affiliates."
TAXABLE INCOME WITHOUT CASH PAYMENTS
Holders of the Notes will be required to report taxable income, for federal
income tax purposes, as original issue discount accrues thereon (regardless of
whether stated interest thereon is paid in cash or through the issuance of
additional Notes). As a result, such holders may be required to report interest
income before receiving the cash to which such interest is attributable. See
"Certain Federal Income Tax Considerations."
ABSENCE OF ACTIVE TRADING MARKET
The New Notes are a new issue of securities for which there is currently no
active trading market, and there can be no assurance that an active trading
market for the New Notes will exist. If the New Notes are traded after their
initial issuance, they may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities and other factors, including general economic conditions and the
financial condition of the Company. The Company does not intend to apply for
listing of the Notes on any securities exchange or authorization for quotation
on the National Association of Securities Dealers Automated Quotations System.
No assurance can be given as to the liquidity of the trading market for the New
Notes or that an active public market will develop for the New Notes.
CONSEQUENCES TO NON-TENDERING HOLDERS OF OLD DEBENTURES AND BROKER-DEALERS
Upon consummation of the Exchange Offer, the Company will have no further
obligation to register the Old Notes under the Securities Act, other than those
held by the Initial Purchaser. Thereafter, Old Notes which are not tendered or
which are tendered but not accepted will remain subject to the existing
restrictions upon transfer of such Old Notes. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Old Notes could be adversely affected. In addition,
any holder of Old Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of such New Notes will be required to comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. Each broker-dealer that receives
New Notes for its own account in exchange for Old Notes, where such Old Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "The Exchange Offer" and
"Plan of Distribution."
RECENT DEVELOPMENT
On January 14, 1994, the Company completed a public offering of 9,132,604
shares of Class A Common Stock (the "Stock Offering"), which included 300,000
shares of Class A Common Stock sold to the underwriter in the Stock Offering
pursuant to an over-allotment option. Upon completion of the Stock Offering,
there were 13,507,604 shares of Class A Common Stock outstanding and a total of
24,452,080 shares
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<PAGE>
of Class A Common Stock and Class B Common Stock outstanding. Certain
provisions of this Prospectus present information that gives effect to the
completion of the Stock Offering with net proceeds, before offering expenses,
of $156,579,000 or $17.145 per share to the Company. The net proceeds from the
Stock Offering were used to redeem all the Company's outstanding Senior
Subordinated Notes and to reduce bank debt of Adelphia's subsidiaries. Of the
9,132,604 shares of Class A Common Stock sold in the Stock Offering, 3,300,000
shares were sold to the public at $18.00 per share and 5,832,604 shares were
sold directly by Adelphia to partnerships controlled by members of the Rigas
Family, at the public offering price less the underwriting discount. Highland
Holdings and Syracuse Hilton Head Holdings, L.P., which purchased 4,374,453 and
1,458,151 of such 5,832,604 shares, respectively, hold and control the Managed
Systems. See "Management's Discussion and Analysis" in the December Form 10-Q.
USE OF PROCEEDS
Adelphia will not receive any cash proceeds from the issuance of the New
Notes offered hereby. In consideration for the issuance of New Notes as
contemplated hereby, Adelphia will receive in exchange Old Notes in like
principal amount which will be retired and cancelled. The net proceeds received
by Adelphia from the offering of Old Notes of approximately $147,000,000 were
used to repay outstanding bank debt of subsidiaries in order to extend the
scheduled maturities of the Company's long-term debt. As of December 31, 1993,
the effective interest rates charged on such debt ranged from 4.375% to 5.0%,
and such debt requires amortization of principal from September 1994 through
September 1999.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On February 22, 1994, Adelphia issued $150,000,000 aggregate principal amount
of Old Notes to Salomon Brothers Inc, the Initial Purchaser. The issuance was
not registered under the Securities Act in reliance upon the exemption provided
by Section 4(2) of the Securities Act. In connection with the issuance and sale
of the Old Notes, Adelphia entered into a Registration Rights Agreement with
the Initial Purchaser dated as of February 22, 1994 (the "Registration Rights
Agreement"), which requires Adelphia to cause the Old Notes to be registered
under the Securities Act or to file with the Commission a registration
statement under the Securities Act with respect to an issue of new notes of
Adelphia identical in all material respects to the Old Notes, and use its best
efforts to cause such registration statement to become effective under the
Securities Act and, upon the effectiveness of that registration statement, to
offer to the holders of the Old Notes the opportunity to exchange their Old
Notes for a like principal amount of New Notes, which will be issued without a
restrictive legend and may be reoffered and resold by the holder without
restrictions or limitations under the Securities Act. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is being made
pursuant to the Registration Rights Agreement to satisfy Adelphia's obligations
thereunder.
Based on no-action letters issued by the staff of the Commission to third-
parties, Adelphia believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any holder of such New Notes (other than any such holder which
is an "affiliate" of Adelphia within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holder's business and such holder has
no arrangement or understanding with any person to participate in the
distribution of such New Notes. Any holder who tenders in the Exchange Offer
for the purpose of participating in a distribution of the New Notes cannot rely
on such interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker dealer that receives New
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."
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<PAGE>
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus and
in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), Adelphia will accept any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration
Date. The Company will issue a principal amount of New Notes in exchange for an
equal principal amount of outstanding Old Notes tendered and accepted in the
Exchange Offer. Holders may tender some or all of their Old Notes pursuant to
the Exchange Offer.
The form and terms of the New Notes will be the same as the form and terms of
the Old Notes except that the New Notes will be registered under the Securities
Act and hence will not bear legends restricting the transfer thereof. The New
Notes will evidence the same debt as the Old Notes. The New Notes will be
issued under and entitled to the benefits of the Indenture pursuant to which
the Old Notes were issued.
As of the date of this Prospectus, $150,000,000 aggregate principal amount of
the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered holders.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. Adelphia intends to conduct the Exchange Offer in accordance
with the provisions of the Registration Rights Agreement and the applicable
requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder. Old Notes which are not tendered for exchange in the
Exchange Offer will remain outstanding and continue to accrue interest, but
will not be entitled to any rights or benefits under the Registration Rights
Agreement.
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
Adelphia will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. For purposes of the Exchange Offer, Adelphia shall be deemed to have
accepted properly tendered Old Notes for exchange when, as and if Adelphia has
given oral or written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering holders for the purposes of receiving the
New Notes from Adelphia.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents; provided, however, that
Adelphia reserves the absolute right to waive any defects or irregularities in
the tender or conditions of the Exchange Offer. If any tendered Old Notes are
not accepted for any reason set forth in the terms and conditions of the
Exchange Offer or if Old Notes are submitted for a greater principal amount
than the holder desires to exchange, such unaccepted or non-exchanged Old Notes
or substitute Old Notes evidencing the unaccepted portion, as appropriate, will
be returned without expense to the tendering holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. Adelphia will pay all charges and expenses,
other than certain applicable taxes described below, in connection with the
Exchange Offer. See "Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date," shall mean 5:00 p.m., New York City time, on
, 1994, unless Adelphia, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Expiration Date, Adelphia will notify the Exchange
Agent of any extension by oral or written notice and will mail to the
registered holders an announcement thereof, prior to 9:00 a.m., New York City
time, on the next business day after the then Expiration Date.
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<PAGE>
Adelphia reserves the right, in its sole discretion, (i) to delay accepting
any Old Notes, to extend the Exchange Offer or to terminate the Exchange Offer
if any of the conditions set forth below under "Conditions" shall not have been
satisfied, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by oral or written notice thereof. If
the Exchange Offer is amended in a manner determined by Adelphia to constitute
a material change, Adelphia will promptly disclose such amendment in a manner
reasonably calculated to inform the holders of Old Notes of such amendment.
Without limiting the manner in which Adelphia may choose to make a public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, Adelphia shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from their date of issuance. Accrued
interest on Old Notes that are accepted for exchange will be paid, on the date
of the first interest payment on the New Notes (August 15, 1994), to the
holders of the New Notes as of the first record date for the payment of
interest on the New Notes (August 1, 1994). Interest on the Old Notes accepted
for exchange will cease to accrue upon issuance of the New Notes. Interest on
Old Notes not accepted for exchange will continue to accrue in accordance with
the Indenture.
The New Notes will bear interest at a rate of 9 1/2% per annum. Interest on
the New Notes will be payable semi-annually on each February 15 and August 15,
commencing on August 15, 1994.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Adelphia will not be
required to exchange any New Notes for any Old Notes, and may terminate or
amend the Exchange Offer before the acceptance of any Old Notes for exchange,
if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange
Offer which, in Adelphia's judgment, would materially impair the
ability of Adelphia to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or enacted,
or any existing law, statute, rule or regulation is interpreted by the
staff of the Commission, which in Adelphia's judgment, would
materially impair the ability of Adelphia to proceed with the Exchange
Offer; or
(c) the Exchange Offer would otherwise violate applicable law.
If Adelphia determines in its sole discretion that any of these conditions
are not satisfied, Adelphia may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of holders who tendered such Old Notes
to withdraw their tendered Old Notes, or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Old Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, Adelphia will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
holders, and Adelphia will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the waiver and the manner
of disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
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<PAGE>
The foregoing conditions are for the sole benefit of Adelphia and may be
asserted by Adelphia regardless of the circumstances giving rise to any such
condition or may be waived by Adelphia in whole or in part at any time and from
time to time in its sole discretion. The failure by Adelphia at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by Adelphia
concerning the events described above shall be final and binding on all
parties.
PROCEDURES FOR TENDERING
The tender of Old Notes by a holder as set forth below and the acceptance
thereof by Adelphia will constitute an agreement between such holder and
Adelphia in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Old
Notes (unless such tender is being effected pursuant to the procedure for book-
entry transfer described below) and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date,
or by complying with the guaranteed delivery procedures described below.
DELIVERY OF ALL DOCUMENTS MUST BE MADE TO THE EXCHANGE AGENT AT ITS ADDRESS
SET FORTH HEREIN. THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE
ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED
THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE
SENT TO ADELPHIA. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering of
such owner's Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such owner's name or obtain a properly completed
bond power from the registered holder. The transfer of registered ownership may
take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by any Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Payment Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution (as defined below). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Old Notes with the
signature thereon guaranteed by an Eligible Institution. If the Letter of
Transmittal or any Old Notes or bond powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and
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<PAGE>
unless waived by Adelphia, evidence satisfactory to Adelphia of their authority
to so act must be submitted with the Letter of Transmittal.
Any financial institution that is a participant in the book-entry transfer
facility for the Old Notes, The Depository Trust Company ("DTC"), may make
book-entry delivery of Old Notes by causing DTC to transfer such Old Notes into
the Exchange Agent's account with respect to the Old Notes in accordance with
DTC's procedures for such transfer. Although delivery of Old Notes may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
an appropriate Letter of Transmittal with any required signature guarantee and
all other required documents must in each case be transmitted to and received
and confirmed by the Exchange Agent at its address set forth below on or prior
to the Expiration Date, or, if the guaranteed delivery procedures described
below are complied with, within the time period provided under such procedures.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by Adelphia in its sole discretion, which determination will
be final and binding. Adelphia reserves the absolute right to reject any and
all Old Notes not properly tendered or any Old Notes Adelphia's acceptance of
which would, in the opinion of counsel for Adelphia, be unlawful. Adelphia also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. Adelphia's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as Adelphia shall determine. Although Adelphia intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither Adelphia, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, Adelphia reserves the right in its sole discretion to purchase
or make offers for any Old Notes that remain outstanding subsequent to the
Expiration Date or, as set forth below under "Conditions," to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Old
Notes in the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
By tendering, each holder will represent to Adelphia that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the holder, that neither the holder nor
any such person has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that neither the holder
nor any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act, of Adelphia.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, or (iii) who cannot complete the procedures for book-entry
transfer of Old Notes to the Exchange Agent's account with DTC prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) On or prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission,
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<PAGE>
mail or hand delivery) setting forth the name and address of the
holder, the certificate number(s) of such Old Notes (if possible) and
the principal amount of Old Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within five business trading
days after the Expiration Date, (i) the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the
Old Notes and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent,
or (ii) that book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC will be effected and confirmation of such book-
entry transfer will be delivered to the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all
tendered Old Notes in proper form for transfer and all other documents
required by the Letter of Transmittal, or confirmation of book-entry
transfer of the Old Notes into the Exchange Agent's account at DTC,
are received by the Exchange Agent within five business trading days
after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
facsimile transmission or letter indicating notice of withdrawal must be
received by the Exchange Agent at its address set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. Any such notice of withdrawal
must (i) specify the name of the person having tendered the Old Notes to be
withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn
(including the certificate number or numbers and principal amount of such Old
Notes), (iii) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Old Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the Trustee with respect to the Old Notes register
the transfer of such Old Notes into the name of the person withdrawing the
tender and (iv) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. If Old Notes have been
tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawn Old Notes or otherwise comply with DTC's
procedures. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by Adelphia, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no New Notes will be issued with respect thereto unless the
Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for payment will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Old Notes may be retendered by following one of the procedures described above
under "Procedures for Tendering" at any time prior to the Expiration Date.
UNTENDERED OLD NOTES
Holders of Old Notes whose Old Notes are not tendered or are tendered but not
accepted in the Exchange Offer will continue to hold such Old Notes and will be
entitled to all the rights and preferences and subject to the limitations
applicable thereto under the Indenture. Following consummation of the Exchange
Offer, the holders of Old Notes will continue to be subject to the existing
restrictions upon transfer thereof and Adelphia will have no further
obligations to such holders, other than the Initial Purchaser, to
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<PAGE>
provide for the registration under the Securities Act of the Old Notes held by
them. To the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
could be adversely affected.
EXCHANGE AGENT
Bank of Montreal Trust Company has been appointed as Exchange Agent of the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notices of Guaranteed Delivery should be directed to the Exchange Agent
addressed as follows:
By Registered or Certified Mail, By Facsimile:
by hand or by Overnight Courier: Bank of Montreal Trust Company
Bank of Montreal Trust Company Attention: Corporate Trust Department
77 Water Street (212) 701-7684
New York, NY 10005 Confirm by Telephone:
Attention: Corporate Trust Department (212) 701-7653
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Adelphia. The principal
solicitation is being made by mail; however, additional solicitation may be
made by telegraph, telephone or in person by officers and regular employees of
Adelphia and its affiliates.
Adelphia has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. Adelphia, however, will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith and will pay the
reasonable fees and expenses of holders in delivering their Old Notes to the
Exchange Agent.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by Adelphia. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
Adelphia will pay all transfer taxes, if any, applicable to the exchange of
Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Notes tendered, or
if tendered Old Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Old Notes pursuant to the Exchange Offer,
then the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes as
reflected in Adelphia's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by
Adelphia. The expenses of the Exchange Offer will be expensed over the terms of
the New Notes.
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CAPITALIZATION
The following table sets forth the actual capitalization of the Company at
December 31, 1993 and as adjusted to give effect to the Stock Offering and to
the Offering of Notes, and to the application of the net proceeds therefrom.
<TABLE>
<CAPTION>
DECEMBER 31, 1993
------------------------
ACTUAL AS ADJUSTED
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total Debt (a):
Notes of subsidiaries to banks................... $ 402,775 $ 199,541(b)
Notes of subsidiaries to institutions ........... 516,500 516,500
----------- -----------
Total subsidiaries' debt....................... 919,275 716,041
9 1/2% Senior Pay-In-Kind Notes Due 2004........ -- 150,000(b)
10 1/4% Senior Notes Due 2000.................... 108,731 108,731
12 1/2% Senior Notes Due 2002.................... 400,000 400,000
11 7/8% Senior Debentures Due 2004............... 124,435 124,435
9 7/8% Senior Debentures Due 2005............... 127,856 127,856
13% Senior Subordinated Notes Due 1996....... 99,453 -- (b)
Other debt....................................... 18,534 18,534
----------- -----------
Total Debt..................................... 1,798,284 1,645,597
Stockholders' Equity (Deficiency):
Preferred Stock, $.01 par value, 5,000,000 shares
authorized, none issued......................... -- --
Class A Common Stock, $.01 par value, 50,000,000
shares authorized, 4,375,000 and 13,507,604
shares issued and outstanding, liquidation
preference, $1.00 per share (c)................. 44 135(d)
Class B Common Stock, $.01 par value, 25,000,000
shares authorized, 10,944,476 shares issued and
outstanding..................................... 109 109
Paid-in capital.................................. 60,112 216,254(d)
Accumulated deficit.............................. (1,093,428) (1,094,242)(e)
----------- -----------
Stockholders' Equity (Deficiency).............. (1,033,163) (877,744)
----------- -----------
Total Capitalization........................... $ 765,121 $ 767,853
=========== ===========
</TABLE>
- --------
(a) Reference is made to Note 3 to the Adelphia Communications Corporation
Consolidated Financial Statements for a description of Notes of
subsidiaries to banks and institutions. See "Management's Discussion and
Analysis--Liquidity and Capital Resources."
(b) Gives effect to the application of $100,000,000 of the net proceeds from
the Stock Offering for the redemption of the Senior Subordinated Notes, and
to the application of the remainder of the proceeds from the Stock Offering
($56,234,000) and to the estimated net proceeds from the Offering of Notes
($147,000,000) to reduce bank debt of subsidiaries.
(c) Does not include an aggregate of 700,000 shares of Class A Common Stock
reserved for issuance to officers and other key employees pursuant to
Adelphia's Stock Option Plan of 1986 and Restricted Stock Bonus Plan.
(d) Gives effect to the issuance of 9,132,604 shares of Class A Common Stock
pursuant to the Stock Offering.
(e) Gives effect to the redemption at par of the Senior Subordinated Notes,
with accretion requirements of $547,000, and the treatment as an expense of
deferred debt cost of $267,000.
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DESCRIPTION OF NEW NOTES
The Old Notes were issued pursuant to the Indenture between Adelphia and The
Bank of Montreal Trust Company, as trustee (the "Trustee"). The New Notes will
be issued under and entitled to the benefits of the Indenture. The form and
terms of the New Notes will be substantially the same as the form and terms of
the Old Notes except that the New Notes will be registered under the
Securities Act and, therefore, will not contain registration rights or bear
legends restricting the transfer thereof. The following is a summary of the
material provisions of the Indenture. References in this Section to the
"Notes" refer to the Old Notes and the New Notes. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), as in effect on the date of the Indenture. The Notes are subject to all
such terms, and holders of the Notes are referred to the Indenture and the
Trust Indenture Act for a statement of those terms. The statements under this
caption relating to the Notes and the Indenture are summaries and do not
purport to be complete. Such summaries may make use of certain terms defined
in the Indenture and are qualified in their entirety by express reference to
the Indenture. A copy of the form of Indenture will be provided upon request
without charge to any prospective investor.
GENERAL
The Indenture authorizes the issuance of $150,000,000 in aggregate principal
amount of the Notes plus Notes in the aggregate principal amount necessary to
pay interest, at the option of the Company, in additional Notes. The Notes are
general unsecured obligations of Adelphia and are effectively subordinate in
right of payment to the liabilities of Adelphia's subsidiaries. See
"Subordination to Subsidiary Debt" and "Certain Definitions" below.
The Notes will mature on February 15, 2004. Adelphia will pay interest on
February 15 and August 15 of each year, commencing August 15, 1994, to the
persons who are registered holders at the close of business on the February 1
and August 1 immediately preceding the interest payment date. On or prior to
February 15, 1999, interest on the Notes may be paid in cash, through the
issuance of additional Notes (valued at 100% of their principal amount) or in
any combination thereof at the option of the Company, in accordance with the
terms of the Indenture.
The principal of, premium, if any, and interest on the Notes will be payable
at the office or agency to be maintained by Adelphia, which, unless otherwise
provided by Adelphia, will be the offices of the Trustee. The principal of and
interest payments on the Notes may be paid by check. Except as described
below, the Notes may be presented for registration of transfer and exchange at
such offices.
The Notes will be issued in fully registered form only.
The Indenture and the existing indentures under which the 12 1/2% Notes, the
11 7/8% Debentures, the 9 7/8% Debentures and the 10 1/4% Notes of Adelphia
were issued contain covenants which may afford holders of Notes, the 12 1/2%
Notes, the 11 7/8% Debentures, the 9 7/8% Debentures and the 10 1/4% Notes
certain protections regarding leverage and the incurrence of indebtedness.
These include covenants which limit the amount of additional indebtedness that
may be incurred by Adelphia and its subsidiaries, which restrict mergers and
consolidations by Adelphia unless after giving effect to the transaction the
consolidated fixed charge ratio of the surviving entity satisfies certain
compliance tests, and which require such Notes, 12 1/2% Notes, 11 7/8%
Debentures, 9 7/8% Debentures and 10 1/4% Notes to be secured equally and
ratably with other indebtedness in certain circumstances where Adelphia
creates or assumes liens on its property or assets in connection therewith.
See "Covenants" below.
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<PAGE>
REDEMPTION
Optional Redemption. The Notes will be redeemable at the option of Adelphia,
in whole or in part, at any time on or after February 15, 1999 at the following
redemption prices (expressed as a percentage of principal amount) if redeemed
during the twelve-month period beginning on the dates indicated below:
<TABLE>
<S> <C>
February 15, 1999........................................... 103.56%
February 15, 2000........................................... 102.38%
February 15, 2001........................................... 101.19%
</TABLE>
and from February 15, 2002 and thereafter at 100% of the principal amount,
together, in each case, with accrued interest to the redemption date. In the
event of redemption of fewer than all of the Notes, the Trustee shall select by
lot or in such other manner as it shall deem fair and equitable the Notes to be
redeemed. The Notes will be redeemable in whole or in part upon not less than
30 nor more than 60 days' prior written notice, mailed by first class mail to a
holder's last address as it shall appear on the register of Notes maintained by
the Registrar. On and after any redemption date, interest will cease to accrue
on the Notes or portions thereof called for redemption unless Adelphia shall
fail to redeem any such Note.
In addition, in the event of a sale by the Company prior to February 15, 1996
of at least $100 million of its Capital Stock to a Strategic Equity Investor
(an "Equity Event"), up to 33 1/3% of the aggregate principal amount of Notes
then outstanding may be redeemed, at the Company's option, upon not less than
30 nor more than 60 days' prior written notice given to holders within 30 days
after the Equity Event, from the net cash proceeds of the Equity Event at
109.50% of such principal amount, together with accrued interest to the
redemption date.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Notes will be issued in fully registered
form without coupons. The Old Notes were and the New Notes, except as directed
herein, will be initially represented by a global note in fully registered form
without interest coupons (the "Global Old Note" and "Global New Note",
respectively, and each a "Global Note") and were and will be deposited with the
Trustee as custodian for The Depository Trust Company, New York, New York
("DTC") and registered in the name of a nominee of DTC.
Old Notes represented by beneficial interests in the Global Old Note are
exchangeable for Old Notes represented by physical certificates. Notes
initially purchased by or transferred to persons who elect to take physical
delivery of certificates instead of holding their interest through a Global
Note (and which are thus ineligible to trade through DTC) (collectively
referred to herein as the "Non-Global Purchasers") will be issued in registered
form without interest coupons (the "Certificated Notes").
Old Notes represented by the Global Old Note, to the extent directed by the
holders thereof in their Letter of Transmittal, will be exchanged through book-
entry electronic transfer for a Global New Note. Interests in the Global New
Note will, upon request, be exchangeable for Certificated New Notes in
accordance with DTC's customary procedures.
Upon the issuance of a Global Note, DTC or its custodian will credit, on its
internal system, the respective principal amount of the individual beneficial
interests represented by such Global Note to the accounts of institutions that
have accounts with such depositary ("participants"). Ownership of beneficial
interests in the Global Note will be limited to participants or persons who
hold interests through participants. Ownership of beneficial interests in the
Global Note will be shown on, and the transfer of that ownership will be
affected only through, records maintained by DTC or its nominee (with respect
to interests of participants) and the records of participants (with respect to
interests of persons other than participants).
So long as DTC or its nominee is the registered owner or holder of a Global
Note, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Note
26
<PAGE>
for all purposes under the Indenture and the Notes. No beneficial owner of an
interest in a Global Note will be able to transfer the interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture or described elsewhere herein.
Payments of the principal of, and interest on, a Global Note will be made to
DTC or its nominee, as the case may be, as the registered owner and holder
thereof. Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Note
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules. If a holder requires physical delivery of a
Certificated Note for any reason such holder must transfer its interest in a
Global Note in accordance with the normal procedures of DTC and the procedures
set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of the Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default (as defined below) under the Notes, DTC will exchange
the Global Note for Certificated Notes, which it will distribute to its
participants. If DTC is at any time unwilling or unable to continue as a
depositary for a Global Note and a successor depositary is not appointed by the
Company within 90 days, the Company will issue Certificated Notes in exchange
for such Global Note.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for
the full definition of all such terms as well as any other capitalized terms
used herein for which no definition is provided.
"Affiliate" means a Person (i) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, Adelphia, (ii) which beneficially owns or holds 10% or more of any class
of the voting Capital Stock of Adelphia, or (iii) of which 10% or more of the
voting Capital Stock is beneficially owned or held by Adelphia, a Restricted
Subsidiary or an Unrestricted Subsidiary of Adelphia. Without limitation, an
Affiliate also includes any director or executive officer of Adelphia. As used
herein, "Affiliate" shall not include a Restricted Subsidiary.
"Aggregate Excess Restricted Investments" means for any fiscal quarter the
aggregate of Excess Restricted Investments with respect to the Restricted
Investments in all of the Unrestricted Subsidiaries and Affiliates of Adelphia.
"Allowable Securities" means (i) cash equivalents, (ii) common or preferred
Capital Stock in a Person which (x) has Investment Grade Senior Debt or (y)
whose ratio of Indebtedness plus Preferred Stock to Annualized Pro Forma EBITDA
is less than 7.75:1, or (iii) debt securities issued by a Person which (x) has
Investment Grade Senior Debt or (y) whose Leverage Ratio is less than 7.75:1,
provided that the securities in (ii)(y) and (iii)(y) above shall only be deemed
to be Allowable Securities if the principal business of the Person is owning
and operating cable television systems.
"Annualized Pro Forma EBITDA" means, with respect to any Person, (i) such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four,
minus (ii) in the case of Adelphia only, Adelphia's Aggregate Excess Restricted
Investments for such fiscal quarter.
27
<PAGE>
"Asset Sale" means the sale, transfer or other disposition (other than to
Adelphia or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary, (b) all or substantially all of the
assets of Adelphia or of any Restricted Subsidiary, or (c) all or
substantially all of the assets of a Company system or part thereof serving at
least 5,000 basic subscribers, a division, line of business or comparable
business segment of Adelphia or any Restricted Subsidiary.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capital Stock Sale Proceeds" means the aggregate net sale proceeds
(including the fair market value of property, other than cash, as determined
by an independent appraisal firm) received by Adelphia from the issue or sale
(other than to a Subsidiary) by Adelphia of any class of its Capital Stock on
or after January 1, 1993 (including Capital Stock of Adelphia issued after
January 1, 1993 upon conversion of or in exchange for other securities of
Adelphia).
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles
and the amount of such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with generally accepted accounting
principles.
"Change of Control" means such time as (i) (a) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than
the Rigas Family and its affiliates, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power required to elect or designate for election a majority of
Adelphia's Board of Directors and attaching to the then outstanding voting
Capital Stock of Adelphia and (b) the Rigas Family, together with its
affiliates, is not at such time the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act) of more than 35% of the total voting power
required to elect or designate for election a majority of Adelphia's Board of
Directors and attaching to the then outstanding voting Capital Stock of
Adelphia, or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted Adelphia's Board
of Directors (together with any new directors whose election by Adelphia's
Board of Directors or whose nomination for election by Adelphia's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved or approved by
the Rigas Family and its affiliates at a time when they had the right or
ability by voting right, contract or otherwise to elect or designate for
election a majority of Adelphia's Board of Directors) cease for any reason to
constitute a majority of the directors then in office.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Closing Price" on any Trading Day with respect to the per share price of
any shares of Capital Stock means the last reported sale price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
National Association of Securities Dealers Automated Quotations National
Market System or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on such automated quotations system but
the issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange
Act) and the principal securities exchange on which such shares are listed or
admitted to trading is a Designated Offshore Securities Market (as defined in
Rule 902(a) under the Securities Act), the average of the reported closing bid
and asked prices regular way on
28
<PAGE>
such principal exchange, or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on such automated
quotation system and the issuer and principal securities exchange do not meet
such requirements, the average of the closing bid and asked prices in the over-
the-counter market as furnished by any New York Stock Exchange member firm that
is selected from time to time by the Company for that purpose and is reasonably
acceptable to the Trustee.
"Common Stock" of any Person means Capital Stock of such Person that does not
rank prior, with respect to dividends, distributions or liquidation proceeds of
such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Fixed Charge Ratio" means, for any Person, for any period, the
ratio of (i) Annualized Pro Forma EBITDA to (ii) Consolidated Interest Expense
for such period multiplied by four.
"Consolidated Interest Expense" means, for any Person, for any period, the
amount of interest in respect of Indebtedness (including amortization of
original issue discount, amortization of debt issuance costs, and non-cash
interest payments on any Indebtedness and the interest portion of any deferred
payment obligation and after taking into account the effect of elections made
under any Interest Rate Agreement, however denominated, with respect to such
Indebtedness), the amount of Redeemable Dividends and the interest component of
rentals in respect of any Capitalized Lease Obligation paid, accrued or
scheduled to be paid or accrued by such Person during such period, determined
on a consolidated basis in accordance with generally accepted accounting
principles. For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by such Person to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with generally accepted accounting principles
consistently applied.
"Cumulative Credit" means the sum of (i) Capital Stock Sale Proceeds plus
(ii) cumulative EBITDA of Adelphia from and after January 1, 1993 to the end of
the fiscal quarter immediately preceding the date of a proposed Restricted
Payment, or, if such cumulative EBITDA for such period is negative, minus the
amount by which such cumulative EBITDA is less than zero.
"Cumulative Interest Expense" means the aggregate amount of Consolidated
Interest Expense paid, accrued or scheduled to be paid or accrued by Adelphia
from January 1, 1993 to the end of the fiscal quarter immediately preceding a
proposed Restricted Payment, determined on a consolidated basis in accordance
with generally accepted accounting principles.
"EBITDA" means, for any Person, for any period, an amount equal to (A) the
sum of (i) consolidated net income for such period (exclusive of any gain or
loss realized in such period upon an Asset Sale), plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing consolidated net income and any provision
for taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period, plus (iv) depreciation for such
period on a consolidated basis, plus (v) amortization of intangibles for such
period on a consolidated basis, plus (vi) any other non-cash items reducing
consolidated net income for such period, minus (B) all non-cash items
increasing consolidated net income for such period, all for such Person and its
Subsidiaries determined in accordance with generally accepted accounting
principles consistently applied, except that with respect to Adelphia each of
the foregoing items shall be determined on a consolidated basis with respect to
Adelphia and its Restricted Subsidiaries only.
"Excess Restricted Investment" means, with respect to any particular
Unrestricted Subsidiary or Affiliate of Adelphia for a fiscal quarter, the
lesser of the amounts described in the following clauses (i) and (ii), or, if
such amounts are equal, such amount:
(i) the aggregate amount of any Restricted Investments (other than the
Initial Investment) made by Adelphia or any Restricted Subsidiary with
respect to such Unrestricted Subsidiary or Affiliate
29
<PAGE>
after the date of the Indenture and during the twelve-month period
ending on the last day of such fiscal quarter;
(ii) cash income received during such quarter by Adelphia with respect to
its Restricted Investments in such Unrestricted Subsidiary or
Affiliate multiplied by four;
and provided that cash income from a particular Restricted Investment shall be
included only (x) if cash income has been received by Adelphia with respect to
such Restricted Investment during each of the previous two fiscal quarters, or
(y) if the cash income derived from such Restricted Investment is attributable
to Allowable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Indebtedness" is defined to mean (without duplication), with respect to any
Person, any indebtedness, secured or unsecured, contingent or otherwise, which
is for 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), or evidenced
by bonds, notes, debentures or similar instruments or representing the balance
deferred and unpaid of the purchase price of any property (excluding, without
limitation, any balances that constitute subscriber advance payments and
deposits, accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with generally accepted accounting principles,
and shall also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations, (ii) obligations secured by a lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed, (iii)
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), (iv) in the case of Adelphia, Preferred
Stock of its Restricted Subsidiaries and (v) obligations of any such Person
under any Interest Rate Agreement applicable to any of the foregoing.
Notwithstanding the foregoing, Indebtedness shall not include any interest or
accrued interest until due and payable.
"Initial Investment" means the Restricted Investment in a Person made by
Adelphia or a Restricted Subsidiary that first results in such Person becoming
an Unrestricted Subsidiary or Affiliate of Adelphia, except that in the case of
Olympus, "Initial Investment" shall mean any Restricted Investment made in
Olympus since the date of the Indenture, but only to the extent that such
Restricted Investment when aggregated with the other Restricted Investments
made in Olympus since such date does not exceed $25,000,000.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investment Grade Senior Debt" means, with respect to any Person,
Indebtedness of such Person which has been rated with an investment grade
rating by Moody's or Standard & Poor's Corporation.
"Leverage Ratio" is defined as the ratio of (i) the outstanding Indebtedness
of a Person and its Subsidiaries (or in the case of Adelphia, its Restricted
Subsidiaries) divided by (ii) the Annualized Pro Forma EBITDA of such Person.
"Lien" means with respect to any property or assets of Adelphia (it being
understood that for purposes of this definition property or assets of Adelphia
do not include property or assets of any Subsidiary of Adelphia) any mortgage
or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
security interest, lien, charge, easement (other than any easement not
materially impairing usefulness or marketability), encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind
or nature whatsoever on or with respect to such property or assets (including
without limitation,
30
<PAGE>
any Capitalized Lease Obligation, conditional sale, or other title retention
agreement having substantially the same economic effect as any of the
foregoing) except for (i) liens for taxes, assessments or governmental charges
or levies on property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good faith
and by appropriate proceedings; (ii) liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations not more than
sixty (60) days past due or obligations that are being contested in good faith
and by appropriate proceedings; (iii) other liens incidental to the conduct of
its business or the ownership of its property and assets which were not
incurred in connection with the borrowing of money or the obtaining of advances
or credit and which do not in the aggregate materially detract from the value
of its property or assets or materially impair the use thereof in the operation
of its business; (iv) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character; or (v) liens
arising upon entry of a confession of judgment in Pennsylvania courts in
connection with borrowings not in excess of $1,000,000 in aggregate.
"Permitted Investments" means, for any Person, Restricted Investments made on
or after the date of the Indenture, consisting of (i) advances for less than
one year issued in the ordinary course of business for working capital purposes
or for the purchase of property, plant and equipment in an amount not to exceed
$5,000,000 in the aggregate outstanding, (ii) with respect to a Restricted
Investment in Olympus, $25,000,000 plus the aggregate amount of cash income
received by Adelphia from Olympus, minus the aggregate amount of all Restricted
Investments made since the date of the Indenture, with respect to Olympus,
(iii) $20,000,000 plus the cash proceeds from the sale or redemption of, or
income from, any Restricted Investments made on or after the date of the
Indenture, minus the aggregate amount of all Restricted Investments (excluding
Restricted Investments made with respect to Olympus) since the date of the
Indenture, (iv) non-cash Restricted Investments made with the non-cash proceeds
from the sale or redemption of, or income from, any Restricted Investments, or
(v) an amount which, at the time of such Restricted Investment, does not exceed
the amount of Restricted Payments that could then be made by Adelphia and its
Restricted Subsidiaries under the covenant set forth under "Limitations on
Restricted Payments"; provided further that no Restricted Investments may be
made under subsections (ii), (iii), (iv) or (v) of this paragraph unless after
giving pro forma effect to such Restricted Investment Adelphia could incur $1
of debt under the first paragraph of the covenant set forth under "Limitation
on Indebtedness."
"Permitted Refinancing Indebtedness" means any renewals, extensions,
substitutions, refinancings or replacements of any Indebtedness, including any
successive extensions, renewals, substitutions, refinancings or replacements so
long as (i) the aggregate amount of Indebtedness represented thereby is not
increased by such renewal, extension, substitution, refinancing or replacement,
(ii) in the case of Indebtedness of Adelphia, the average life and the date
such Indebtedness is scheduled to mature is not shortened and (iii) in the case
of Indebtedness of Adelphia, the new Indebtedness shall not be senior in right
of payment to the Indebtedness that is being extended, renewed, substituted,
refinanced or replaced.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied after giving effect to the
following: (i) if, during or after such period, such Person or any of its
Subsidiaries shall have made any Asset Sale, Pro Forma EBITDA of such Person
and its Subsidiaries for such period shall be reduced by an amount equal to the
Pro Forma EBITDA (if positive) directly attributable to the assets which are
the subject of such Asset Sale for the period or increased by an amount equal
to the Pro Forma EBITDA (if negative) directly attributable thereto for such
period and (ii) if, during or after such period, such Person or any of its
Subsidiaries completes an acquisition of any Person or business which
immediately after such
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acquisition is a Subsidiary of such Person or whose assets are held directly by
such Person or a Subsidiary of such Person, Pro Forma EBITDA shall be computed
so as to give pro forma effect to the acquisition of such Person or business;
and provided further that, with respect to Adelphia, all of the foregoing
references to "Subsidiary" or "Subsidiaries" shall be deemed to refer only to a
"Restricted Subsidiary" or "Restricted Subsidiaries" of Adelphia.
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention of Adelphia to effect a Change of Control.
"Rating Decline" means the occurrence of the following on, or within 90 days
after, the date of public notice of the occurrence of a Change of Control or of
the intention by Adelphia to effect a Change of Control (which period shall be
extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrade by Moody's or Standard & Poor's
Corporation): (a) in the event the Notes are rated by either Moody's or
Standard & Poor's Corporation on the Rating Date as Investment Grade Senior
Debt, the rating of the Notes by both Moody's and Standard & Poor's Corporation
shall be below Investment Grade Senior Debt; or (b) in the event the Notes are
rated below Investment Grade Senior Debt by both Moody's and Standard & Poor's
Corporation on the Rating Date, the rating of the Notes by either Moody's or
Standard and Poor's Corporation shall be decreased by one or more gradations
(including gradations within rating categories as well as between rating
categories).
"Redeemable Dividend" means, for any dividend with regard to Redeemable
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means, with respect to any Person, any Capital Stock that
by its terms or otherwise is required to be redeemed or is redeemable at the
option of the holder at any time prior to the maturity of the Debentures.
"Restricted Investment" means any advance, loan, account receivable (other
than an account receivable arising in the ordinary course of business), or
other extension of credit (excluding, however, accrued and unpaid interest in
respect of any advance, loan or other extension of credit) or any capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others, or otherwise), any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership or
joint venture) of, or any bank accounts with or guarantee of any Indebtedness
or other obligations of, any Unrestricted Subsidiary or Affiliate of Adelphia.
"Restricted Payment" means (i) any dividend or distribution (whether made in
cash, property or securities), on or with respect to any shares of Capital
Stock of Adelphia or Capital Stock of any Subsidiary which is consolidated with
Adelphia in accordance with generally accepted accounting principles
consistently applied, except for any dividend or distribution which is made
solely to Adelphia or another Subsidiary or dividends or distributions payable
solely in shares of Common Stock of Adelphia, or (ii) any redemption,
repurchase, retirement or other direct or indirect acquisition of (a)
Indebtedness of Adelphia which is subordinate in right of payment to the Notes,
except, within one year of or on the original maturity date (August 15, 1996)
of Adelphia's 13% Senior Subordinated Notes Due 1996, without regard to any
subsequent extension of such maturity date, or prior to such original maturity
date (August 15, 1996) by exchange for or out of the proceeds of the
substantially concurrent issuance of Permitted Refinancing Indebtedness or from
the proceeds of a sale of Capital Stock by Adelphia, or (b) shares of Capital
Stock of Adelphia or any warrants, rights or options to directly or indirectly
purchase or acquire any such Capital Stock of Adelphia or any securities
exchangeable for or convertible into any such shares, other than options issued
or shares purchased or granted under Adelphia's Stock Option Plan of 1986 or
Adelphia's Restricted Stock Bonus Plan,
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from any employee of Adelphia or any of its Subsidiaries who, together with any
Person that, directly or indirectly, controls (other than by virtue of being
directly or indirectly the employer of such employee), is controlled by or is
under common control with such employee, owns less than 1% of the outstanding
Capital Stock of Adelphia, except for the purchase, redemption, retirement or
other acquisition of any shares of Adelphia's Capital Stock by exchange for, or
out of the proceeds of the substantially concurrent sale of, other shares of
its Capital Stock other than any capital stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to
February 15, 2004.
"Restricted Subsidiary" means (a) any Subsidiary of Adelphia, whether
existing on or after the date of the Indenture, unless such Subsidiary is an
Unrestricted Subsidiary or shall have been classified as an Unrestricted
Subsidiary by a resolution adopted by the Board of Directors of Adelphia and
(b) an Unrestricted Subsidiary which is reclassified as a Restricted Subsidiary
by a resolution adopted by the Board of Directors of Adelphia, provided that on
and after the date of such reclassification such Unrestricted Subsidiary shall
not incur Indebtedness other than that permitted to be incurred by a Restricted
Subsidiary under the provisions of the Indenture.
"Rigas Family" means collectively John J. Rigas and members of his immediate
family, any of their respective spouses, estates, lineal descendants, heirs,
executors, personal representatives, administrators, trusts for any of their
benefit and charitable foundations to which shares of Adelphia's Capital Stock
beneficially owned by any of the foregoing have been transferred.
"Strategic Equity Investor" means, with respect to any sale of the Company's
Capital Stock, any Person engaged in the telecommunications business which,
both as of the Trading Day, with respect to any class of such Person's Capital
Stock, immediately before the day of such sale and the Trading Day, with
respect to any class of such Person's Capital Stock, immediately after the day
of such sale, has a Total Market Capitalization of at least $2 billion and the
long-term senior debt of which is rated BBB- or above by Standard & Poor's
Corporation and Baa3 or above by Moody's, after giving effect to such Person's
purchase of the Company's Capital Stock on a pro forma basis. In calculating
Total Market Capitalization for the purpose of this definition, the
consolidated Indebtedness of such Person, solely when calculated as of the
Trading Day, with respect to any class of such Person's Capital Stock,
immediately after the day of such sale, will be calculated after giving effect
to such sale (including any Indebtedness incurred in connection with such sale)
and the average Closing Price of the Common Stock of such Person, solely when
calculated as of the Trading Day, with respect to any class of such Person's
Capital Stock, immediately after the day of such sale, will be deemed to be the
Closing Price of such Common Stock on such Trading Day, subject to the last
sentence of the definition of "Total Market Capitalization."
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which
more than 50% of the total voting power of the Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the
direction of the management and policies of such entity by contract or
otherwise, if in accordance with generally accepted accounting principles such
entity is consolidated with the first-named Person for financial statement
purposes.
"Total Market Capitalization" of any Person means, as of any day of
determination (and as modified for purposes of the definition of "Strategic
Equity Investor"), the sum of (1) the consolidated Indebtedness of such Person
and its Subsidiaries on such day, plus (2) the product of (i) the aggregate
number of outstanding primary shares of Common Stock of such Person on such day
(which shall not include any options or warrants on, or securities convertible
or exchangeable into, shares of Common Stock of such Person) and
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(ii) the average Closing Price of such Common Stock over the 20 consecutive
Trading Days immediately preceding such day, plus (3) the liquidation value of
any outstanding shares of Preferred Stock of such Person on such day. If no
such Closing Price exists with respect to shares of any such class, the value
of such shares for purposes of clause (2) of the preceding sentence shall be
determined by the Company's Board of Directors in good faith and evidenced by a
resolution of the Board of Directors filed with the Trustee.
"Trading Day" means, with respect to a security listed or admitted to trading
on a securities exchange or automated quotation system, a day on which such
exchange or system is open for a full day of trading, and with respect to a
security not so listed or admitted to trading, a day on which such security has
traded at least once.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of Adelphia which is classified after the
date of the Indenture as an Unrestricted Subsidiary by a resolution adopted by
the Board of Directors of Adelphia; provided that a Subsidiary organized or
acquired after the date of the Indenture may be so classified as an
Unrestricted Subsidiary only if immediately after the date of such
classification, any investment by Adelphia and its Restricted Subsidiaries in
such Subsidiary made at the time of the organization or acquisition of such
Subsidiary would be a Restricted Investment permissible under the Indenture.
The Trustee shall be given prompt notice by Adelphia of each resolution adopted
by its Board of Directors under this provision, together with a copy of each
such resolution adopted.
SUBORDINATION TO SUBSIDIARY DEBT
All liabilities of Adelphia's subsidiaries will be effectively senior in
right of payment to the Notes. As of December 31, 1993, the total indebtedness
of such subsidiaries to banks and institutions, on a consolidated basis,
aggregated $919,275,000.
COVENANTS
The Indenture will contain, among others, the following covenants. Except as
otherwise specified, all of the covenants described below will appear in the
Indenture.
Limitation on Indebtedness. The Indenture will provide that Adelphia will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
create, incur, issue, assume or become liable for, contingently or otherwise
(collectively an "incurrence"), any Indebtedness (other than the Notes)
unless, after giving effect to such incurrence on a pro forma basis,
Indebtedness of Adelphia and its Restricted Subsidiaries, on a consolidated
basis, shall not be more than the product of the Annualized Pro Forma EBITDA
for the latest fiscal quarter preceding such incurrence for which financial
statements are available, multiplied by 8.75.
Notwithstanding the above, the Indenture will not limit the incurrence of
Indebtedness which is incurred by Adelphia or its Restricted Subsidiaries for
working capital purposes or capital expenditures with respect to plant,
property and equipment of Adelphia and its Restricted Subsidiaries in an
aggregate amount not to exceed $50,000,000. Further, the Indenture will not
limit Permitted Refinancing Indebtedness, subject to the provisions of the
covenant set forth under "Limitation on Restricted Payments."
Limitation on Restricted Payments. The Indenture will provide that, so long
as any of the Notes remain outstanding, Adelphia shall not make, and shall not
permit any Restricted Subsidiary to make, any Restricted Payment (as defined
above) if (a) at the time of such proposed Restricted Payment, a Default or
Event of Default shall have occurred and be continuing or shall occur as a
consequence of such Restricted Payment, or (b) immediately after giving effect
to any such Restricted Payment, the aggregate of all Restricted Payments which
shall have been made on or after January 1, 1993 (the amount of any Restricted
Payment, if other than cash, to be based upon fair market value as determined
in good faith by Adelphia's Board of Directors whose determination shall be
conclusive) would exceed an amount equal to the greater of (i) the
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sum of $5,000,000 or (ii) the difference between (a) the Cumulative Credit (as
defined above) and (b) the sum of the aggregate amount of all Restricted
Payments, and all Permitted Investments made pursuant to clause (v) of the
definition of "Permitted Investments," made on or after January 1, 1993 plus
1.2 times Cumulative Interest Expense (as defined above).
Mergers and Consolidations. The Indenture will provide that Adelphia may not
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction
or a series of related transactions), to any Person unless: (i) Adelphia shall
be the continuing Person, or the Person (if other than Adelphia) formed by such
consolidation or into which Adelphia is merged or to which the properties and
assets of Adelphia are transferred shall be a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
of the obligations of Adelphia under the Notes and the Indenture, and the
obligations under the Indenture shall remain in full force and effect; (ii)
immediately before and immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and (iii)
immediately after giving effect to such transaction on a pro forma basis for
the most recent quarter, the pro forma Consolidated Fixed Charge Ratio of the
surviving entity shall be at least 1:1 provided that, if the Consolidated Fixed
Charge Ratio of Adelphia for the most recent quarter preceding such transaction
is within the range set forth in Column A below, then the pro forma
Consolidated Fixed Charge Ratio of the surviving entity after giving effect to
such transaction shall be at least equal to the greater of the percentage of
the Consolidated Fixed Charge Ratio of Adelphia for the most recent quarter
preceding such transaction set forth in Column B or the ratio set forth in
Column C below:
<TABLE>
<S> <C> <C>
A B C
----- ----- ------
1.1111:1 to 1.4999:1 90% 1.00:1
1.5 and higher 80% 1.35:1
</TABLE>
and provided, further, that if the pro forma Consolidated Fixed Charge Ratio of
the surviving entity is 2:1 or more, the calculation in the preceding proviso
shall be inapplicable and such transaction shall be deemed to have complied
with the requirements of such proviso.
In connection with any consolidation, merger or transfer contemplated by this
provision, Adelphia shall deliver, or cause to be delivered, to the Trustee, in
form and substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and the supplemental indenture in respect thereto comply
with this provision and that all conditions precedent herein provided for
relating to such transaction or transactions have been complied with.
Limitations on Investment in Affiliates and Unrestricted Subsidiaries. After
the date of the Indenture, Adelphia may not, nor will Adelphia allow any
Restricted Subsidiary to, make a Restricted Investment other than by way of
Permitted Investments unless pro forma for such Restricted Investment the
Leverage Ratio of Adelphia does not exceed 7.75:1.
Covenant to Secure Notes Equally. The Indenture will provide that except for
Liens created or assumed by Adelphia in connection with the acquisition of real
property or equipment to be used by Adelphia in the operation of its business
which do not secure Indebtedness in excess of the purchase price of such real
property or equipment, Adelphia covenants that, if it shall create or assume
any Lien upon any of its property or assets, whether now owned or hereafter
acquired, it will make or cause to be made effective provisions whereby the
Notes will be secured by such Lien equally and ratably with all other
Indebtedness of Adelphia secured by such Lien, as long as any such other
Indebtedness of Adelphia shall be so secured. The restriction imposed by this
covenant shall not apply with respect to a Lien, including a pledge of Capital
Stock of a Subsidiary or an Affiliate, to secure Indebtedness which is an
obligation of such Subsidiary or Affiliate and not an obligation of Adelphia.
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Limitation on Transactions with Affiliates. The Indenture will provide that
Adelphia will not, and will not permit any Restricted Subsidiary to, engage in
any transaction with any Affiliate upon terms which would be any less favorable
than those obtainable by Adelphia or a Restricted Subsidiary in a comparable
arm's-length transaction with a person which is not an Affiliate. The Indenture
will provide that Adelphia will not, and will not permit any Restricted
Subsidiary to, engage in any transaction (or series of related transactions)
involving in the aggregate $1,000,000 or more with any Affiliate except for (i)
the making of any Restricted Payment, (ii) any transaction or series of
transactions between Adelphia and one or more of its Restricted Subsidiaries or
between two or more of its Restricted Subsidiaries (provided that no more than
5% of the equity interest in any of its Restricted Subsidiaries is owned by an
Affiliate), and (iii) the payment of compensation (including, without
limitation, amounts paid pursuant to employee benefit plans) for the personal
services of officers, directors and employees of Adelphia or any of its
Restricted Subsidiaries, so long as the Board of Directors of Adelphia in good
faith shall have approved the terms thereof and deemed the services theretofore
or thereafter to be performed for such compensation or fees to be fair
consideration therefor; and provided further that for any Asset Sale, or a
sale, transfer or other disposition (other than to Adelphia or any of its
Restricted Subsidiaries) of an interest in a Restricted Investment, involving
an amount greater than $25,000,000, such Asset Sale or transfer of interest in
a Restricted Investment is for fair value as determined by an opinion of a
nationally recognized investment banking firm filed with the Trustee.
Notwithstanding the foregoing, the Indenture provides that such provision will
not prohibit any such transaction which is determined by the independent
members of the Board of Directors of Adelphia, in their reasonable, good faith
judgment (as evidenced by a Board Resolution filed with the Trustee) to be (a)
in the best interests of Adelphia or such Restricted Subsidiary, and (b) upon
terms which would be obtainable by Adelphia or a Restricted Subsidiary in a
comparable arm's-length transaction with a Person which is not an Affiliate.
Limitation on Sale of Assets. The Indenture provides that neither Adelphia
nor a Restricted Subsidiary shall sell an asset (including Capital Stock of
Restricted Subsidiaries) or reclassify a Restricted Subsidiary existing on the
date of the Indenture as an Unrestricted Subsidiary (a "Reclassification")
unless (a) in the case of an asset sale, (i) at least 75% of the net proceeds
received by Adelphia or such Restricted Subsidiary is in cash, cash equivalents
or common or preferred Capital Stock or debt securities issued by a Person
which has Investment Grade Senior Debt, and (ii) cash proceeds from the asset
sale are used to reduce Indebtedness and such Indebtedness reduction results in
Adelphia's Leverage Ratio being lower pro forma after such asset sale than
prior to such asset sale, or (b) in the case of an asset sale or
Reclassification, pro forma for such asset sale or Reclassification the
Indebtedness of Adelphia and its Restricted Subsidiaries, on a consolidated
basis, shall not be more than 7.75 multiplied by Annualized Pro Forma EBITDA,
provided that in no case under either clause (a) or (b) shall Adelphia
undertake an asset sale or Reclassification, if pro forma for such an asset
sale or Reclassification Adelphia and its Restricted Subsidiaries would be the
owners of fewer than 75% of the cable systems (measured on the basis of basic
subscribers as of the date of the Indenture) owned by Adelphia and its
Restricted Subsidiaries as of the date of the Indenture, provided however, that
Adelphia and its Restricted Subsidiaries may sell additional assets of up to
10% of assets held as of the date of the Indenture if the consideration
received from such sale is (i) cash which is used within 12 months to purchase
additional systems of equivalent value or (ii) other cable systems of
equivalent value.
Change of Control Offer. Within 50 days of (i) the proposed occurrence of a
Change of Control or (ii) the occurrence of a Change of Control Triggering
Event, Adelphia shall notify the Trustee in writing of such proposed occurrence
or occurrence, as the case may be, and shall make an offer to purchase (the
"Change of Control Offer") the Notes at a purchase price equal to 100% of the
principal amount thereof plus any accrued and unpaid interest thereon (which
interest must be paid in cash) to the Change of Control Payment Date (as
hereinafter defined) (the "Change of Control Purchase Price") in accordance
with the procedures set forth in this covenant.
Within 50 days of (i) the proposed occurrence of a Change of Control or (ii)
the occurrence of a Change of Control Triggering Event, Adelphia also shall (a)
cause a notice of the Change of Control Offer to be sent
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at least once to the Dow Jones News Service or similar business news service in
the United States and (b) send by first-class mail, postage prepaid, to the
Trustee and to each holder of the Notes, at his address appearing in the
register of the Notes maintained by the Registrar, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment,
provided that a Change of Control Triggering Event has occurred and
otherwise subject to the terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 50 days from the date such
notice is mailed and no later than 15 days after the date of the
corresponding Change of Control Triggering Event) (the "Change of
Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless Adelphia defaults in the payment of the Change of Control
Purchase Price, any Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender
the Notes to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(6) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of the Notes delivered for
purchase, and a statement that such holder is withdrawing his election
to have such Notes purchased;
(7) that holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered; and
(8) any other procedures that a holder must follow to accept a Change of
Control Offer or effect withdrawal of such acceptance.
Notwithstanding any other provision of this covenant, in the case of a notice
of a Change of Control Offer that is being furnished by Adelphia with respect
to a proposed Change of Control that has not yet actually occurred, the Company
may specify in such notice that holders of the Notes shall be required to
notify Adelphia, by a date not later than the date (the "Proposed Change of
Control Response Date") which is 30 days from the date of such notice, as to
whether such holders will tender their Notes for payment pursuant to the Change
of Control Offer and to notify Adelphia of the principal amount of such Notes
to be so tendered (with the failure of any holder to so notify Adelphia within
such 30-day period to be deemed an election of such holder not to accept such
Change of Control Offer). In such event, Adelphia shall have the option, to be
exercised by a subsequent written notice to be sent, no later than 15 days
after the Proposed Change of Control Response Date, to the same Persons to whom
the original notice of the Change of Control Offer was sent, to cancel or
otherwise effect the termination of the proposed Change of Control and to
rescind the related Change of Control Offer, in which case the then outstanding
Change of Control Offer shall be deemed to be null and void and of no further
effect.
On the Change of Control Payment Date, Adelphia shall (a) accept for payment
Notes or portions thereof tendered pursuant to the Change of Control Offer, (b)
deposit with the Paying Agent money sufficient to pay the Change of Control
Purchase Price of all Notes or portions thereof so tendered and (c) deliver or
cause to be delivered to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof tendered to
Adelphia. The Paying Agent shall promptly mail to each holder of Notes so
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accepted payment in an amount equal to the Change of Control Purchase Price for
such Notes, and the Trustee shall promptly authenticate and mail to such holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered.
There shall be no purchase of any Notes pursuant to this covenant if there
has occurred (prior to, on or after, as the case may be, the tender of such
Notes pursuant to the Change of Control Offer, by the holders of such Notes)
and is continuing an Event of Default. The Paying Agent will promptly return to
the respective holders thereof any Notes (a) the tender of which has been
withdrawn in compliance with the Indenture or (b) held by it during the
continuance of an Event of Default (other than a default in the payment of the
Change of Control Purchase Price with respect to such Notes).
Because a "Change of Control" for purposes of this covenant is defined in
terms of "beneficial ownership" (as defined in Rule 13d-3 under the Exchange
Act) of voting power, there may be circumstances in which the Rigas Family
could beneficially own (for purposes of Rule 13d-3) more than 35% of the
outstanding voting Capital Stock of Adelphia through options, warrants or other
purchase rights while directly holding 35% or less of the total voting power
required to elect or designate for election a majority of Adelphia's Board of
Directors, without a Change of Control Triggering Event occurring. Further, a
change in the composition of the Board of Directors of Adelphia could occur
without the occurrence of a Change of Control Triggering Event if either the
election or the nomination of the new directors was approved by two-thirds of
the continuing directors or by the Rigas Family and its Affiliates. See
"Certain Definitions--Change of Control."
The indentures for the 12 1/2% Notes, the 11 7/8% Debentures, the 9 7/8%
Debentures and the 10 1/4% Notes, which together represent outstanding
indebtedness in the aggregate principal amount of $765,000,000, provide that
Adelphia must make an offer to purchase such Notes and Debentures,
respectively, at a purchase price equal to 100% of the principal amount
thereof, plus any accrued but unpaid interest thereon, in the event of
circumstances identical to those which trigger a Change of Control Offer under
this covenant. In addition, the credit agreements of Adelphia's subsidiaries
generally contain provisions under which circumstances that would trigger a
Change of Control Offer under this covenant would constitute an event of
default under such credit agreements. In the event that Adelphia is required to
purchase 12 1/2% Notes, 11 7/8% Debentures, 9 7/8% Debentures, the 10 1/4%
Notes and Notes in accordance with such provisions, and the indebtedness under
such subsidiary credit agreements were to be accelerated, the source of funds
for such purchases or payments will be Adelphia's available cash, cash
generated from Adelphia's operating activities, and other sources including
borrowings, asset sales or equity sales. There can be no assurance that
sufficient funds would be available to make any required repurchases under the
Indenture and under the indentures for the 12 1/2% Notes, the 11 7/8%
Debentures, the 9 7/8% Debentures and the 10 1/4% Notes or any such required
payments under such credit agreements. Although in the past Adelphia has been
able to both refinance its indebtedness or obtain new financing, there can be
no assurance that Adelphia would be able to do so under such circumstances or
that, if Adelphia were able to do so, the terms would be favorable to Adelphia.
In the event that Adelphia is required to make a Change of Control Offer,
Adelphia will comply with all applicable tender offer rules including Rule 14e-
1 under the Exchange Act, to the extent applicable.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default": (i)
default in payment of any principal of, or premium, if any, on the Notes; (ii)
default for 30 days in payment of any interest on the Notes; (iii) default by
Adelphia in the observance or performance of any other covenant in the Notes or
the Indenture for 60 days after written notice from the Trustee or the holders
of not less than 25% in aggregate principal amount of the Notes then
outstanding; (iv) failure to pay when due principal, interest or premium
aggregating $10,000,000 or more with respect to any Indebtedness of Adelphia or
any Restricted Subsidiary or the acceleration of any such Indebtedness which
default shall not be cured or waived, or such acceleration shall not be
rescinded or annulled, within ten days after written notice as provided in the
Indenture; (v) any final judgment or judgments for the payment of money in
excess of $10,000,000 shall be rendered against Adelphia or any Restricted
Subsidiary and shall not be discharged for any period of 60 consecutive days
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during which a stay of enforcement shall not be in effect; or (vi) certain
events involving bankruptcy, insolvency or reorganization of Adelphia or any
Restricted Subsidiary with liabilities of greater than $10,000,000 under
generally accepted accounting principles as of the date of such bankruptcy,
insolvency or reorganization. The Indenture provides that the Trustee may
withhold notice to the holders of the Notes of any default (except in payment
of principal or premium, if any, or interest on the Notes) if the Trustee
considers it to be in the best interest of the holders of the Notes to do so.
The Indenture will provide that if an Event of Default (other than an Event
of Default resulting from certain events of bankruptcy, insolvency or
reorganization) shall have occurred and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may declare to be immediately due and payable the principal amount
of all the Notes then outstanding plus accrued but unpaid interest to the date
of acceleration; provided, however, that after such acceleration but before a
judgment or decree based on acceleration is obtained by the Trustee, the
holders of a majority in aggregate principal amount of outstanding Notes may,
under certain circumstances, rescind and annul such acceleration if all Events
of Default, other than the nonpayment of accelerated principal, premium or
interest, have been cured or waived as provided in the Indenture. In case an
Event of Default resulting from certain events of bankruptcy, insolvency or
reorganization shall occur, such amount with respect to all of the Notes shall
be due and payable immediately without any declaration or other act on the
part of the Trustee or the holders of Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
subject to certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default and unless also the holders of at least 25% in aggregate
principal amount of the outstanding Notes shall have made written request and
offered reasonable indemnity to the Trustee to institute such proceeding as a
trustee, and unless the Trustee shall not have received from the holders of a
majority in aggregate principal amount of the outstanding Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a holder of a Note for enforcement of payment of the principal
of and premium, if any, or interest on such Note on or after the respective
due dates expressed in such Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides Adelphia may elect either (a) to defease and be
discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold monies for payment in trust)
("defeasance") or (b) to be released from its obligations with respect to the
Notes under certain covenants contained in the Indenture and described above
under "Covenants" ("covenant defeasance"), upon the deposit with the Trustee
(or other qualifying trustee), in trust for such purpose, of money and/or U.S.
Government Obligations which through the payment of principal and interest in
accordance with their terms will provide money, in an amount sufficient to pay
the principal of, premium, if any, and interest on the Notes, on the scheduled
due dates therefor in accordance with the terms of the Indenture. Such a trust
may only be established if, among other things, Adelphia has delivered to the
Trustee an Opinion of Counsel (as specified in the Indenture) to the effect
that the holders of the Notes or persons in their positions will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred. Such
opinion, in the case of defeasance under clause (a) above, must
39
<PAGE>
refer to and be based upon a private ruling of the Internal Revenue Service
concerning the Notes or a ruling of general effect published by the Internal
Revenue Service.
MODIFICATION OF INDENTURE
From time to time, Adelphia and the Trustee may, without the consent of
holders of the Notes, amend the Indenture or the Notes or supplement the
Indenture for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
materially and adversely affect the rights of any holder. The Indenture
contains provisions permitting Adelphia and the Trustee, with the consent of
holders of at least one-half in principal amount of the outstanding Notes, to
modify or supplement the Indenture or the Notes, except that no such
modification shall, without the consent of each holder affected thereby, (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture or the Notes, (ii) reduce the rate of
interest, or change the time for or permissible method of any payment of
interest on any Note, (iii) reduce the principal of or premium on or change the
stated maturity of any Note, (iv) make any Note payable in money other than
that stated in the Note or change the place of payment from New York, New York,
(v) change the amount or time of any payment required by the Notes or provide
for the redemption of the Notes prior to maturity other than as stated in the
Indenture, (vi) waive a default on the payment of the principal of, interest
on, or redemption payment with respect to any Note, or (vii) take any other
action otherwise prohibited by the Indenture to be taken without the consent of
each holder affected thereby.
REPORTS TO HOLDERS
So long as Adelphia is subject to the periodic reporting requirements of the
Exchange Act it will continue to furnish the information required thereby to
the Commission and to the holders of the Notes. The Indenture provides that
even if Adelphia is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, it will
nonetheless continue to furnish such information to the Commission (at such
time as it would be required to file such reports under the Exchange Act) and
to the Trustee and the holders of the Notes (within 15 days thereafter as
required by the Indenture) as if it were subject to such periodic reporting
requirements.
COMPLIANCE CERTIFICATE
Adelphia will deliver to the Trustee on or before 105 days after the end of
its fiscal year and on or before 50 days after the end of its second fiscal
quarter in each year an Officer's Certificate stating whether or not the
signers know of any Default or Event of Default that has occurred. If they do,
the certificate will describe the Default or Event of Default and its status.
THE TRUSTEE
Bank of Montreal Trust Company is to be the Trustee under the Indenture and
has been appointed by Adelphia as Registrar and Paying Agent with regard to the
Notes. Bank of Montreal Trust Company also serves as Registrar and Paying Agent
and Trustee under the indentures with respect to the 12 1/2% Notes, the 11 7/8%
Debentures, the 9 7/8% Debentures and the 10 1/4% Notes. The Indenture provides
that, except during the continuance of an Event of Default, the Trustee will
perform only such duties as are specifically set forth in the Indenture. During
the existence of an Event of Default, the Trustee will exercise such rights and
powers vested in it under the Indenture and use the same degree of care and
skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
TRANSFER AND EXCHANGE
Holders may transfer or exchange Notes in accordance with the Indenture. The
Registrar under such Indenture may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, and to pay any taxes
and fees required by law or permitted by the Indentures.
40
<PAGE>
The registered holder of a Note may be treated as the owner of it for all
purposes.
REGISTRATION RIGHTS AGREEMENT
Adelphia agreed pursuant to the Registration Rights Agreement for the benefit
of the holders of the Notes, that Adelphia will use its best efforts to cause
to become effective (i) a registration statement with respect to an offer to
exchange the Old Notes for an issue of senior notes (which herein have been
referred to as the New Notes) of Adelphia having terms substantially identical
to the Old Notes or (ii) a shelf registration statement with respect to the
resale of the Old Notes by the holders thereof. This Prospectus is part of the
Registration Statement filed with respect to the exchange offer referred to in
clause (i) above. Pursuant to this Prospectus and the Letter of Transmittal,
Adelphia is offering the New Notes in return for surrender of the Old Notes.
Pursuant to the Registration Rights Agreement, Adelphia has agreed that the
Exchange Offer shall remain open for not less than 30 days after the date
notice of the Exchange Offer is mailed to holders of the Old Notes, and that it
shall be consummated within 120 days after such registration statement has been
declared effective (unless the Initial Purchaser agrees to or requests an
extension of such period). For each Old Note surrendered to Adelphia under the
Exchange Offer, the holder will receive a New Note of equal principal amount.
Holders of New Notes are not entitled to any exchange rights with respect to
the New Notes. Once the Exchange Offer is consummated, Adelphia will have no
further obligations to register any of the Old Notes not tendered by the
holders (other than the Initial Purchaser) thereof.
Adelphia has also agreed that, until the earlier of 180 days after the
closing of a registered Exchange Offer or December 31, 1994, it will have the
Exchange Offer registration statement remain effective and will make the
related Exchange Offer prospectus available for use upon request by broker-
dealers in connection with resales by a broker-dealer of New Notes that such
broker-dealer receives for its own account in the Exchange Offer for Old Notes
that were acquired by such broker-dealer as a result of market-making
activities or other trading activities.
In the event that applicable interpretations of the staff of the Commission
do not permit Adelphia to effect the Exchange Offer, Adelphia shall, at its
cost, use its best efforts to have a shelf registration statement covering
resales of the Old Notes declared effective and kept effective until three
years after the effective date of such registration statement.
The interest rate on the Old Notes was 10% prior to the date of this
Prospectus, at and from which date the interest rate on the Old Notes decreased
to 9 1/2%. The interest rate on the New Notes will be 9 1/2%. The Registration
Statement of which this Prospectus is a part was declared effiective on the
date of this Prospectus.
The summary herein of the Registration Rights Agreement does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Registration Rights Agreement.
41
<PAGE>
CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS
The discussion set forth in this summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder ("Treasury Regulations"), and administrative and
judicial interpretations thereof, all as in effect on the date hereof and all
of which are subject to change (possibly on a retroactive basis). Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could affect the tax consequences to holders of the New Notes.
This summary is for general information only and does not purport to address
all of the United States federal income tax consequences that may be applicable
to the exchange of the Old Notes for the New Notes and the ownership and
disposition of the New Notes. This discussion assumes that the Old Notes and
New Notes are held as capital assets. The tax treatment of a holder may vary
depending on the holder's particular situation. For example, certain holders,
including individual retirement and other tax-deferred accounts, insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations, and non-U.S. persons, may be subject to special rules not
discussed below. A ruling from the Internal Revenue Service ("IRS") on the
matters discussed below has not been requested.
Thus, no assurance can be provided that the statements set forth herein would
be sustained by a court if contested by the IRS. The costs of any contest with
the IRS will be borne directly or indirectly by each holder or prospective
holder.
The IRS has recently issued final regulations dealing with the inclusion of
original issue discount in income by holders of debt instruments (the
"Regulations"). The Regulations apply to debt instruments issued on or after
April 4, 1994 and to sales and exchanges that occur on or after such date.
However, taxpayers may rely on the Regulations for debt instruments issued
after December 21, 1992 and for sales and exchanges that occur after such date.
The following discussion reflects the Regulations. Holders should consult their
own tax advisors regarding the application of the Regulations to them.
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW AND ANY OTHER FEDERAL,
STATE, LOCAL, OR FOREIGN TAX CONSEQUENCES TO IT OF EXCHANGING THE OLD NOTES FOR
THE NEW NOTES AND HOLDING AND DISPOSING OF THE NEW NOTES.
EXCHANGE OFFER
Because the New Notes should not be considered to differ materially either in
kind or in extent from the Old Notes, the exchange of the New Notes for the Old
Notes pursuant to the Exchange Offer should not be treated as an "exchange" for
federal income tax purposes and each New Note should be treated as a
continuation of the corresponding Old Note. As a result, holders should not
recognize gain or loss with respect to the exchange of Old Notes for New Notes.
The following discussion assumes that the exchange of the New Notes for the Old
Notes is not an "exchange" for federal income tax purposes. However, if the
effective date of the registration statement relating to the Exchange Offer is
not April 27, 1994, then the Notes will be deemed to be reissued solely to
determine the yield of the Notes in order to calculate the accrual of original
issue discount. See "Original Issue Discount" below. As used herein, the term
"Note" refers both to an Old Note and a New Note received in exchange therefor.
42
<PAGE>
ORIGINAL ISSUE DISCOUNT
The following discussion is based on the Regulations. Because the Company may
issue additional Notes (the "Additional Notes") in lieu of paying cash interest
on the Notes on or prior to February 15, 1999, the Notes are issued with
original issue discount within the meaning of Section 1273 of the Code, and no
payment of interest on the Notes is treated as "qualified stated interest".
Accordingly, each holder of a Note will recognize, as ordinary income, through
the accrual of original issue discount, the full amount of interest with
respect to the Note and such holder will not recognize ordinary income upon
receipt of an Additional Note or upon a cash payment of stated interest. As
discussed below, each holder of a Note will be required to include such
original issue discount in income on a constant yield to maturity basis,
regardless of the holder's method of tax accounting.
The total amount of original issue discount with respect to a Note will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a Note is the first price at which a substantial amount of the
Notes are sold to investors. The stated redemption price at maturity of a Note
is the sum of all amounts payable over the life of the Note (determined as if
all interest will be paid in cash and not in Additional Notes).
Under the Regulations, the portion of original issue discount includible in
the income of a holder of a Note for any accrual period is equal to the product
of (x) the "adjusted issue price" of the Note at the beginning of the accrual
period and (y) the yield of the Note. The "adjusted issue price" of a Note is
equal to the original issue price, plus any previously accrued original issue
discount, minus any cash payments previously made on the Note or an Additional
Note issued with respect to such Note. An accrual period may be of any length
and may vary in length, provided that each accrual period is no longer than one
year and February 15 and August 15 in each year occur at the beginning or end
of an accrual period. For purposes of calculating the yield on the Notes, the
Company assumed that a registration statement with respect to an exchange offer
for the Notes or a shelf registration statement with respect to the resale of
the Notes by investors would be declared effective on April 27, 1994. Thus, the
Company's calculation of the yield of the Notes initially reflects interest
payable at 9 1/2 percent following such date. Under the Regulations, this
assumption is binding on holders of the Notes unless a holder explicitly
discloses that its determination of the yield of the Notes is different than
the Company's determination. This disclosure must be made on a statement
attached to the holder's timely filed income tax return for the taxable year
that includes the acquisition date of the Note. If, however, the actual
effective date of the registration statement relating to the Exchange Offer is
not April 27, 1994, then solely for purposes of the accrual of original issue
discount, the yield of the Notes will be redetermined by treating the Notes as
if they were reissued on the effective date of the registration statement
relating to the Exchange Offer (and also on April 27, 1994, if the registration
statement relating to the Exchange Offer is not effective on or prior to that
date) for an amount equal to its adjusted issue price on such date or dates.
Original issue discount as determined above will be allocated ratably to each
day in the accrual period, and the amount includable in a holder's income
(whether such holder is on the cash or accrual method of accounting) with
respect to the Note will be the sum of the resulting daily portions of original
issue discount for each day of the taxable year on which the holder holds the
Note. The amount of original issue discount required to be accrued annually
with respect to a Note will increase each year, reflecting the compounding of
original issue discount on the Note. In addition, the amount of original issue
discount for any accrual period may be greater than the amount of cash payments
denominated as interest that are made during the accrual period. Generally, the
tax basis of a Note in the hands of the holder will be increased by the amount
of any original issue discount on the Note that is included in the holder's
income pursuant to these rules and will be decreased by the amount of any cash
payments received with respect to the Note whether such payments are
denominated as principal or interest.
43
<PAGE>
MARKET DISCOUNT
If a holder acquires a Note at a market discount (i.e., at a price less than
the stated redemption price at maturity of the Note), the Note is subject to
the market discount rules of the Code unless the market discount is de minimis.
Market discount is de minimis if it is less than one quarter of one percent of
the principal amount of the Note multiplied by the number of complete years to
maturity after the holder acquires the Note. Notes that have more than de
minimis market discount are herein referred to as "Market Discount Notes."
Any gain recognized on the maturity or disposition of a Market Discount Note
will be treated as ordinary income to the extent that such gain does not exceed
the accrued market discount on the Market Discount Note. In addition, the
holder could be required to defer the deduction of a portion of the interest
paid on any indebtedness incurred or continued to purchase a Market Discount
Note.
A holder of a debt instrument acquired at a market discount may elect to
include the market discount in income as the discount thereon accrues, either
on a straight line basis or, if elected, on a constant interest rate basis. The
current inclusion election, once made, applies to all market discount
obligations acquired by such holder on or after the first day of the first
taxable year to which the election applies, and may not be revoked without the
consent of the IRS. If a holder of a Market Discount Note elects to include
market discount in income in accordance with the preceeding sentence, the
foregoing rules with respect to the recognition of ordinary income on a sale or
certain other dispositions of such Market Discount Note and the deferral of
interest deductions on indebtedness related to such Market Discount Note would
not apply.
AMORTIZABLE BOND PREMIUM
A holder that purchases a Note for an amount in excess of its principal
amount may elect to treat such excess as "amortizable bond premium," in which
case the amount required to be included in the holder's income each year with
respect to interest on the Note will be reduced by the amount of amortizable
bond premium allocable (based on the yield to maturity of the Note) to such
year. Any election to amortize bond premium shall apply to all debt instruments
(other than debt instruments the interest on which is excludable from gross
income) held by the holder at the beginning of the first taxable year to which
the election applies or thereafter acquired by the holder, and is irrevocable
without the consent of the IRS.
DISPOSITION OF A NOTE OR AN ADDITIONAL NOTE
In general, a holder of a Note will recognize gain or loss upon the sale,
exchange, redemption or other taxable disposition of the Note measured by the
difference between (i) the amount of cash and the fair market value of property
received and (ii) the holder's tax basis in the Note (i.e., such holder's
original purchase price as increased by any original issue discount and market
discount previously included in income by the holder and decreased by any cash
payments received with respect to the Note). If a holder has received
Additional Notes in lieu of cash payments of interest on the Note and
separately disposes of such Note or Additional Notes, the tax basis in the Note
generally will be allocated among the Note and such Additional Notes in
proportion to their respective principal amounts. Subject to the original issue
discount and market discount rules discussed above, any such gain or loss will
generally be long-term capital gain or loss, provided the Note had been held
for more than one year.
BACKUP WITHHOLDING
A holder of a Note may be subject to backup withholding at the rate of 31%
with respect to interest paid on, original issue discount accrued on, and gross
proceeds of a sale of, the Note, unless such holder (a) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact or (b) provides a correct taxpayer identification number, certifies
as to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A holder of a Note who
does not provide the Company with its correct taxpayer identification number
may be subject
44
<PAGE>
to penalties imposed by the IRS. Any amount withheld under these rules will be
creditable against the holder's federal income tax liability.
The Company will report to the holders of the Notes and the IRS the amount of
any "reportable payments" (including any interest paid and any original issue
discount accrued on the Notes) and any amount withheld with respect to the
holders during the calendar year.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER OF
NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES
TO IT OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, until the earlier of 180 days
after the Expiration Date or December 31, 1994 (the "Resale Prospectus
Period"), it will make this Prospectus, as amended or supplemented, available
to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in an
distribution of such New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of New Notes
and any commissions or concessions received by any such persons may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
During the Resale Prospectus Period, the Company will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. The Company has agreed to pay all expenses incident to the
Exchange Offer other than commissions or concessions of any brokers or dealers
and will indemnify the holders of the Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The legality of the New Notes offered hereby will be passed upon for Adelphia
by Buchanan Ingersoll Professional Corporation, Pittsburgh, Pennsylvania.
45
<PAGE>
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company and its subsidiaries as of March 31, 1992 and 1993, and for each of
the three years in the period ended March 31, 1993, and the consolidated
financial statements of Olympus Communications, L.P. and its subsidiaries as of
December 31, 1991 and 1992, and for each of the three years in the period ended
December 31, 1992 that are incorporated in this Prospectus by reference have
been audited by Deloitte & Touche, independent auditors, as stated in their
reports incorporated by reference herein and have been incorporated herein in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
46
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE ACCOMPANYING
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY ADELPHIA. NEITHER
THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF ADELPHIA SINCE THE DATE HERE-
OF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL CONSTI-
TUTES AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OF-
FER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 3
Prospectus Summary......................................................... 5
Risk Factors............................................................... 12
Recent Development......................................................... 16
Use of Proceeds............................................................ 17
The Exchange Offer......................................................... 17
Capitalization............................................................. 24
Description of New Notes................................................... 25
Certain United States Income Tax Considerations............................ 42
Plan of Distribution....................................................... 45
Legal Matters.............................................................. 45
Experts.................................................................... 46
</TABLE>
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$150,000,000
ADELPHIA
LOGO
ADELPHIA COMMUNICATIONS CORPORATION
9 1/2% SENIOR PAY-IN-KIND NOTES
DUE 2004, SERIES B
------------------
P R O S P E C T U S
------------------
, 1994
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in general that
a corporation may indemnify its directors, officers, employees or agents
against expenditures (including judgments, fines, amounts paid in settlement
and attorneys' fees) made by them in connection with certain lawsuits to which
they may be made parties by reason of their being directors, officers,
employees or agents and shall so indemnify such persons against expenses
(including attorneys' fees) if they have been successful on the merits or
otherwise. The bylaws of Adelphia provide for indemnification of the officers
and directors of Adelphia to the full extent permissible under Delaware law.
Adelphia's Certificate of Incorporation also provides, pursuant to Section
102(b)(7) of the Delaware General Corporation Law, that directors of Adelphia
shall not be personally liable to Adelphia or its stockholders for monetary
damages for breach of fiduciary duty as a director for acts or omissions after
July 1, 1986, provided that directors shall nonetheless be liable for breaches
of the duty of loyalty, bad faith, intentional misconduct, knowing violations
of law, unlawful distributions to stockholders, or transactions from which a
director derived an improper personal benefit.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
<CAPTION>
EXHIBIT
NO. REFERENCE
----------- ---------
<C> <S> <C>
4.01 Indenture, dated as of May 7, 1992, Incorporated herein by reference is
with respect to the Registrant's Exhibit 4.03 to Registrant's Annual
12 1/2% Senior Notes Due 2002 Report on Form 10-K for the fiscal year
ended March 31, 1992.
4.02 Indenture, dated as of September 2, Incorporated herein by reference is
1992, with respect to the Registrant's Exhibit 4.03 to Registration Statement
11 7/8% Senior Debentures Due 2004 No. 33-52630 on Form S-1.
4.03 Amended and Restated Indenture, dated Incorporated herein by reference is
as of May 11, 1993, with respect to Exhibit 4.01 to Registrant's Annual
Registrant's 9 7/8% Senior Debentures Report on Form 10-K for the fiscal year
Due 2005 ended March 31, 1993.
4.04 Indenture, dated as of July 28, 1993, Incorporated herein by reference is
with respect to the Registrant's Exhibit 4.01 to Registrant's Quarterly
10 1/4% Senior Notes Due 2000, Series Report on Form 10-Q for the Quarter
A and B ended June 30, 1993.
4.05 Indenture, dated as of February 22, Filed herewith.
1994, with respect to the Registrant's
9 1/2% Senior Pay-In-Kind Notes Due
2004, Series A and B
5.01 Opinion of Buchanan Ingersoll Filed herewith.
Professional Corporation with regard to
the legality of the securities being
registered
10.01 Purchase Agreement relating to 9 1/2% Filed herewith.
Senior Pay-In-Kind Notes Due 2004,
Series A, by and between Adelphia
Communications Corporation and the
Purchaser, dated February 14, 1994
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. REFERENCE
----------- ---------
<C> <S> <C>
10.02 Registration Rights Agreement relating Filed herewith.
to 9 1/2% Senior Pay-In-Kind Notes Due
2004, Series A, by and between Adelphia
Communications Corporation and the
Purchaser, dated February 22, 1994
12.01 Computation of Ratio of Earnings to Filed herewith.
Fixed Charges
23.01 Consent of Deloitte & Touche Filed herewith.
23.02 Consent of Buchanan Ingersoll Filed herewith.
Professional Corporation (contained in
its opinion filed as Exhibit 5.01
hereto)
24.01 Power of Attorney (appearing on the Filed herewith.
Signature Page)
25.01 Form T-1 Statement of Eligibility of Filed herewith.
Trustee
99.01 Form of Letter of Transmittal Filed herewith.
99.02 Form of Notice of Guaranteed Delivery Filed herewith.
</TABLE>
The Registrant will furnish to the Commission upon request copies of
instruments not filed herewith which authorize the issuance of long-term
obligations of Registrant not in excess of 10% of the Registrant's total assets
on a consolidated basis.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
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 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 of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Registrant hereby undertakes to respond to requests for information that
is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11,
or 13 of this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
The Registrant hereby undertakes to supply by means of a post-effective
amendment all information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of a
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed part of the Registration
Statement as of the time it was declared effective.
II-2
<PAGE>
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at such time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to the extent applicable
hereunder:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registrant statement:
(i) To include any prospectus required by section 10(a)(3) of the Act;
(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;
(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 (1)(i) and (1)(ii) above do not apply if the
registration statement is on Form S-3 or Form S-8, and 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 Act, 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.
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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coudersport,
Commonwealth of Pennsylvania, on the 4th day of March 1994.
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ John J. Rigas
----------------------------------
John J. Rigas, Chairman, President
and Chief Executive Officer
POWER OF ATTORNEY
Know All Men By These Presents that each person whose signature appears below
constitutes and appoints John J. Rigas, Timothy J. Rigas and Daniel R.
Milliard, and each of them, such person's true and lawful attorneys-in-fact and
agents, with full power of substitution and revocation, for such person and in
such person's name, place and stead, in any and all capacities to sign any and
all amendments (including post-effective amendments to this Registration
Statement) and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURES TITLE DATE
/s/ John J. Rigas Chairman, President and March 4, 1994
- ------------------------------- Chief Executive Officer
JOHN J. RIGAS
/s/ Michael J. Rigas Senior Vice President and March 4, 1994
- ------------------------------- Director
MICHAEL J. RIGAS
/s/ Timothy J. Rigas Senior Vice President, March 4, 1994
- ------------------------------- Chief Financial Officer,
TIMOTHY J. RIGAS Chief Accounting Officer,
Treasurer and Director
/s/ James P. Rigas Vice President and March 4, 1994
- ------------------------------- Director
JAMES P. RIGAS
/s/ Daniel R. Milliard Vice President, Secretary March 4, 1994
- ------------------------------- and Director
DANIEL R. MILLIARD
/s/ Perry S. Patterson Director March 4, 1994
- -------------------------------
PERRY S. PATTERSON
/s/ Pete J. Metros Director March 4, 1994
- -------------------------------
PETE J. METROS
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. REFERENCE
------- ---------
<C> <S> <C>
4.01 Indenture, dated as of May 7, 1992, Incorporated herein by reference is
with respect to the Registrant's Exhibit 4.03 to Registrant's Annual
12 1/2% Senior Notes Due 2002 Report on Form 10-K for the fiscal year
ended March 31, 1992.
4.02 Indenture, dated as of September 2, Incorporated herein by reference is
1992, with respect to the Registrant's Exhibit 4.03 to Registration Statement
11 7/8% Senior Debentures Due 2004 No. 33-52630 on Form S-1.
4.03 Amended and Restated Indenture, dated Incorporated herein by reference is
as of May 11, 1993, with respect to Exhibit 4.01 to Registrant's Annual
Registrant's 9 7/8% Senior Debentures Report on Form 10-K for the fiscal year
Due 2005 ended March 31, 1993.
4.04 Indenture, dated as of July 28, 1993, Incorporated herein by reference is
with respect to the Registrant's Exhibit 4.01 to Registrant's Quarterly
10 1/4% Senior Notes Due 2000, Series Report on Form 10-Q for the Quarter
A and B ended June 30, 1993.
4.05 Indenture, dated as of February 22, Filed herewith.
1994, with respect to the Registrant's
9 1/2% Senior Pay-In-Kind Notes Due
2004, Series A and B
5.01 Opinion of Buchanan Ingersoll Filed herewith.
Professional Corporation with regard to
the legality of the securities being
registered
10.01 Purchase Agreement relating to 9 1/2% Filed herewith.
Senior Pay-In-Kind Notes Due 2004,
Series A, by and between Adelphia
Communications Corporation and the
Purchaser, dated February 14, 1994
10.02 Registration Rights Agreement relating Filed herewith.
to 9 1/2% Senior Pay-In-Kind Notes Due
2004, Series A, by and between Adelphia
Communications Corporation and the
Purchaser, dated February 22, 1994
12.01 Computation of Ratio of Earnings to Filed herewith.
Fixed Charges
23.01 Consent of Deloitte & Touche Filed herewith.
23.02 Consent of Buchanan Ingersoll Filed herewith.
Professional Corporation (contained in
its opinion filed as Exhibit 5.01
hereto)
24.01 Power of Attorney (appearing on the Filed herewith.
Signature Page)
25.01 Form T-1 Statement of Eligibility of Filed herewith.
Trustee
99.01 Form of Letter of Transmittal Filed herewith.
99.02 Form of Notice of Guaranteed Delivery Filed herewith.
</TABLE>
<PAGE>
Exhibit 4.05
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ADELPHIA COMMUNICATIONS CORPORATION
9-1/2% Senior Pay-In-Kind Notes Due 2004
Series A and Series B
INDENTURE
Dated as of February 22, 1994
BANK OF MONTREAL TRUST COMPANY,
Trustee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1)...................................................... 7.10
(a)(2)...................................................... 7.10
(a)(3)...................................................... N.A.
(a)(4)...................................................... N.A.
(b)......................................................... 7.08;7.10;11.02
(b)(1)...................................................... 7.10
(b)(9)...................................................... 7.10
(c)......................................................... N.A.
311(a)......................................................... 7.11
(b)......................................................... 7.11
(c)......................................................... N.A.
312(a)......................................................... 2.05
(b)......................................................... 11.03
(c)......................................................... 11.03
313(a)......................................................... 7.06
(b)(1)...................................................... 7.06
(b)(2)...................................................... 7.06
(c)......................................................... 7.06, 11.02
(d)......................................................... 7.06
314(a)......................................................... 4.02;11.02
(b)......................................................... N.A.
(c)(1)...................................................... 11.04;11.05
(c)(2)...................................................... 11.04;11.05
(c)(3)...................................................... N.A.
(d)......................................................... N.A.
(e)......................................................... 11.05
(f)......................................................... N.A.
315(a)......................................................... 7.01;7.02
(b)......................................................... 7.05;11.02
(c).......................................................... 7.01
(d)......................................................... 6.05;7.01;7.02
(e)......................................................... 6.11
316(a) (last sentence)......................................... 11.06
(a)(1)(A)................................................... 6.05
(a)(1)(B)................................................... 6.04
(a)(2)...................................................... 8.02
(b)......................................................... 6.07
317(a)(1)...................................................... 6.08
(a)(2)...................................................... 6.09
(b)......................................................... 2.04
318(a)......................................................... 11.01
</TABLE>
N.A. means Not Applicable
- ----------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.01. Definitions......................................... 1
Section 1.02. Other Definitions................................... 25
Section 1.03. Incorporation by Reference of Trust Indenture Act... 26
Section 1.04. Rules of Construction............................... 26
Section 1.05. Acts of Holders..................................... 27
ARTICLE 2 THE NOTES............................................. 28
Section 2.01. Dating; Incorporation of Form
in Indenture........................................ 28
Section 2.02. Execution and Authentication........................ 30
Section 2.03. Registrar and Paying Agent.......................... 31
Section 2.04. Paying Agent to Hold Money in Trust................. 32
Section 2.05. Noteholder Lists.................................... 33
Section 2.06. Transfer and Exchange............................... 33
Section 2.07. Replacement Notes................................... 34
Section 2.08. Outstanding Notes................................... 35
Section 2.09. Temporary Notes..................................... 36
Section 2.10. Cancellation........................................ 36
Section 2.11. Defaulted Interest.................................. 37
Section 2.12. Effective Registration.............................. 37
Section 2.13. Book Entry Provisions for Global Notes.............. 38
Section 2.14. Special Transfer Provisions for
Series A Notes...................................... 41
Section 2.15. Payment of Interest................................. 45
ARTICLE 3 REDEMPTION............................................ 46
Section 3.01. Right of Redemption................................. 46
Section 3.02. Notices to Trustee.................................. 46
Section 3.03. Selection by Trustee of Notes
to be Redeemed...................................... 46
Section 3.04. Notice of Redemption................................ 47
Section 3.05. Effect of Notice of Redemption...................... 48
Section 3.06. Deposit of Redemption Price......................... 48
Section 3.07. Notes Redeemed in Part.............................. 49
ARTICLE 4 COVENANTS............................................. 49
Section 4.01. Payment of Notes.................................... 49
Section 4.02. SEC Reports......................................... 49
Section 4.03. Waiver of Stay, Extension or Usury Laws............. 50
Section 4.04. Limitation on Transactions with
Affiliates.......................................... 50
Section 4.05. Limitation on Indebtedness.......................... 52
Section 4.06. Limitation on Restricted Payments................... 53
Section 4.07. Reports to Holders.................................. 53
Section 4.08. Notice of Defaults Or Events of Default............. 54
-i-
<PAGE>
Page
----
Section 4.09. Compliance Certificates............................. 55
Section 4.10. Covenant to Secure Notes Equally.................... 55
Section 4.11. Limitation on Investment in Affiliates
and Unrestricted Subsidiaries....................... 56
Section 4.12. Limitation on Sale of Assets........................ 56
Section 4.13. Change of Control Offer............................. 57
ARTICLE 5 SUCCESSOR CORPORATION................................. 62
Section 5.01. Mergers and Consolidations.......................... 62
Section 5.02. Successor Person Substituted........................ 63
ARTICLE 6 DEFAULTS AND REMEDIES................................. 64
Section 6.01. Events of Default................................... 64
Section 6.02. Acceleration........................................ 67
Section 6.03. Other Remedies...................................... 68
Section 6.04. Waiver of Past Defaults and
Events of Default................................... 69
Section 6.05. Control by Majority................................. 69
Section 6.06. Limitation on Suits................................. 70
Section 6.07. Rights of Holders to Receive Payment................ 71
Section 6.08. Collection Suit by Trustee.......................... 71
Section 6.09. Trustee May File Proofs of Claim.................... 71
Section 6.10. Priorities.......................................... 73
Section 6.11. Undertaking for Costs............................... 73
ARTICLE 7 TRUSTEE............................................... 74
Section 7.01. Duties of Trustee................................... 74
Section 7.02. Rights of Trustee................................... 76
Section 7.03. Individual Rights of Trustee........................ 77
Section 7.04. Trustee's Disclaimer................................ 78
Section 7.05. Notice of Defaults.................................. 78
Section 7.06. Reports by Trustee to Holders....................... 78
Section 7.07. Compensation and Indemnity.......................... 79
Section 7.08. Replacement of Trustee.............................. 81
Section 7.09. Successor Trustee by Consolidation,
Merger or Conversion................................ 82
Section 7.10. Eligibility; Disqualification....................... 83
Section 7.11. Preferential Collection of Claims
Against Company..................................... 83
Section 7.12. Paying Agents....................................... 83
ARTICLE 8 AMENDMENTS, SUPPLEMENTS AND WAIVERS................... 84
Section 8.01. Without Consent of Holders.......................... 84
Section 8.02. With Consent of Holders............................. 85
Section 8.03. Compliance with Trust Indenture Act................. 87
Section 8.04. Revocation and Effect of Consents................... 87
Section 8.05. Notation on or Exchange of Notes.................... 88
Section 8.06. Trustee to Sign Amendments, etc..................... 89
-ii-
<PAGE>
Page
----
ARTICLE 9 SATISFACTION AND DISCHARGE OF INDENTURE:
UNCLAIMED MONEYS....................................... 89
Section 9.01. Satisfaction and Discharge of Indenture............. 89
Section 9.02. Funds Deposited for Payment of Notes................ 91
Section 9.03. Moneys Held by Paying Agent......................... 91
Section 9.04. Moneys Held by Trustee.............................. 92
Section 9.05. Reinstatement....................................... 93
ARTICLE 10 DEFEASANCE AND COVENANT DEFEASANCE.................... 94
Section 10.01. Applicability of Article; Company Option
to Effect Defeasance................................ 94
Section 10.02. Defeasance and Discharge............................ 95
Section 10.03. Covenant Defeasance................................. 95
Section 10.04. Conditions to Defeasance or Covenant
Defeasance.......................................... 96
Section 10.05. Deposited Money and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions............................ 99
Section 10.06. Reinstatement....................................... 100
ARTICLE 11 MISCELLANEOUS........................................ 101
Section 11.01. Trust Indenture Act Controls....................... 101
Section 11.02. Notices............................................ 101
Section 11.03. Communications by Holders with
Other Holders...................................... 102
Section 11.04. Certificate and Opinion as to Conditions
Precedent.......................................... 103
Section 11.05. Statements Required in Certificate and
Opinion............................................ 103
Section 11.06. When Treasury Notes Disregarded.................... 104
Section 11.07. Rules by Trustee and Agents........................ 105
Section 11.08. Business Days; Legal Holidays...................... 105
Section 11.09. Governing Law...................................... 105
Section 11.10. No Adverse Interpretation of Other
Agreements......................................... 105
Section 11.11. No Recourse against Others......................... 106
Section 11.12. Successors......................................... 107
Section 11.13. Multiple Counterparts.............................. 107
Section 11.14. Table of Contents, Headings, etc................... 107
Section 11.15. Separability....................................... 107
-iii-
<PAGE>
THIS INDENTURE, dated as of February 22, 1994, between ADELPHIA
COMMUNICATIONS CORPORATION, a Delaware corporation (the "Company"), and BANK OF
MONTREAL TRUST COMPANY, a trust company organized under the laws of the State of
New York (the "Trustee").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
-----------
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.05 hereof.
"Additional Notes" has the meaning specified in Section 2.15 hereof.
"Affiliate" means a Person (i) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, the Company, (ii) which beneficially owns or holds 10% or more of any
class of the voting Capital Stock of the Company, or (iii) of which 10% or more
of the voting Capital Stock is beneficially owned or held by the Company, a
Restricted Subsidiary or an Unrestricted Subsidiary of the Company. Without
limitation, an Affiliate also includes any director or executive officer of the
Company. As used herein, "Affiliate" shall not include a Restricted Subsidiary.
"Agent" means any Registrar, Paying Agent, co-registrar or agent for
service of notices and demands. See Section 2.03 hereof.
-1-
<PAGE>
"Aggregate Excess Restricted Investments" means for any fiscal quarter
the aggregate of Excess Restricted Investments with respect to the Restricted
Investments in all of the Unrestricted Subsidiaries and Affiliates of the
Company.
"Allowable Securities" means (i) cash equivalents, (ii) common or
preferred Capital Stock in a Person which (x) has Investment Grade Senior Debt
or (y) whose ratio of Indebtedness plus Preferred Stock to Annualized Pro Forma
EBITDA is less than 7.75:1, or (iii) debt securities issued by a Person which
(x) has Investment Grade Senior Debt or (y) whose Leverage Ratio is less than
7.75:1, provided that the securities in (ii)(y) and (iii)(y) above shall only be
deemed to be Allowable Securities if the principal business of the Person is
owning and operating cable television systems.
"Annualized Pro Forma EBITDA" means, with respect to any Person, (i)
such Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four,
minus (ii) in the case of the Company only, the Company's Aggregate Excess
Restricted Investments for such fiscal quarter.
"Asset Sale" means the sale, transfer or other disposition (other
than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions of (a) any Capital Stock of or
other equity interest in any Restricted Subsidiary, (b) all or substantially
all of the assets of the Company or of any Restricted Subsidiary or (c) all or
substantially all of the assets of a Company system or part
-2-
<PAGE>
thereof serving at least 5,000 basic subscribers, a division, line of
business or comparable business segment of the Company or any Restricted
Subsidiary.
"Board of Directors" means the board of directors of the Company or any
committee authorized to act therefor.
"Board Resolution" means a copy of a resolution certified pursuant to
an Officers' Certificate to have been duly adopted by the Board of Directors and
to be in full force and effect, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all shares
or other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right or other interest in the nature of
any equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capital Stock Sale Proceeds" means the aggregate net sale proceeds
(including the fair market value of property, other than cash, as determined by
an independent appraisal firm) received by the Company from the issue or sale
(other than to a Subsidiary) by the Company of any class of its Capital Stock on
or after January 1, 1993 (including Capital Stock of the Company issued after
January 1, 1993 upon conversion of or in exchange for other securities of the
Company).
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with
-3-
<PAGE>
GAAP and the amount of such Indebtedness shall be the capitalized amount of
such obligations determined in accordance with GAAP.
"Change of Control" means such time as (i) (a) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other
than the Rigas Family and its affiliates, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power required to elect or designate for election a majority of the Board
of Directors and attaching to the then outstanding voting Capital Stock of the
Company and (b) the Rigas Family, together with its affiliates, is not at such
time the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 35% of the total voting power required to elect or designate for
election a majority of the Board of Directors and attaching to the then
outstanding voting Capital Stock of the Company, or (ii) during any period of
two consecutive calendar years, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved or approved by the Rigas Family and its affiliates at a time when they
had the right or ability by voting right, contract or otherwise to elect or
designate for election a
-4-
<PAGE>
majority of the Board of Directors) cease for any reason to constitute a
majority of the directors then in office.
"Change of Control Triggering Event" means the occurrence of both a
Change of Control and a Rating Decline.
"Closing Price" on any Trading Day with respect to the per share price
of any shares of Capital Stock means the last reported sale price regular way
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if such shares of Capital Stock are not listed or
admitted to trading on such exchange, on the principal national securities
exchange on which such shares are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, on the
National Association of Securities Dealers Automated Quotations National Market
System or, if such shares are not listed or admitted to trading on any national
securities exchange or quoted on such automated quotations system but the issuer
is a Foreign Issuer (as defined in Rule 3b-4(b) under the Exchange Act) and the
principal securities exchange on which such shares are listed or admitted to
trading is a Designated Offshore Securities Market (as defined in Rule 902(a)
under the Securities Act), the average of the reporting closing bid and asked
prices regular way on such principal exchange, or, if such shares are not listed
or admitted to trading on any national securities exchange or quoted on such
-5-
<PAGE>
automated quotation system and the issuer and principal securities exchange do
not meet such requirements, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Trustee.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, with respect to dividends, distributions or liquidation
proceeds of such Person, to shares of Capital Stock of any other class of such
Person.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor and any other obligor on the Notes.
"Company Request" means any written request signed in the name of the
Company by the Chairman, the President or a Vice President of the Company and
attested to by a Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Company.
"Consolidated Fixed Charge Ratio" means, for any Person, for any
period, the ratio of (i) Annualized Pro Forma EBITDA to (ii) Consolidated
Interest Expense for such period multiplied by four.
"Consolidated Interest Expense" means, for any Person, for
any period, the amount of interest in respect of Indebtedness (including
amortization of original issue discount, amortization
-6-
<PAGE>
of debt issuance costs, and non-cash interest payments on any Indebtedness and
the interest portion of any deferred payment obligation and after taking into
account the effect of elections made under any Interest Rate Agreement, however
denominated, with respect to such Indebtedness), the amount of Redeemable
Dividends and the interest component of rentals in respect of any Capitalized
Lease Obligation paid, accrued or scheduled to be paid or accrued by such
Person during such period, determined on a consolidated basis in accordance
with GAAP. For purposes of this definition, interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by such Person to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP consistently applied.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 77 Water Street, New York, New York 10005.
"Cumulative Credit" means the sum of (i) Capital Stock Sale Proceeds
plus (ii) cumulative EBITDA of the Company from and after January 1, 1993, to
the end of the fiscal quarter immediately preceding the date of a proposed
Restricted Payment, or, if such cumulative EBITDA for such period is negative,
minus the amount by which such cumulative EBITDA is less than zero.
-7-
<PAGE>
"Cumulative Interest Expense" means the aggregate amount of
Consolidated Interest Expense paid, accrued or scheduled to be paid or accrued
by the Company from January 1, 1993 to the end of the fiscal quarter immediately
preceding a proposed Restricted Payment, determined on a consolidated basis in
accordance with GAAP.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means the Depository Trust Company and its successors.
"EBITDA" means, for any Person, for any period, an amount equal to (a)
the sum of (i) consolidated net income for such period (exclusive of any gain or
loss realized in such period upon an Asset Sale), plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing consolidated net income and any provision for
taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period, plus (iv) depreciation for such
period on a consolidated basis, plus (v) amortization of intangibles for such
period on a consolidated basis, plus (vi) any other non-cash items reducing
consolidated net income for such period, minus (b) (i) all non-cash items
increasing consolidated net income for such period, all for such Person and its
Subsidiaries determined in accordance with GAAP consistently applied, except
that with respect to the Company, each of the foregoing items shall be
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determined on a consolidated basis with respect to the Company and its
Restricted Subsidiaries only.
"Equity Event" means a sale by the Company prior to February 15, 1996
of its Capital Stock to a Strategic Equity Investor in a single transaction for
an aggregate purchase price equal to or exceeding $100 million.
"Excess Restricted Investment" means, with respect to any particular
Unrestricted Subsidiary or Affiliate of the Company for a fiscal quarter, the
lesser of the amounts described in the following clauses (i) and (ii), or if
such amounts are equal, such amount:
(i) the aggregate amount of any Restricted Investments (other than
the Initial Investment) made by the Company or any Restricted
Subsidiary with respect to such Unrestricted Subsidiary or
Affiliate after the date of the Indenture and during the
twelve-month period ending on the last day of such fiscal
quarter;
(ii) cash income received during such quarter by the Company with
respect to its Restricted Investments in such Unrestricted
Subsidiary or Affiliate multiplied by four;
and provided that cash income from a particular Restricted Investment shall be
included only (x) if cash income has been received by the Company with respect
to such Restricted Investment during each of the previous two fiscal quarters,
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or (y) if the cash income derived from such Restricted Investment is
attributable to Allowable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the Exchange Offer as defined in the
Registration Rights Agreement.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"Global Note" means a Note that evidences all or part of a Note and is
authenticated and delivered to, and registered in the name of, the Depositary
for such Note or a nominee thereof.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Indebtedness" means (without duplication), with respect to any
Person, any indebtedness, secured or unsecured, contingent or otherwise,
which is for 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), or
evidenced by bonds, notes, debentures or similar instruments or representing
the balance deferred and unpaid of the purchase price of any property
(excluding, without limitation, any balances that constitute subscriber
advance payments and deposits, accounts payable or trade payables, and other
accrued liabilities arising in the ordinary course of business) if and to the
extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and shall
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also include, to the extent not otherwise included, (i) any Capitalized Lease
Obligations, (ii) obligations secured by a lien to which the property or assets
owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed, (iii) 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), (iv) in the case of the Company, Preferred Stock of Restricted
Subsidiaries and (v) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing. Notwithstanding the foregoing,
Indebtedness shall not include any interest or accrued interest until due and
payable.
"Indenture" means this indenture as amended, restated or supplemented
from time to time.
"Initial Investment" means the Restricted Investment in a Person made
by the Company or a Restricted Subsidiary that first results in such Person
becoming an Unrestricted Subsidiary or Affiliate of the Company, except that in
the case of Olympus, "Initial Investment" shall mean any Restricted Investment
made in Olympus since the date hereof, but only to the extent that such
Restricted Investment when aggregated with the other Restricted Investments made
in Olympus since such date does not exceed $25,000,000.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
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"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investment Grade Senior Debt" means, with respect to any Person,
Indebtedness of such Person which has been rated with an investment grade rating
by Moody's or Standard & Poor's Corporation.
"Leverage Ratio" is defined as the ratio of (i) the outstanding
Indebtedness of a Person and its Subsidiaries (or in the case of the Company,
its Restricted Subsidiaries) divided by (ii) the Annualized Pro Forma EBITDA of
such Person.
"Lien" means with respect to any property or assets of the Company
(it being understood that for the purposes of this definition property or
assets of the Company do not include property or assets of any Subsidiary of
the Company) any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority, or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation, conditional
sale, or other title retention agreement having substantially the same
economic effect as any of the foregoing)
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except for (i) liens for taxes, assessments or governmental charges or levies
on property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by
appropriate proceedings; (ii) liens imposed by law such as carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations not more than
sixty (60) days past due or obligations that are being contested in good faith
and by appropriate proceedings; (iii) other liens incidental to the conduct of
its business or the ownership of its property and assets which were not
incurred in connection with the borrowing of money or the obtaining of
advances or credit and which do not in the aggregate materially detract from
the value of its property or assets or materially impair the use thereof in
the operation of its business; (iv) utility easements, building restrictions
and such other encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a similar character;
or (v) liens arising upon entry of a confession of judgment in Pennsylvania
courts in connection with borrowings not in excess of $1,000,000 in the
aggregate.
"Notes" means the securities (including any Additional Notes) that are
issued under this Indenture, as amended or supplemented from time to time
pursuant to this Indenture.
"Officer" means the Chairman of the Board, the President,
any Vice President, the Chief Financial Officer, the Treasurer, the
Secretary or any Assistant Secretary of the Company.
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"Officers' Certificate" means a certificate signed by two Officers.
See Sections 11.04 and 11.05 hereof.
"Olympus" means Olympus Communications, L.P., a Delaware limited
partnership.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 11.04 and 11.05 hereof.
"Permitted Investments" means, for any Person, Restricted
Investments made on or after the date hereof consisting of (i) advances for
less than one year issued in the ordinary course of business for working
capital purposes or for the purchase of property, plant and equipment in an
amount not to exceed $5,000,000 in the aggregate outstanding and, (ii) with
respect to a Restricted Investment in Olympus, $25,000,000 plus the aggregate
amount of cash income received by the Company from Olympus, minus the aggregate
amount of all Restricted Investments made since the date hereof with respect to
Olympus, (iii) $20,000,000 plus the cash proceeds from the sale or redemption
of, or income from, any Restricted Investments made on or after the date
hereof, minus the aggregate amount of all Restricted Investments (excluding
Restricted Investments made with respect to Olympus) since the date hereof,
(iv) non-cash Restricted Investments made with the non-cash proceeds from the
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sale or redemption of, or income from, any Restricted Investments, or (v)
an amount which, at the time of such Restricted Investment, does not
exceed the amount of Restricted Payments that could then be made by the
Company and its Restricted Subsidiaries under Section 4.06; provided
further that no Restricted Investments may be made under subsections (ii),
(iii), (iv) or (v) of this paragraph unless after giving pro forma effect
to such Restricted Investment the Company could incur $1 of debt under the
first paragraph of Section 4.05.
"Permitted Refinancing Indebtedness" means any renewals, extensions,
substitutions, refinancings or replacements of any Indebtedness, including any
successive extensions, renewals, substitutions, refinancings or replacements so
long as (i) the aggregate amount of Indebtedness represented thereby is not
increased by such renewal, extension, substitution, refinancing or replacement,
(ii) in the case of Indebtedness of the Company, the average life and the date
such Indebtedness is scheduled to mature is not shortened and (iii) in the case
of Indebtedness of the Company, the new Indebtedness shall not be senior in
right of payment to the Indebtedness that is being extended, renewed,
substituted, refinanced or replaced.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person,
however designated, which entitles the holder thereof to a
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preference with respect to dividends, distributions or liquidation proceeds of
such Person over the holders of other Capital Stock issued by such Person.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of
such Person, as determined on a consolidated basis in accordance with GAAP
consistently applied after giving effect to the following: (i) if, during or
after such period, such Person or any of its Subsidiaries shall have made any
Asset Sale, Pro Forma EBITDA of such Person and its Subsidiaries for such period
shall be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset Sale for
the period or increased by an amount equal to the Pro Forma EBITDA (if negative)
directly attributable thereto for such period and (ii) if, during or after such
period, such Person or any of its Subsidiaries completes an acquisition of any
Person or business which immediately after such acquisition is a Subsidiary of
such Person or whose assets are held directly by such Person or a Subsidiary of
such Person, Pro Forma EBITDA shall be computed so as to give pro forma effect
to the acquisition of such Person or business; and provided further that with
respect to the Company, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or
"Restricted Subsidiaries" of the Company.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
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"Rating Date" means the date which is 90 days prior to the earlier of
(i) a Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention of the Company to effect a Change of Control.
"Rating Decline" means the occurrence of the following on, or within 90
days after, the date of public notice of the occurrence of a Change of Control
or of the intention by the Company to effect a Change of Control (which period
shall be extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrade by Moody's or Standard & Poor's
Corporation): (a) in the event the Notes are rated by either Moody's or Standard
& Poor's Corporation on the Rating Date as Investment Grade Senior Debt, the
rating of the Notes by both Moody's and Standard & Poor's Corporation shall be
below Investment Grade Senior Debt; or (b) in the event the Notes are rated
below Investment Grade Senior Debt by both Moody's and Standard & Poor's
Corporation on the Rating Date, the rating of the Notes by either Moody's or
Standard & Poor's Corporation shall be decreased by one or more gradations
(including gradations within rating categories as well as between rating
categories).
"Redeemable Dividend" means, for any dividend with regard to Redeemable
Stock, the quotient of the dividend divided by the difference between one and
the maximum statutory federal income tax rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Redeemable Stock.
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"Redeemable Stock" means with respect to any Person, any Capital Stock
that by its terms or otherwise is required to be redeemed or is redeemable at
the option of the holder at any time prior to the maturity of the Notes.
"Redemption Date" when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of February 22, 1994, by and between the Company and Salomon
Brothers Inc with respect to the Notes.
"Restricted Investment" means any advance, loan, account receivable
(other than an account receivable arising in the ordinary course of business),
or other extension of credit (excluding, however, accrued and unpaid interest in
respect of any advance, loan or other extension of credit) or any capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others, or otherwise), any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership or
joint venture) of, or any bank accounts with or guarantee of any Indebtedness or
other obligations of, any Unrestricted Subsidiary or Affiliate of the Company.
"Restricted Payment" means (i) any dividend or distribution
(whether made in cash, property or securities), on or with respect
to any shares of Capital Stock of the Company or
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Capital Stock of any Subsidiary which is consolidated with the Company in
accordance with GAAP consistently applied, except for any dividend or
distribution which is made solely to the Company or another Subsidiary or
dividends or distributions payable solely in shares of Common Stock of the
Company, or (ii) any redemption, repurchase, retirement or other direct or
indirect acquisition of (a) Indebtedness of the Company which is
subordinate in right of payment to the Notes, except, within one year of
or on the original maturity date (August 15, 1996) of the Company's 13%
Senior Subordinated Notes Due 1996, without regard to any subsequent
extension of such maturity date, or prior to such original maturity date
(August 15, 1996), by exchange for or out of the proceeds of the
substantially concurrent issuance of Permitted Refinancing Indebtedness or
from the proceeds of a sale of Capital Stock by the Company, or (b) shares
of Capital Stock of the Company or any warrants, rights or options to
directly or indirectly purchase or acquire any such Capital Stock of the
Company or any securities exchangeable for or convertible into any such
shares, other than options issued or shares purchased or granted under the
Company's Stock Option Plan of 1986 or the Company's Restricted Stock
Bonus Plan, from any employee of the Company or any of its Subsidiaries
who, together with any Person that, directly or indirectly, controls
(other than by virtue of being directly or indirectly the employer of such
employee), is controlled by or is under common control with such employee,
owns less than 1% of the outstanding Capital Stock of the Company,
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except for the purchase, redemption, retirement or other acquisition of
any shares of the Company's Capital Stock by exchange for, or out of the
proceeds of the substantially concurrent sale of, other shares of its
Capital Stock other than any Capital Stock which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or
in part, on or prior to July 15, 2000.
"Restricted Subsidiary" means (a) any Subsidiary of the Company,
whether existing on or after the date of this Indenture, unless such Subsidiary
is an Unrestricted Subsidiary or shall have been classified as an Unrestricted
Subsidiary by a resolution adopted by the Board of Directors and (b) an
Unrestricted Subsidiary which is reclassified as a Restricted Subsidiary by a
resolution adopted by the Board of Directors, provided that on and after the
date of such reclassification such Unrestricted Subsidiary shall not incur
Indebtedness other than that permitted to be incurred by a Restricted Subsidiary
under the provisions of this Indenture.
"Rigas Family" means collectively John J. Rigas and members of his
immediate family, any of their respective spouses, estates, lineal descendants,
heirs, executors, personal representatives, administrators, trusts for any of
their benefit and charitable foundations to which shares of the
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Company's Capital Stock beneficially owned by any of the foregoing
have been transferred.
"SEC" means the United States Securities and Exchange Commission as
constituted from time to time or any successor performing substantially the same
functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Notes" and "Series B Notes" mean the Notes of such Series as
described and in the forms contemplated herein, and as authenticated and issued
under this Indenture.
"Strategic Equity Investor" means, with respect to any sale of the
Company's Capital Stock, any Person engaged in the telecommunications
business which, both as of the Trading Day, with respect to any class of such
Person's Capital Stock, immediately before the day of such sale and the
Trading Day, with respect to any class of such Person's Capital Stock,
immediately after the day of such sale, has a Total Market Capitalization of
at least $2 billion and the long-term senior debt of which is rated BBB- or
above by Standard & Poor's Corporation and Baa3 or above by Moody's, after
giving effect to such Person's purchase of the Company's Capital Stock on a
pro forma basis. In calculating Total Market Capitalization for the purpose
of this definition, the consolidated Indebtedness of such Person, solely when
calculated as of the Trading Day, with respect to any class of such Person's
Capital Stock, immediately after the day of such sale, will be calculated
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after giving effect to such sale (including any Indebtedness incurred in
connection with such sale) and the average Closing Price of the Common Stock
of such Person, solely when calculated as of the Trading Day, with respect to
any class of such Person's Capital Stock, immediately after the day of such
sale shall be deemed to be the Closing Price of such Common Stock on such
Trading Day, subject to the last sentence of the definition of "Total Market
Capitalization."
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such Person or any of its
Subsidiaries; or (ii) in the case of a partnership, joint venture, association
or other business entity, with respect to which such Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise, if in accordance with GAAP
such entity is consolidated with such Person for financial statement purposes.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Sections77aaa- 77bbbb) as in effect on the date of this Indenture (except as
provided in Section 8.03 hereof).
"Total Market Capitalization" of any Person means, as of
any day of determination (and as modified for purposes of the
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definition of "Strategic Equity Investor"), the sum of (1) the consolidated
Indebtedness of such Person and its Subsidiaries on such day, plus (2) the
product of (i) the aggregate number of outstanding primary shares of Common
Stock of such Person on such day (which shall not include any options or
warrants on, or securities convertible or exchangeable into, shares of Common
Stock of such Person) and (ii) the average Closing Price of such Common Stock
over the 20 consecutive Trading Days immediately preceding such day, plus (3)
the liquidation value of any outstanding shares of Preferred Stock of such
Person on such day. If no such Closing Price exists with respect to shares
of any such class, the value of such shares for purposes of clause (2) of the
preceding sentence shall be determined by the Board of Directors in good
faith and evidenced by a Board Resolution.
"Trading Day" means, with respect to a security listed or admitted to
trading on a securities exchange or automated quotation system, a day on which
such exchange or system is open for a full day of trading, and with respect to a
security not so listed or admitted to trading, a day on which such security has
traded at least once.
"Trustee" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"Trust Officer" means any officer or assistant officer of the Trustee.
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"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided, that (except as required by law) such
--------
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company
which is classified after the date of this Indenture as an Unrestricted
Subsidiary by a resolution adopted by the Board of
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Directors; provided that a Subsidiary organized or acquired after
the date of this Indenture may be so classified as an Unrestricted Subsidiary
only if immediately after the date of such classification, any investment by the
Company and its Restricted Subsidiaries in any such Subsidiary made at the time
of the organization or acquisition of such Subsidiary would be a Restricted
Investment permissible under this Indenture. The Trustee shall be given prompt
notice by the Company of each resolution adopted by its Board of Directors
under this provision, together with a copy of each such resolution adopted.
Section 1.02. Other Definitions.
------------------
The definitions of the following terms may be found in the sections
indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
<S> <C>
"Act"....................... 1.05
"Agent Members"............. 2.13
"Bankruptcy Law"............ 6.01
"Business Day".............. 11.08
"Certificated Notes"........ 2.01
"Covenant Defeasance"....... 10.03
"Custodian"................. 6.01
"Defeasance"................ 10.02
"Event of Default".......... 6.01
"Legal Holiday"............. 11.08
"Non-Global Purchasers"..... 2.01
"Paying Agent".............. 2.03
"Private Placement Legend".. 2.13
"Registrar"................. 2.03
"Regulation S".............. 2.14
"Rule 144".................. 2.14
"Rule 144A"................. 2.14
</TABLE>
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Section 1.03. Incorporation by Reference of Trust Indenture Act.
-------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC.
"indenture notes" means the Notes.
"indenture noteholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture notes" means the Company or any other
obligor on the indenture notes.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings therein assigned to them.
Section 1.04. Rules of Construction.
---------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
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(5) words used herein implying any gender shall apply to every
gender.
Section 1.05. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where
it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Holders signing such
instrument or instruments. Proof of execution of any such instrument
or of a writing appointing an agent therefor shall be sufficient for
any purpose of this Indenture and (subject to Section 7.01 hereof)
conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
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individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority
of the Person executing the same, may also be proved in any other manner
which the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the register
of Notes maintained by the Registrar pursuant to Section 2.03 hereof.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Note shall bind every
future Holder of the same Note and the Holder of every Note issued upon
the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation
of such action is made upon such Note.
ARTICLE 2
THE NOTES
Section 2.01. Dating; Incorporation of Form in Indenture.
------------------------------------------
The Notes and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A which is incorporated in and
made part of this Indenture. The Notes may have notations, legends or
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endorsements required by law, stock exchange rule or usage. The
Company may use 'CUSIP' numbers in issuing the Notes. The Board of
Directors shall approve the form of the Notes. Each Note shall be
dated the date of its authentication which with respect to Additional
Notes shall be the Interest Payment Date as to which the Company has
elected not to make interest payments in cash.
Except as otherwise provided herein, Series A Notes shall be
issued initially in the form of a Global Note which shall be a global
Series A Note in definitive, fully registered form without interest
coupons and deposited with the Trustee as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as herein
provided. Except as otherwise provided herein, Series B Notes shall be
issued initially in the form of a Global Note which shall be a global
Series B Note in definitive, fully registered form without interest
coupons and deposited with the Trustee as custodian for the Depositary,
duly executed by the Company and authenticated by the Trustee as herein
provided.
Notes held by purchasers who elect to take physical delivery of
their certificates instead of holding their interest through a Global
Note ("Non-Global Purchasers") will be issued in fully registered form
without interest coupons (the "Certificated Notes").
The aggregate principal amount of the Global Notes may from time
to time be increased or decreased by adjustments made on the records of
the Trustee, as custodian for the Depositary or its nominee, as herein
provided.
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Each Certificated Note or Global Note, as the case may be, shall
bear the applicable legends and provisions set forth in Exhibit A
hereto as indicated therein with respect to Series A Notes and Series B
Notes, respectively.
On the certificates representing the Notes, the Series A Notes
shall have the title "9-1/2% Senior Pay-In-Kind Notes Due 2004, Series
A" and the Series B Notes shall have the title "9-1/2% Senior Pay-In-
Kind Notes Due 2004, Series B."
Section 2.02. Execution and Authentication.
----------------------------
The Notes shall be executed on behalf of the Company by the
Chairman of the Board, the President, any Vice President or the
Treasurer of the Company and attested by the Secretary or an Assistant
Secretary of the Company. Such signatures may be either manual or
facsimile. The Company's seal shall be impressed, affixed, imprinted
or reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee authenticates the Note, the Note shall
be valid nevertheless.
A Note shall not be valid until the Trustee manually signs the
certificate of authentication on the Note. Such signature shall be
conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee or an authenticating agent shall authenticate
Notes for original issue and, at the option of the
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Company pursuant to Section 2.15 hereof, Additional Notes to pay interest
on the Notes, upon a written order of the Company signed by two Officers.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $150,000,000, except for
Additional Notes and Notes authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Sections 2.06, 2.07, 2.09, 2.12, 8.05 and 4.13. The aggregate principal
amount of Notes outstanding at any time may not exceed such amount except
as provided in Section 2.07 hereof. The Notes shall be issuable only in
registered form as provided for herein without coupons.
The Trustee may appoint an authenticating agent to authenticate
Notes. An authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication
by the Trustee includes authentication by such agent. An
authenticating agent has the same right as an Agent to deal with the
Company or an Affiliate.
Section 2.03. Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency where Notes
may be presented for registration of transfer or for exchange ("Registrar"),
an office or agency located in the Borough of Manhattan, City of New York,
State of New York where Notes may be presented for payment ("Paying Agent")
and an office or agency where notices and demands to or upon the Company in
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respect of the Notes and this Indenture may be served. The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company
may have one or more co-registrars and one or more additional paying agents.
Neither the Company nor any Affiliate may act as Paying Agent.
The Company shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate
to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, or agent for service of notices and demands,
or fails to give the foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the
Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
-----------------------------------
On or before each due date of the principal of, premium, if
any, and interest on any Notes, the Company shall deposit with the Paying
Agent money (or, if on or prior to February 15, 1999, with respect to the
payment of interest only, at the Company's option, Additional Notes)
sufficient to pay such principal, premium and interest so becoming due. The
Company at any time may require a Paying Agent to pay all money and
Additional Notes held by it to the Trustee and the Trustee may at any time
during the continuance of any payment Default, upon written request to a
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Paying Agent, require such Paying Agent to forthwith pay to the Trustee all
money and Additional Notes so held in trust by such Paying Agent. Upon doing
so, the Paying Agent shall have no further liability for the money or such
Additional Notes.
Section 2.05. Noteholder Lists.
----------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and
addresses of Noteholders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee on or before each March 15 and
September 15 in each year, and at such other times as the Trustee may
request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of
Noteholders.
Section 2.06. Transfer and Exchange.
---------------------
When a Note is presented to the Registrar with a request
to register the transfer thereof, the Registrar shall register the
transfer as requested if the requirements of applicable law are met and,
when Notes are presented to the Registrar with a request to exchange them
for an equal principal amount of Notes of other authorized denominations,
the Registrar shall make the exchange as requested provided that every
Note presented or surrendered for registration of transfer or exchange
shall be duly endorsed or be accompanied by a written instrument of
transfer duly executed by the Holder thereof or his attorney duly
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authorized in writing, and shall be accompanied by such other requested
certifications or documentation, all in form satisfactory to the Company
and the Registrar. To permit transfers and exchanges, upon surrender of
any Note for registration of transfer at the office or agency maintained
pursuant to Section 2.03 hereof, the Company shall execute and the Trustee
shall authenticate Notes at the Registrar's request. Except for an
exchange described in Section 2.12, the Trustee shall, in each case of a
Note surrendered for registration of transfer or exchange, authenticate
and deliver Notes of the same series to the designated transferee or
Holder making the exchange. Any exchange or transfer shall be without
charge, except that the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
to a transfer or exchange, but this provision shall not apply to any
exchange pursuant to Sections 2.09, 3.07 or 8.05 hereof. The Trustee
shall not be required to register transfers of Notes or to exchange Notes
for a period of 15 days before selection of Notes to be redeemed. The
Trustee shall not be required to exchange or register transfers of any
Notes called or being called for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part.
Section 2.07. Replacement Notes.
-----------------
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note presents evidence to the satisfaction of the
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Company and the Trustee that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note if the requirements of Section 8-405 of
the New York Uniform Commercial Code as in effect on the date of this
Indenture are met. An indemnity bond may be required by the Company or
the Trustee that is sufficient in the judgment of the Company and the
Trustee to protect the Company, the Trustee or any Agent from any loss
which any of them may suffer if a Note is replaced. In every case of
destruction, loss or theft, the applicant shall also furnish to the
Company and to the Trustee evidence to their satisfaction of the
destruction, loss or the theft of such Note and the ownership thereof. The
Company may charge for its expenses in replacing a Note. Every
replacement Note is an additional obligation of the Company.
Section 2.08. Outstanding Notes.
-----------------
Notes outstanding at any time are all Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not
outstanding.
If a Note is replaced pursuant to Section 2.07, it ceases to be
outstanding until the Company and the Trustee receive proof
satisfactory to each of them that the replaced Note is held by a bona
fide purchaser.
If a Paying Agent holds on a Redemption Date or maturity
date money sufficient to pay the principal of, premium, if any,
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and accrued interest on Notes payable on that date, then on and after that
date such Notes cease to be outstanding and interest on them ceases to
accrue.
Subject to Section 11.06, a Note does not cease to be
outstanding solely because the Company or an Affiliate holds the Note.
Section 2.09. Temporary Notes.
---------------
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form, and shall carry all rights,
of definitive Notes but may have variations that the Company considers
appropriate for temporary Notes. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive
Notes in exchange for temporary Notes presented to it.
Section 2.10. Cancellation.
------------
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Notes surrendered to them for transfer, exchange or payment.
The Trustee shall cancel and destroy all Notes surrendered for transfer,
exchange, payment or cancellation and deliver a certificate of destruction
to the Company unless the Company instructs the Trustee in writing to
deliver the Notes to the Company. Subject to Section 2.07
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hereof, the Company may not issue new Notes to replace Notes in
respect of which it has previously paid all principal, premium and
interest accrued thereon, or delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Notes,
it shall pay, or shall deposit with the Paying Agent either money or,
for any default on interest on the Notes payable on or before February
15, 1999, Additional Notes sufficient to pay, the defaulted amounts,
plus any interest payable on defaulted amounts pursuant to Section 4.01
hereof, to the Persons who are Noteholders on a subsequent special
record date. The Company shall fix the special record date and payment
date in a manner satisfactory to the Trustee. At least 15 days before
the special record date, the Company shall mail or cause to be mailed
to each Noteholder at his address as it appears on the Note register
maintained by the Registrar a notice that states the special record
date, the payment date (which shall be not less than five nor more than
ten days after the special record date), and the amount to be paid. In
lieu of the foregoing procedures, the Company may pay defaulted
interest in any other lawful manner satisfactory to the Trustee.
Section 2.12. Effective Registration.
----------------------
In the event that the Company delivers to the Trustee a
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copy of an Officers' Certificate certifying that a registration statement
under the Securities Act with respect to the Exchange Offer has been
declared effective by the Commission, and that the Company has offered
Series B Notes to the Holders of Series A Notes in accordance with the
Exchange Offer, upon request of any Holder, the Trustee shall exchange
such Holder's Series A Notes for Series B Notes upon the terms set forth
in the Exchange Offer.
Section 2.13. Book Entry Provisions for Global Notes.
--------------------------------------
(a) Each Global Note initially shall (i) be registered in
the name of the Depositary for such Global Note or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such
Depositary and (iii) bear legends as set forth in Exhibit A.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depositary, or the Trustee as
its custodian, or under a Global Note, and the Depositary may be
treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Note for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary
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practices governing the exercise of the rights of a Holder or beneficial
owner of any Note.
(b) Transfers of a Global Note shall be limited to transfers
of such Global Note in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial
owners in a Global Note may be transferred in accordance with the rules
and procedures of the Depositary and the provisions of Section 2.14
hereof, provided that each beneficial owner of an interest in a Global
Note with respect to the Series A Notes (including Agent Members shown
holding such an interest on the Depositary's records and each
beneficial owner holding through any such Agent Member) shall be deemed
to agree to and shall comply with, and shall give notice to transferees
of such beneficial interest of, the provisions and restrictions set
forth in the legend regarding transfer restrictions applicable to
Series A Notes set forth in Exhibit A (the "Private Placement Legend")
and the transferee of any such beneficial interest shall have and be
deemed to have made the applicable representations and agreements set
forth in Section 2.14(a)(i) hereof to the same extent as if such
beneficial interest were represented by a Certificated Note.
Beneficial owners may obtain Certificated Notes in exchange for their
beneficial interests in a Global Note upon request in accordance with
the Depositary's and the Registrar's procedures and the provisions of
this Indenture. In addition, Certificated Notes shall be transferred
to all beneficial owners in exchange for their beneficial interests in
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a Global Note if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for a Global Note and a
successor depositary is not appointed by the Company within 90 days of
such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a request from the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in a Global Note to a beneficial owner in exchange
for a Certificated Note pursuant to paragraph (b), the Registrar shall
reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred,
and the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Certificated Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note
to beneficial owners pursuant to paragraph (b), the Global Note shall
be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner in exchange for its beneficial interest in the
Global Note, an equal aggregate principal amount of Certificated Notes.
(e) Any Certificated Note with respect to a Series A Note
delivered in exchange for an interest in a Global Note pursuant to
paragraphs (b) or (c) shall bear the Private Placement Legend.
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(f) The registered holder of a Global Note may grant proxies
and otherwise authorize any Person, including Agent Members and Persons
that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Notes.
Section 2.14. Special Transfer Provisions for Series A Notes.
----------------------------------------------
(a) Transfers. The following provisions shall apply with
---------
respect to the registration of any proposed transfer of a Series A Note:
(i) If the Series A Note to be transferred consists
of Certificated Notes, the Registrar shall register the transfer
if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Series A Note
stating, or has otherwise advised the Company and the Registrar
in writing, that (x) the transfer has been made in compliance
with the provisions of Rule 144A under the Securities Act ("Rule
144A") to a transferee who, in either case, by purchasing or
otherwise acquiring the Note shall have and shall be deemed to
have represented and agreed that it is purchasing the Series A
Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such
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account is a QIB within the meaning of Rule 144A, and that it is
aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware
that the transferor is relying upon its foregoing
representations in order to claim the exemption from
registration provided by Rule 144A, (y) the transfer has been
made in an offshore transaction in accordance with all
requirements and provisions of Regulation S under the Securities
Act ("Regulation S") to a transferee who, in either case, by
purchasing or otherwise acquiring the Note shall have and shall
be deemed to have represented and agreed that it is purchasing
the Series A Note for its own account or for an account with
respect to which it exercises sole investment discretion and
that it and any such account have complied, and the purchase or
other acquisition is in compliance with, all requirements and
provisions of Regulation S, or (z) the transfer has been made in
accordance with Rule 144 under the Securities Act ("Rule 144");
in each case such transfer shall be accompanied by such
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additional documentation or certifications as shall be requested
by the Company or the Registrar.
(ii) If the proposed transferee is an Agent Member,
and the Series A Note to be transferred consists of Certificated
Notes, upon receipt by the Registrar of (x) the documents or
certifications, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of
the Global Note in an amount equal to the principal amount of
the Certificated Notes to be transferred, and the Trustee shall
cancel the Certificated Note so transferred.
(iii) If the proposed transferor is an Agent Member
holding a beneficial interest in a Series A Note represented by
the Global Note and the interest to be transferred is to be
exchanged for a Certificated Note, upon receipt by the Registrar
of (x) the documents or certifications, if any, required by
paragraph (i) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall
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reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the
beneficial interest in the Global Note to be transferred, and
the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Certificated Notes of like tenor and
amount.
(b) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Series A Notes not bearing the Private Placement Legend, the
Registrar shall, except in the case of an exchange described in Section 2.12
hereof, deliver Series A Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Series A Notes bearing the Private
Placement Legend, the Registrar shall, except in the case of an exchange
described in Section 2.12 hereof, deliver only Series A Notes that bear the
Private Placement Legend unless the requested transfer is at least three years
after the original issuance of the Series A Notes, as such period may be
extended by applicable law pursuant to Rule 144.
(c) General. By its acceptance of any Series A Note bearing
-------
the Private Placement Legend, each Holder of such a Series A Note acknowledges
the restrictions on transfer of such Series A Note set forth in this Indenture
and in the Private Placement Legend and agrees that it will transfer such Series
A Note only as provided in this Indenture.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
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Section 2.13 or this Section 2.14. The Company shall have the right to
inspect and make copies of all such letters, notices or other written
communications at any reasonable time.
Section 2.15. Payment of Interest.
-------------------
Through and including February 15, 1999, on each Interest Payment Date,
the Company may, at its option and in its sole discretion, in lieu of the
payment in whole or in part of interest in cash on the Notes, pay interest on
the Notes through the issuance of additional Notes ("Additional Notes") in an
aggregate principal amount equal to the amount of interest that would be payable
with respect to the Notes, if such interest were paid in cash. After February
15, 1999 the Company shall pay interest on the Notes in cash. The Company shall
notify the Trustee in writing of its election to pay interest through the
issuance of Additional Notes not less than 10 nor more than 45 days prior to the
record date for an Interest Payment Date on which Additional Notes will be
issued. On each such Interest Payment Date, the Trustee shall authenticate
Additional Notes for original issuance to each Holder on the relevant record
date in the aggregate principal amount required to pay such interest. Each
Additional Note is an additional obligation of the Company and shall be governed
by, and entitled to the benefits of, the Indenture and shall be subject to the
terms of the Indenture and shall be pari passu with and subject to the same
terms (including the rate of interest from time to time payable thereon) as the
Notes (except, as the case may be, with respect to the issuance date and
aggregate principal amount).
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ARTICLE 3
REDEMPTION
Section 3.01. Right of Redemption.
-------------------
The Notes may be redeemed at the election of the Company, in the
amounts, at the times, at the Redemption Prices (together with any accrued and
unpaid interest to the Redemption Date) and subject to the conditions specified
in the form of Note set forth as Exhibit A hereto.
Section 3.02. Notices to Trustee.
------------------
If the Company elects to redeem Notes pursuant to Paragraph 6 of the
Notes, at least 10 days prior to the date of the notice of redemption described
in Section 3.04 in the case of a partial redemption, or at least 5 days prior to
the date of the notice of redemption described in Section 3.04 in the case of
the redemption of all of the outstanding Notes, the Company shall notify the
Trustee in writing of the Redemption Date and deliver to the Trustee an
Officers' Certificate stating that such redemption will comply with the
conditions contained in Paragraph 6 of the Notes.
Section 3.03. Selection by Trustee of Notes to be Redeemed.
--------------------------------------------
In the event that less than all of the Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed, if the
Notes are listed on a national securities exchange, in
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accordance with the rules of such exchange or, if the Notes are not so
listed, on either a pro rata basis or by lot, or such other method as it
shall deem fair and equitable. The Trustee shall promptly notify the
Company of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
Section 3.04. Notice of Redemption.
--------------------
At least 30 days, and no more than 60 days, before a Redemption Date,
and in the case of redemption as a result of an Equity Event no more than 30
days after (and not before) the Equity Event, the Company shall mail, or cause
to be mailed, a notice of redemption by first-class mail to each Holder of Notes
to be redeemed at his last address as the same appears on the registry books
maintained by the Registrar pursuant to Section 2.03 hereof.
The notice shall identify the Notes to be redeemed (including the CUSIP
numbers thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
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(4) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(5) that unless the Company defaults in making the redemption payment,
interest on Notes called for redemption ceases to accrue on and after
the Redemption Date; and
(6) that no representation is made as to the correctness or accuracy
of the CUSIP numbers listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.05. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Notes called for redemption become
due and payable on the Redemption Date and at the redemption price, including
any premium, plus interest accrued to the Redemption Date. Upon surrender to
the Paying Agent, such Notes shall be paid at the redemption price, including
any premium, plus interest accrued to the Redemption Date.
Section 3.06. Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Company shall deposit with the
Paying Agent money sufficient to pay the redemption price of, including any
premium, plus accrued interest to the Redemption Date (which interest must be
paid in cash) on, all Notes to be redeemed on the Redemption Date.
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Section 3.07. Notes Redeemed in Part.
----------------------
Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate for a Holder a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
----------------
The Company shall pay the principal of, premium, if any, and all
interest on the Notes on the dates and in the manner provided in the Notes and
this Indenture. An installment of principal, premium, if any, or interest shall
be considered paid on the date it is due if the Trustee or Paying Agent holds on
that date money and/or Additional Notes, if applicable, designated for and
sufficient to pay such installment.
The Company will pay interest on overdue principal (including post-
petition interest in a proceeding under any Bankruptcy Law), on overdue premium,
if any, and on overdue interest, to the extent lawful, at the rate borne by the
Notes.
Section 4.02. SEC Reports.
-----------
The Company shall file with the Trustee, within 15 days after
it files with the SEC, copies of the annual reports and of the other
information, documents and reports (or copies of such portions of any of the
foregoing as the SEC may by rules and
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regulations prescribe), if any, which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended. The Company shall also comply with the other provisions
of TIA Section 314(a).
Section 4.03. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead (as a defense or otherwise) or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium on, if any,
and/or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 4.04. Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any transaction with any Affiliate upon terms which
would be any less favorable than those obtainable by the Company or a
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Restricted Subsidiary of the Company in a comparable arm's-length transaction
with a Person which is not an Affiliate. The Company will not, and will not
permit any Restricted Subsidiary of the Company to, engage in any transaction
(or series of related transactions) involving in the aggregate $1,000,000 or
more with any Affiliate except for (i) the making of any Restricted Payment,
(ii) any transaction or series of transactions between the Company and one or
more of its Restricted Subsidiaries or between two or more of its Restricted
Subsidiaries (provided that no more than 5% of the equity interest in any of
its Restricted Subsidiaries is owned by an Affiliate), and (iii) the payment of
compensation (including, without limitation, amounts paid pursuant to employee
benefit plans) for the personal services of officers, directors and employees
of the Company or any of its Restricted Subsidiaries, so long as the Board of
Directors in good faith shall have approved the terms thereof and deemed the
services theretofore or thereafter to be performed for such compensation or
fees to be fair consideration therefor; and provided further that for any Asset
Sale, or a sale, transfer or other disposition (other than to the Company or
any of its Restricted Subsidiaries) of an interest in a Restricted Investment,
involving an amount greater than $25,000,000, such Asset Sale or transfer of
interest in a Restricted Investment is for fair value as determined by an
opinion of a nationally recognized investment bank filed with the Trustee.
Notwithstanding the foregoing, this provision shall not prohibit any such
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transaction which is determined by the independent members of the Board of
Directors, in their reasonable, good faith judgment (as evidenced by a Board
Resolution filed with the Trustee) to be (a) in the best interests of the
Company or such Restricted Subsidiary, and (b) upon terms which would be
obtainable by the Company or a Restricted Subsidiary in a comparable
arm's-length transaction with a Person which is not an Affiliate.
Section 4.05. Limitation on Indebtedness.
--------------------------
The Company will not, and will not permit any Restricted Subsidiary of
the Company to, directly or indirectly, create, incur, issue, assume or become
liable for, contingently or otherwise (collectively an "incurrence"), any
Indebtedness (other than the Notes) unless, after giving effect to such
incurrence on a pro forma basis, Indebtedness of the Company and its Restricted
Subsidiaries, on a consolidated basis, shall not be more than the product of the
Annualized Pro Forma EBITDA for the latest fiscal quarter preceding such
incurrence for which financial statements are available, multiplied by 8.75.
Notwithstanding the above, this provision will not limit the
incurrence of Indebtedness which is incurred by the Company or its Restricted
Subsidiaries for working capital purposes or capital expenditures with respect
to plant, property and equipment of the Company and its Restricted Subsidiaries
in an aggregate amount not to exceed $50,000,000. Further, this
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Indenture will not limit Permitted Refinancing Indebtedness, subject to the
provisions of Section 4.06.
Section 4.06. Limitation on Restricted Payments.
---------------------------------
So long as any of the Notes remain outstanding, the Company shall not
make, and shall not permit any Restricted Subsidiary to make, any Restricted
Payment (as defined above) if (a) at the time of such proposed Restricted
Payment, a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence of such Restricted Payment, or (b) immediately
after giving effect to any such Restricted Payment, the aggregate of all
Restricted Payments which shall have been made on or after January 1, 1993 (the
amount of any Restricted Payment, if other than cash, to be based upon fair
market value as determined in good faith by the Board of Directors whose
determination shall be conclusive) would exceed an amount equal to the greater
of (i) the sum of $5,000,000 or (ii) the difference between (a) the Cumulative
Credit and (b) the sum of the aggregate amount of all Restricted Payments, and
all Permitted Investments made pursuant to clause (v) of the definition of
"Permitted Investments," made on or after January 1, 1993 plus 1.2 times
Cumulative Interest Expense.
Section 4.07. Reports to Holders.
------------------
The Company will send to the Trustee and to Noteholders,
within 15 days after the filing thereof with the SEC, copies of its
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Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q and its
Current Reports on Form 8-K; provided, however, that notwithstanding any event
which results in the Company being relieved of its obligation to file
information, documents and reports with the SEC pursuant to Sections 13 or
15(d) of the Exchange Act, the Company shall nevertheless continue, so long as
any Note remains outstanding and unpaid, (i) to file with the SEC (at such time
as it would be required to file such reports under the Exchange Act), and to
send to the Trustee and Noteholders (within 15 days thereafter), quarterly and
annual reports and information, documents and other reports substantially
equivalent to those it would have been obligated to file if it had remained
subject to such sections of the Exchange Act, and (ii) so long as the Notes
have not been registered pursuant to the Registration Rights Agreement, upon
the request of a Noteholder, to provide information required to be delivered
under Rule 144A(d)(4) under the Securities Act to such Noteholder and its
prospective purchasers designated by such Noteholder.
Section 4.08. Notice of Defaults Or Events of Default.
---------------------------------------
In the event that any Default or Event of Default shall occur and be
continuing, the Company will, within 10 days of the occurrence thereof, give
written notice of such Default or Event of Default to the Trustee.
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<PAGE>
Section 4.09. Compliance Certificates.
-----------------------
The Company shall deliver to the Trustee on or before 105 days after
the end of its fiscal year and on or before 50 days after the end of its second
fiscal quarter in each year an Officers' Certificate stating whether or not the
signers know of any Default or Event of Default. If they do know of such a
Default or Event of Default, the certificate shall describe such Default or
Event of Default and the efforts to remedy or obtain a waiver of the same. The
certificate must comply with Section 11.05 hereof.
Section 4.10. Covenant to Secure Notes Equally.
--------------------------------
Except for Liens created or assumed by the Company in connection with
the acquisition of real property or equipment to be used by the Company in the
operation of its business which do not secure Indebtedness in excess of the
purchase price of such real property or equipment, the Company covenants that,
if it shall create or assume any Lien upon any of its property or assets,
whether now owned or hereafter acquired, it will make or cause to be made
effective provisions whereby the Notes will be secured by such Lien equally and
ratably with all other Indebtedness of the Company secured by such Lien as long
as any such other Indebtedness of the Company shall be so secured. The
restriction imposed by this covenant shall not apply with respect to a Lien,
including a pledge of Capital Stock of a Subsidiary or an Affiliate, to secure
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Indebtedness which is an obligation of such Subsidiary or Affiliate and not an
obligation of the Company.
Section 4.11. Limitation on Investment in Affiliates and Unrestricted
-------------------------------------------------------
Subsidiaries.
------------
After the date of this Indenture, the Company may not, nor will the
Company allow any Restricted Subsidiary to, make a Restricted Investment other
than by way of Permitted Investments unless pro forma for such Investment the
Leverage Ratio of the Company does not exceed 7.75:1.
Section 4.12. Limitation on Sale of Assets.
----------------------------
Neither the Company nor any Restricted Subsidiary of the Company shall
sell an asset (including Capital Stock of Restricted Subsidiaries) or
reclassify a Restricted Subsidiary existing on the date of the Indenture as an
Unrestricted Subsidiary (a "Reclassification") unless (a) in the case of an
asset sale, (i) at least 75% of the net proceeds received by the Company or
such Restricted Subsidiary is in cash, cash equivalents or common or preferred
Capital Stock or debt securities issued by a Person which has Investment Grade
Senior Debt and (ii) cash proceeds from the asset sale are used to reduce
Indebtedness and such Indebetedness reduction results in the Company's
Leverage Ratio being lower pro forma for such asset sale than prior to such
asset sale, or (b) in the case of an asset sale or Reclassification, pro forma
for such asset sale or Reclassification the Indebtedness of the Company and
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<PAGE>
its Restricted Subsidiaries, on a consolidated basis, shall not be more than
7.75 multiplied by Annualized Pro Forma EBITDA, provided that in no case under
either clause (a) or (b) shall the Company undertake an asset sale or
Reclassification, if pro forma for such an asset sale or Reclassification the
Company and its Restricted Subsidiaries would be the owners of fewer than 75%
of the cable systems (measured on the basis of basis subscribers as of the
date of this Indenture) owned by the Company and its Restricted Subsidiaries
as of the date of this Indenture, provided however, that the Company and its
Restricted Subsidiaries may sell additional assets of up to 10% of assets held
as the date of this Indenture if the consideration received from such sale is
(i) cash which is used within 12 months to purchase additional systems of
equivalent value or (ii) other cable systems of equivalent value.
Section 4.13. Change of Control Offer.
-----------------------
Within 50 days of (i) the proposed occurrence of a Change of Control or
(ii) the occurrence of a Change of Control Triggering Event, the Company shall
notify the Trustee in writing of such proposed occurrence or occurrence, as the
case may be, and shall make an offer to purchase (the "Change of Control Offer")
the Notes at a purchase price equal to 100% of the principal amount thereof plus
any accrued and unpaid interest thereon (which interest must be paid in cash) to
the Change of Control Payment Date (as hereinafter defined) (the "Change of
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Control Purchase Price") in accordance with the procedures set forth in this
covenant.
Within 50 days of (i) the proposed occurrence of a Change of Control or
(ii) the occurrence of a Change of Control Triggering Event, the Company also
shall (a) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Jones News Service or similar business news service in the United
States and (b) send by first-class mail, postage prepaid, to the Trustee and to
each Holder, at his address appearing in the register of the Notes maintained by
the Registrar, a notice stating:
(1) that the Change of Control Offer is being made pursuant to
this covenant and that all Notes tendered will be accepted for payment,
provided that a Change of Control Triggering Event has occurred and
otherwise subject to the terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 50 days from the date
such notice is mailed and no later than 15 days after the date of the
corresponding Change of Control Triggering Event) (the "Change of
Control Payment Date");
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Notes accepted for payment
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pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to
surrender the Notes to the Paying Agent at the address specified in the
notice prior to the close of business on the Business Day preceding the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their acceptance
if the Paying Agent receives, not later than the close of business on
the third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Notes delivered for
purchase, and a statement that such Holder is withdrawing his election
to have such Notes purchased;
(7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; and
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(8) any other procedures that a Holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance.
Notwithstanding any other provision of this covenant, in the case of a
notice of a Change of Control Offer that is being furnished by the Company with
respect to a proposed Change of Control that has not yet actually occurred, the
Company may specify in such notice that Holders shall be required to notify the
Company, by a date not earlier than the date (the "Proposed Change of Control
Response Date") which is 30 days from the date of such notice, as to whether
such Holders will tender their Notes for payment pursuant to the Change of
Control Offer and to notify the Company of the principal amount of such Notes to
be so tendered (with the failure of any Holder to so notify the Company within
such 30-day period to be deemed an election of such Holder not to accept such
Change of Control Offer). In such event, the Company shall have the option, to
be exercised by a subsequent written notice to be sent, no later than 15 days
after the Proposed Change of Control Response Date, to the same Persons to whom
the original notice of the Change of Control Offer was sent, to cancel or
otherwise effect the termination of the proposed Change of Control and to
rescind the related Change of Control Offer, in which case the then outstanding
Change of Control Offer shall be deemed to be null and void and of no further
effect.
On the Change of Control Payment Date, the Company shall
(a) accept for payment Notes or portions thereof tendered pursuant to
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the Change of Control Offer, (b) deposit with the Paying Agent money
sufficient to pay the Change of Control Purchase Price of all Notes or
portions thereof so tendered and (c) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal
to the Change of Control Purchase Price for such Notes, and the Trustee shall
promptly authenticate and mail to such Holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered.
There shall be no purchase of any Notes pursuant to this covenant if
there has occurred (prior to, on or after, as the case may be, the tender of
such Notes pursuant to the Change of Control Offer, by the Holders of such
Notes) and is continuing an Event of Default. The Paying Agent will promptly
return to the respective Holders thereof any Notes (a) the tender of which has
been withdrawn in compliance with the Indenture or (b) held by it during the
continuance of an Event of Default (other than a default in the payment of the
Change of Control Purchase Price with respect to such Notes).
In the event that the Company is required to make a Change of Control
Offer, the Company will comply with all applicable tender offer rules including
Rule 14e-1 under the Exchange Act, to the extent applicable.
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ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Mergers and Consolidations.
--------------------------
The Company may not consolidate with, merge with or into, or transfer
all or substantially all of its assets (as an entirety or substantially as an
entirety in one transaction or a series of related transactions), to any Person
unless: (i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company are transferred
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all of the obligations of the Company under
the Notes and this Indenture, and the obligations under this Indenture shall
remain in full force and effect; (ii) immediately before and immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iii) immediately after giving effect to such
transaction on a pro forma basis for the most recent quarter, the pro forma
Consolidated Fixed Charge Ratio of the surviving entity shall be at least 1:1;
provided that, if the Consolidated Fixed Charge Ratio of the Company for the
- --------
most recent quarter preceding such transaction is within the range
set forth in Column A below, then the pro forma Consolidated Fixed
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Charge Ratio of the surviving entity after giving effect to such transaction
shall be at least equal to the greater of the percentage of the Consolidated
Fixed Charge Ratio of the Company for the most recent quarter preceding such
transaction set forth in Column B below or the ratio set forth in Column C
below:
<TABLE>
<CAPTION>
A B C
- - -
<S> <C> <C>
1.1111:1 to 1.4999:1 90% 1.00:1
1.5 and higher 80% 1.35:1
</TABLE>
and provided, further, that if the pro forma Consolidated Fixed Charge Ratio of
-------- -------
the surviving entity is 2:1 or more, the calculation in the preceding proviso
shall be inapplicable and such transaction shall be deemed to have complied with
the requirements of such proviso.
In connection with any consolidation, merger or transfer contemplated
by this provision, the Company shall deliver, or cause to be delivered, to the
Trustee, in form and substance reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
Section 5.02. Successor Person Substituted.
----------------------------
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
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above, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein, and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
-----------------
An "Event of Default" occurs if:
(1) the Company defaults in the payment of any principal of, or
premium, if any, on any Note when the same becomes due and payable at
maturity, upon acceleration or otherwise;
(2) the Company defaults in the payment of any interest on any
Note when the same becomes due and payable and the Default continues
for a period of 30 days;
(3) the Company defaults in the observance or performance of
any other covenant in the Notes or this Indenture for 60 days after
written notice from the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding;
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(4) the Company fails to pay when due principal, interest or
premium aggregating $10,000,000 or more with respect to any
Indebtedness of the Company or any Restricted Subsidiary or any such
Indebtedness is accelerated, which default shall not be cured or waived
or which acceleration shall not be rescinded or annulled, within 10
days after written notice as provided in this Indenture;
(5) a court of competent jurisdiction enters a final judgment
or judgments for the payment of money in excess of $10,000,000 against
the Company or any Restricted Subsidiary and such judgment remains
undischarged for a period of 60 consecutive days during which a stay of
enforcement of such judgment shall not be in effect;
(6) the Company, or any Restricted Subsidiary with liabilities
of greater than $10,000,000 under GAAP as of the date of the event
described in this clause (6), pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property, or
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(D) makes a general assignment for the benefit of its
creditors;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company, or any Restricted
Subsidiary with liabilities of greater than $10,000,000 under
GAAP as of the effective date of such order or decree, in an
involuntary case,
(B) appoints a Custodian of the Company, or any Restricted
Subsidiary with liabilities of greater than $10,000,000 under
GAAP as of the effective date of such order or decree, or for
all or substantially all of its property, or
(C) orders the liquidation of the Company, or any
Restricted Subsidiary with liabilities of greater than
$10,000,000 under GAAP as of the effective date of such order or
decree, and the order or decree remains unstayed and in effect
for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clauses (3) and (4) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
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principal amount of the Securities notify the Company and the Trustee, of the
Default and the Company does not cure the Default within (a) 60 days after
receipt of such notice in the case of a Default under clause (3) and (b) 10 days
after receipt of such notice in the case of a Default under clause (4). The
notice must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default." If the Holders of at least 25% in principal
amount of the outstanding Notes request the Trustee to give such notice on their
behalf, the Trustee shall do so.
Subject to Section 7.05 hereof, the Trustee may withhold notice to the
Holders of the Notes of any default (except in payment of principal, premium, if
any, or interest on the Notes) if the Trustee considers it to be in the best
interest of the Holders of the Notes to do so.
Section 6.02. Acceleration.
------------
If an Event of Default (other than an Event of Default resulting
from certain events of bankruptcy, insolvency or reorganization) occurs and
is continuing, the Trustee by notice to the Company, or the Holders of not
less than 25% in aggregate principal amount of the Notes then outstanding
may declare to be immediately due and payable the principal amount of and
premium, if any, on all the Notes then outstanding plus accrued but unpaid
interest to the date of acceleration; provided, however that after such
acceleration but before a judgment or decree based on
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such acceleration is obtained by the Trustee, the Holders of a majority in
aggregate principal amount of the outstanding Notes by written notice to the
Trustee and the Company may rescind and annul such acceleration and its
consequences if all existing Events of Default, other than the nonpayment of
accelerated principal, premium, if any, or interest, have been cured or
waived. In case an Event of Default specified in Section 6.01(6) or (7)
occurs, such amount with respect to all of the Notes shall be due and payable
immediately without any declaration or other act on the part of the Trustee or
the Holders of the Notes.
Section 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
principal of, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture and may take any
necessary action requested of it as Trustee to settle, compromise, adjust or
otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
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constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
---------------------------------------------
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Notes then outstanding have the right to
waive any existing default or compliance with any provision of this Indenture or
the Notes and to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, subject to certain limitations
specified in this Indenture.
Section 6.05. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another Noteholder
not taking part in such direction, and the Trustee shall have the right to
decline to follow any such direction if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken or if the
Trustee in good faith shall, by a Trust Officer, determine that the proceedings
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so directed would involve it in personal liability; provided that the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
Section 6.06. Limitation on Suits.
-------------------
Subject to Section 6.07 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of a
majority in aggregate principal amount of the Notes then outstanding.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
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Section 6.07. Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium, if any, and
interest on the Note on or after the respective due dates expressed in the Note,
or to bring suit for the enforcement of any such payment on or after such
respective dates, is absolute and unconditional and shall not be impaired or
affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default in payment of principal, premium, if any, or
interest specified in Section 6.01(1) or (2) hereof occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor on the Notes for the whole amount
of unpaid principal, premium, if any, and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate then borne by the Notes, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
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(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Noteholders allowed
in any judicial proceedings relative to the Company (or any other obligor upon
the Notes), its creditors or its property and shall be entitled and empowered to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same after deduction of its charges and
expenses to the extent that any such charges and expenses are not paid out of
the estate in any such proceedings and any Custodian in any such judicial
proceeding is hereby authorized by each Noteholder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Noteholders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee or any
predecessor trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee or any predecessor Trustee under
Section 7.07 hereof out of the estate in any such proceeding shall be denied
for any reason, payment of the same shall be secured by a lien on, and shall
be paid out of, any and all distributions, dividends, monies, securities and
other properties which the Holders of the Notes may be entitled to receive
in such proceeding whether in liquidation or under any
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plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the
claim of any Noteholder in any such proceedings.
Section 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee or any predecessor trustee for amounts
due under Sections 6.09 and 7.07 hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for principal, premium, if any, and interest as to each, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
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litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the same circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
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correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. The Trustee, however, shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(4) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers if it shall have reasonable
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grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not therein expressly so provided, paragraphs
(a), (b) and (c) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity reasonably satisfactory to it
against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
-----------------
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably believed by
it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 11.05 hereof. The
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Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Certificate or Opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(5) The Trustee may consult with counsel, and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
Section 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee,
however, shall be subject to Sections 7.10 and 7.11 hereof.
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Section 7.04. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable
for the Company's use of the proceeds from the sale of Notes and it
shall not be responsible for any statement in the Notes other than its
certificate of authentication.
Section 7.05. Notice of Defaults.
------------------
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Noteholder notice of the
Default within 90 days after it occurs. Except in the case of a
Default in payment of the principal of, premium, if any, or interest on
any Note, the Trustee may withhold the notice if and so long as the
board of directors of the Trustee, the executive committee or any trust
committee of such board and/or its Trust Officers in good faith
determine(s) that withholding the notice is in the interests of the
Noteholders.
Section 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after May 15 of any year, commencing the May 15
following the date of this Indenture, the Trustee shall mail to each
Noteholder a brief report dated as of such May 15 that complies with
TIA Section 313(a). The Trustee also shall comply with TIA section
313(b)(2).
Reports pursuant to this Section shall be transmitted by mail:
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(1) to all registered Holders of Notes, as the names and
addresses of such Holders appear on the Registrar's books;
(2) to such Holders of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose; and
(3) except in the case of reports pursuant to TIA Section
313(b), to each Noteholder whose name and address is preserved at
the time by the Trustee, as provided in Section 2.05.
A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange on which the Notes are listed.
The Company shall notify the Trustee when the Notes are listed on any stock
exchange.
Section 7.07. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it in connection with
its duties under this Indenture, including the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any loss, liability or reasonable expense incurred by it in connection
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with the performance of its duties under this Indenture including the reasonable
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder (including, without limitation, settlement costs). The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity.
The Company need not reimburse the Trustee for any expense or indemnify
it against any loss or liability incurred by the Trustee through its negligence
or bad faith. To secure the Company's payment obligations in Sections 6.09 and
7.07, the Trustee shall have a lien prior to the Notes on all money or property
held or collected by the Trustee except such money or property held in trust to
pay principal of, premium, if any, and interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law. However, in the event that such
expenses of administration are disallowed by a final judgment of a court of
competent jurisdiction, the expenses thereby, and all other unreimbursed
expenses of the Trustee, shall constitute a general unsecured claim of the
Trustee against the estate.
For purposes of this Section 7.07, the term "Trustee" shall include any
trustee appointed pursuant to Article 10.
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Section 7.08. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
notifying the removed Trustee and may appoint a successor Trustee with the
Company's written consent. Subject to the provisions of Section 6.11, any
Noteholder who has been a bona fide holder of Notes for at least six months may,
on behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee, and the appointment of a
successor, if the Trustee fails, after written notice therefor by such Holder,
to comply with the provisions of clause (i) of TIA 310(b). The Company may
remove the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee pursuant
to Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
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If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Noteholder.
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.
--------------------------------------------------------
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust assets to, another corporation,
subject to Section 7.10 hereof, the successor corporation without any further
act shall be the successor Trustee.
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Section 7.10. Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
shall have a combined capital and surplus of at least $5,000,000 as set
forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b), including the provision in
Section 310(b)(1) and the optional provision permitted by the second sentence
of TIA Section 310(b)(9).
Section 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A Trustee who has resigned or been removed
shall be subject to TIA 311(a) to the extent indicated therein.
Section 7.12. Paying Agents.
-------------
The Company shall cause each Paying Agent other than the Trustee to
execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 7.12:
(A) that it will hold all sums held by it as agent for the
payment of principal of or premium, if any, on, the Notes and all sums
and Additional Notes, if applicable, for the payment of interest on
Notes (whether paid to it by the Company or by any obligor on the
Notes) in trust for the benefit of Holders of the Notes;
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(B) that it will at any time during the continuance of any
Event of Default, upon written request from the Trustee, deliver to the
Trustee all sums and Additional Notes so held in trust by it; and
(C) that it will give the Trustee written notice within three
(3) Business Days of any failure of the Company (or by any obligor on
the Notes) in the payment of any installment of the principal of,
premium, if any, or interest on, the Notes when the same shall be due
and payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
--------------------------
The Company and the Trustee may amend or supplement this
Indenture or the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to convey, transfer, assign, mortgage or pledge any
property to the Trustee and otherwise to comply with Section 4.10
hereof;
(3) to provide for uncertificated Notes in addition to or in
place of certificated Notes; or
(4) to cure any ambiguity, defect or inconsistency, or to make
any other change that does not materially and adversely affect the
rights of any Noteholder.
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The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
which may be therein contained, but the Trustee shall not be obligated to enter
into any such supplemental indenture which adversely affects its own rights,
duties or immunities under this Indenture.
Section 8.02. With Consent of Holders.
-----------------------
The Company and the Trustee may modify or supplement this Indenture or
the Notes with the written consent of the Holders of at least one-half in
principal amount of the outstanding Notes without notice to any Holder. The
Holders of a majority in aggregate principal amount of the outstanding Notes may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes without notice to any Holder. Subject to Section
8.04, without the consent of each Holder affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver to this Indenture or the Notes;
(2) reduce the rate of interest, or change the time for or
permissible method of any payment of interest on any Note;
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(3) reduce the principal of, premium, if any, on, or change the
stated maturity of, any Note;
(4) change the amount or time of any payment required by the
Notes or provide for the redemption of the Notes prior to maturity
(other than as stated herein);
(5) waive a default in the payment of the principal of,
premium, if any, or interest on, or redemption payment with respect to,
any Note;
(6) make any Note payable in money other than that stated in
the Note or change the place of payment from New York, New York; or
(7) make any changes in Sections 6.04, 6.07 hereof or this
sentence of Section 8.02.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon the request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Noteholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture, in which case the Trustee
may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
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It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 8.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the notice of revocation before the date the amendment, supplement, waiver or
other action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to
any amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders
at such record date (or their duly
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designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date unless the consent of the requisite number of Holders has
been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described in
any of clauses (1) through (7) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement, or waiver changes the terms of a Note, the
Trustee may request the Holder of the Note to deliver it to the Trustee. In
such case, the Trustee shall place an appropriate notation on the Note about the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Note shall issue and the
Trustee shall authenticate a new security that reflects the changed terms.
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Section 8.06. Trustee to Sign Amendments, etc.
--------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to Section 7.01 hereof, shall be fully protected in relying
upon an Officers' Certificate and an Opinion of Counsel stating that such
amendment, supplement or waiver is authorized or permitted by this Indenture.
The Company may not sign an amendment or supplement until the Board of Directors
approves it.
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE: UNCLAIMED MONEYS
Section 9.01. Satisfaction and Discharge of Indenture.
---------------------------------------
If at any time
(a) either
(i) there shall have been cancelled by the Trustee or
delivered to the Trustee for cancellation all Notes theretofore
authenticated and delivered (other than any Notes that are
asserted to have been destroyed, lost or stolen and that shall
have been replaced as provided in Section 2.07 hereof, or paid,
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or Notes for whose payment money has theretofore been deposited
in trust with the Trustee); or
(ii) all such Notes not theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and
payable within one (1) year, and the Company has deposited or
caused to be deposited with the Trustee as trust funds money in
the entire amount sufficient to pay at maturity the principal
of, premium, if any, and accrued interest on all such Notes not
theretofore cancelled by the Trustee or delivered to the Trustee
for cancellation; and
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for herein relating
to the satisfaction and discharge of this Indenture have been complied with; and
(d) the Company has delivered to the Trustee an Opinion of
Counsel stating that the documents and other items that have been or are
therewith delivered to the Trustee conform to the requirements of this
Indenture, and that, upon the basis of a Company Request and the accompanying
documents and items specified in this Section 9.01, all conditions precedent
provided for herein relating to the satisfaction and discharge of this
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Indenture have been complied with, then, upon Company Request, this
Indenture and the rights and interests hereby created shall cease to be
of further effect (except as to any surviving rights of registration of
transfer or exchange of Notes), and the Trustee, at the cost and expense
of the Company, shall, subject to Section 9.05 hereof, execute and
deliver proper instruments acknowledging satisfaction and discharge of
this Indenture.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 6.09,
7.07, 7.08, 9.04 and 9.05 shall survive until the Notes are no longer
outstanding. Thereafter, the Company's obligations to the Trustee under
Sections 7.07, 9.04 and 9.05 hereof shall survive.
Section 9.02. Funds Deposited for Payment of Notes.
------------------------------------
All moneys deposited with the Trustee pursuant to Section 9.01 hereof
shall be held in trust and shall be available for payment when the Notes become
due and payable in accordance with their terms, either directly or through any
Paying Agent, to the Holders of the particular Notes for the payment of which
such moneys have been deposited with the Trustee.
Section 9.03. Moneys Held by Paying Agent.
---------------------------
In connection with the satisfaction and discharge of
this Indenture, all moneys then held by any Paying Agent under the
provisions of this Indenture shall, upon demand of the
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Company, be paid to the Trustee, or if sufficient moneys have been
deposited pursuant to Section 9.01 hereof, to the Company, and thereupon
such Paying Agent shall be released from all further liability with
respect to such moneys.
Section 9.04. Moneys Held by Trustee.
----------------------
Any moneys or Additional Notes deposited with the Trustee
or any Paying Agent or then held by the Company in trust for the payment
of the principal of, premium, if any, or interest on any Note that are
not applied but remain unclaimed by the Holder of such Note for two (2)
years after the date upon which the principal of, premium, if any, or
interest on such Note shall have respectively become due and payable
shall be repaid to the Company upon Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Note entitled to receive such payment shall thereafter, as an unsecured
general creditor, look only to the Company for the payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or any such Paying
Agent, before being required to make any such repayment, may, at the
expense of the Company, either mail to each Noteholder affected, at the
address shown in the register of the Notes maintained by the Registrar
pursuant to Section 2.03 hereof, or cause to be published once a week for
two successive weeks, in a newspaper published in the
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English language, customarily published each Business Day and of general
circulation in the City of New York, New York, a notice that such money
remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such mailing or publication,
any unclaimed balance of such moneys then remaining will be repaid to the
Company. After payment to the Company, Noteholders entitled to the money
must look only to the Company for payment as general creditors unless
applicable abandoned property law designates another person.
Section 9.05. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 9.01 hereof by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Notes shall be revived and reinstated
as though no deposit had occurred pursuant to this Article 9 until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 9.01; provided, however, that if the Company has made any payment
of principal of or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
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ARTICLE 10
DEFEASANCE AND COVENANT DEFEASANCE
Section 10.01. Applicability of Article; Company Option to Effect Defeasance.
-------------------------------------------------------------
The Company may at its option by a Board Resolution at any time, with
respect to the Notes elect to have Section 10.02 or Section 10.03 hereof be
applied to the outstanding Notes upon compliance with the conditions set forth
below in this Article 10.
Section 10.02. Defeasance and Discharge.
------------------------
Upon the Company's exercise of the option described in Section 10.01
above applicable to this Section with respect to the Notes, the Company shall be
deemed to have been discharged from its obligations with respect to the Notes on
the date the conditions set forth in Section 10.04 below are satisfied
(hereinafter, "Defeasance"). For this purpose, such Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Notes and to have satisfied all its other obligations under
such Notes and this Indenture insofar as such Notes are concerned (and the
Trustee, at the expense of the Company, shall, subject to Section 10.06 hereof,
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (A) the
rights of Holders of outstanding Notes to receive solely from the trust funds
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described in Section 10.04 hereof and as more fully set forth in such Section,
payments in respect of the principal of and interest on such Notes when such
payments are due, (B) the Company's obligations with respect to such Notes under
Sections 2.03, 2.04, 2.05, 2.06, 2.07 and 2.08 hereof, (C) the rights, powers,
trusts, duties, and immunities of the Trustee hereunder (including claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof) and (D) this
Article 10. Subject to compliance with this Article 10, the Company may
exercise its option under this Section 10.02 with respect to the Notes
notwithstanding the prior exercise of its option under Section 10.03 below with
respect to the Notes.
Section 10.03. Covenant Defeasance.
-------------------
Upon the Company's exercise of the option in Section 10.01
above applicable to this Section with respect to the Notes, the Company shall
be released from its obligations under Sections 4.04, 4.05, 4.06, 4.10, 4.11,
4.12 and 4.13, and clause (iii) of Section 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section
10.04 below are satisfied (hereinafter, "Covenant Defeasance"). For this
purpose, such Covenant Defeasance means that the Company may omit to comply
with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified Section or portion thereof, whether
directly or indirectly by reason of any reference elsewhere
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herein to any such specified Section or portion thereof or by reason of any
reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Notes shall be unaffected thereby.
Section 10.04. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of Section 10.02
or Section 10.03 above to the outstanding Notes:
(1) the Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with the
provisions of this Article 10 applicable to it) as funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Notes, (A) money in an amount, or (B) U.S. Government Obligations
which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later
than the due date of any payment, money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally-
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
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discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of and accrued
interest on the outstanding Notes at the maturity date of such
principal or interest;
(2) no Event of Default or Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, or
shall have occurred and be continuing at any time during the period
ending on the 91st day after the date of such deposit or, if longer,
ending on the day following the expiration of the longest preference
period under any Bankruptcy Law applicable to the Company in respect of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(3) such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest for purposes of the TIA with
respect to any securities of the Company;
(4) such Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute default under, this Indenture
or any other agreement or instrument to which the Company is a party or
by which it is bound;
(5) in the case of an election under Section 10.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that the Company has received from, or there has been published
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by, the Internal Revenue Service a ruling to the effect that, and such
opinion shall confirm that, the Holders of the outstanding Notes or
persons in their positions will not recognize income, gain or loss for
Federal income tax purposes as a result of such Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Defeasance
had not occurred;
(6) in the case of an election under Section 10.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of
such Covenant Defeasance and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(7) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Defeasance
under Section 10.02 above or the Covenant Defeasance under Section
10.03 above (as the case may be) have been complied with; and
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(8) the Company shall have delivered to the Trustee an
Officers' Certificate stating its intention to effect a Defeasance
pursuant to the provisions of this Article 10 at least sixty (60) days
prior to such Defeasance.
Section 10.05. Deposited Money and U.S. Government Obligations to be Held in
-------------------------------------------------------------
Trust; Other Miscellaneous Provisions.
-------------------------------------
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 10.04 in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Notes, of all sums due and to become due thereon in respect of
principal and accrued interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 10.04 above or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Notes.
Anything in this Article 10 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
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Request any money or U.S. Government Obligations held by it as provided in
Section 10.04 above which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance.
Section 10.06. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 10.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 10 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 10.01; provided, however,
-------- -------
that if the Company has made any payment of principal of or accrued interest on
any Notes because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
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ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 11.02. Notices.
-------
Any notice or communication shall be given in writing and delivered in
person, sent by telex or telephone facsimile, delivered by commercial courier
service or mailed by first-class mail, postage prepaid, addressed as follows:
If to the Company:
Adelphia Communications Corporation
5 West Third Street
P.O. Box 472
Coudersport, Pennsylvania 16915
Attention: Colin Higgin, Esq.
Copy to:
Buchanan Ingersoll Professional Corporation
58th Floor
600 Grant Street
Pittsburgh, Pennsylvania 15219
Attention: Carl E. Rothenberger, Jr., Esq.
If to the Trustee:
Bank of Montreal Trust Company
77 Water Street
New York, New York 10005
Attention: Corporate Trust Department
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<PAGE>
Such notices or communications shall be effective when received and
shall be sufficiently given if so given within the time prescribed in this
Indenture.
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address shown on the register
kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication to a Noteholder is mailed in the manner provided above,
it shall be deemed duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 11.03. Communications by Holders with Other Holders.
--------------------------------------------
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
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<PAGE>
Section 11.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 11.05 below) stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 11.05. Statements Required in Certificate and Opinion.
----------------------------------------------
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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<PAGE>
(3) a statement that, in the opinion of such Person, it or he
has made such examination or investigation as is necessary to enable it
or him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 11.06. When Treasury Notes Disregarded.
-------------------------------
In determining whether the Holders of the required aggregate
principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company or any other obligor on the Notes
or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or such
obligor shall be disregarded, except that for the purposes of
determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which the Trustee knows
are so owned shall be so disregarded. Notes so owned which have been
pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to the Notes and that the pledgee is not the
Company or any other obligor upon the Notes or any person directly or
indirectly controlling or controlled by or under direct or indirect
common control with the Company or such obligor.
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<PAGE>
Section 11.07. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or meetings
of Noteholders. The Registrar and Paying Agent may make reasonable
rules for their functions.
Section 11.08. Business Days; Legal Holidays.
-----------------------------
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a
day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
Section 11.09. Governing Law.
-------------
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE
AND THE NOTES WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 11.10. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any Subsidiary. No
such indenture, loan, security or debt agreement may be used to
interpret this Indenture.
-105-
<PAGE>
Section 11.11. No Recourse against Others.
--------------------------
No recourse for the payment of the principal of, premium, if
any, or accrued interest on any of the Notes, or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon
any obligation, covenant or agreement of the Company in this Indenture
or in any supplemental indenture, or in any of the Notes, or because of
the creation of any Indebtedness represented thereby, shall be had
against any stockholder, officer, director or employee, as such, past,
present or future, of the Company or of any successor corporation or
against the property or assets of any such stockholder, officer,
employee or director, either directly or through the Company or any
successor corporation, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the
Notes are solely obligations of the Company, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, any
stockholder, officer, employee or director of the Company or any
successor corporation because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations, covenants
or agreements contained in this Indenture or the Notes or implied
therefrom, and that any and all such personal liability of, and any and
all claims against every stockholder, officer, employee and director,
are hereby expressly waived and released as a condition of, and as a
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<PAGE>
consideration for, the execution of this Indenture and the issuance of
the Notes. It is understood that this limitation on recourse is made
expressly for the benefit of any such shareholder, employee, officer or
director and may be enforced by any of them.
Section 11.12. Successors.
----------
All agreements of the Company in this Indenture and the Notes
shall bind its successor. All agreements of the Trustee, any
additional trustee and any Paying Agents in this Indenture shall bind
its successor.
Section 11.13. Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them
together represent one and the same agreement.
Section 11.14. Table of Contents, Headings, etc.
---------------------------------
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of
the terms or provisions hereof.
Section 11.15. Separability.
------------
Each provision of this Indenture shall be considered
separable and, if for any reason any provision which is not
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<PAGE>
essential to the effectuation of the basic purpose of this Indenture or the
Notes shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
[The rest of this page has been intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed, and attested, all as of the date and year first written above.
ADELPHIA COMMUNICATIONS CORPORATION
/s/ James Brown
By: ______________________________
Name: James Brown
Title: VP
ATTEST:
/s/ Colin H. Higgin
____________________________
Name:
Title: Asst. Sec.
BANK OF MONTREAL TRUST COMPANY,
as Trustee
By: _____________________________
Name:
Title:
ATTEST:
___________________________
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed, and attested, all as of the date and year first written above.
ADELPHIA COMMUNICATIONS CORPORATION
By: ______________________________
Name:
Title:
ATTEST:
____________________________
Name:
Title:
BANK OF MONTREAL TRUST COMPANY,
as Trustee
/s/ Amy Roberts
By: _____________________________
Name: Amy Roberts
Title: Assistant Vice President
ATTEST:
/s/
___________________________
<PAGE>
EXHIBIT A
(FACE OF NOTE)
[Each Global Note shall bear the following legend on the face thereof:]
Unless this certificate is presented by an authorized representative of
the Depository Trust Company, a New York corporation ("DTC"), to the Company (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein. Unless and until it is exchanged in
whole or in part for Notes in definitive registered form, this certificate may
not be transferred except as a whole by DTC to a nominee of DTC or by a nominee
of DTC to DTC or another nominee of DTC or by DTC or any such nominee to a
successor Depository or a nominee of such successor Depository. If DTC is at
any time unwilling or unable to continue as a Depository for this certificate
and a successor Depository is not appointed by the Company within 90 days, the
Company will issue certificated Notes in exchange for this Note [IF NOTE IS
GLOBAL NOTE FOR SERIES A NOTES, INSERT: which will bear the legend set forth
below].
[EACH SERIES A NOTE AND EACH GLOBAL NOTE FOR SERIES A NOTES SHALL BEAR THE
FOLLOWING LEGEND ON THE FACE THEREOF:]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE THIRD ANNIVERSARY OF THE LATER OF THE ISSUANCE HEREOF (OR
ANY PREDECESSOR SECURITY HERETO) OR THE SALE HEREOF (OR ANY PREDECESSOR
SECURITY HERETO) BY THE COMPANY OR AN AFFILIATE OF THE COMPANY
(COMPUTED IN ACCORDANCE WITH PARAGRAPH (D) OF RULE 144 UNDER THE
SECURITIES ACT) OR (Y) BY AN AFFILIATE OF THE COMPANY OR BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE
MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN
(1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT
<PAGE>
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR
THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A AND THAT IT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (2) A NON-
U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (O)(2) OF RULE 902
UNDER) REGULATION S OF THE SECURITIES ACT.
[EACH SERIES A NOTE AND EACH GLOBAL NOTE FOR SERIES A NOTES SHALL BEAR THE
FOLLOWING LEGEND ON THE FACE THEREOF:]
For purposes of Section 1275 of the Internal Revenue Code of 1986, as
amended, the issue price, the amount of original issue discount, the issue date
and the yield to maturity of this Note may be obtained by contacting the Deputy
General Counsel of Adelphia Communications Corporation, 5 West Third Street,
Coudersport, Pennsylvania 16915.
A-2
<PAGE>
[THE FORM OF THE FACE OF THE NOTES SHALL BE SUBSTANTIALLY AS FOLLOWS, WITH
"SERIES A" INSERTED WHERE INDICATED ON ALL CERTIFICATES REPRESENTING SERIES A
NOTES AND "SERIES B" INSERTED WHERE INDICATED ON ALL CERTIFICATES REPRESENTING
SERIES B NOTES:]
CUSIP 006848 AJ 4
See Reverse for
Certain Definitions
Number
ADELPHIA COMMUNICATIONS CORPORATION
9-1/2% SENIOR PAY-IN-KIND NOTE
DUE 2004 [, Series A] [, Series B]
Adelphia Communications Corporation, a corporation organized under the
laws of the State of Delaware, promises to pay to ________________________ or
registered assigns the principal sum of ____________________________ Dollars, on
February 15, 2004.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Additional provisions of this Note are set forth on the other side of
this Note.
Adelphia Communications Corporation
By:____________________________________________
By:____________________________________________
Dated:
Certificate of Authentication:
This is one of the 9-1/2% Senior
Pay-In-Kind Notes Due 2004 [, Series A]
[, Series B] referred to in the
within-mentioned Indenture
By: _______________________________
Authorized Officer
A-3
<PAGE>
[THE FORM OF THE REVERSE OF THE NOTES SHALL BE SUBSTANTIALLY AS FOLLOWS, WITH
"SERIES A" INSERTED WHERE INDICATED ON ALL SERIES A NOTES AND "SERIES B"
INSERTED WHERE INDICATED ON ALL CERTIFICATES REPRESENTING SERIES B NOTES:]
(REVERSE SIDE)
ADELPHIA COMMUNICATIONS CORPORATION
9-1/2% SENIOR PAY-IN-KIND NOTES
DUE 2004 [, Series A] [, Series B]
1. INTEREST.
Adelphia Communications Corporation (the "Company") promises to pay
interest on the principal amount of this Note semi-annually on February 15 and
August 15 of each year, commencing on August 15, 1994, at the rate of 9-1/2% per
annum, except as set forth in paragraph 5 below; provided, however, that through
-------- -------
and including February 15, 1999, on each Interest Payment Date, the Company may,
at its option and in its sole discretion, in lieu of the payment in whole or in
part of interest due on this Note, pay interest on this Note through the
issuance of Additional Notes in an aggregate principal amount equal to the
amount of interest that would be payable with respect to this Note, if such
interest were paid in cash. After February 15, 1999 the Company shall pay
interest on this Note in cash. The Company shall notify the Trustee in writing
of its election to pay interest on this Note through the issuance of Additional
Notes not less than 10 nor more than 45 days prior to the record date for the
Interest Payment Date on which Additional Notes will be issued. Additional
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<PAGE>
Notes shall be governed by, and entitled to the benefits of, the Indenture and
shall be subject to the terms of the Indenture and shall be subject to the same
terms (including the rate of interest from time to time payable thereon) as this
Note (except, as the case may be, with respect to the issuance date and
aggregate principal amount). Interest will be computed on the basis of a 360-
day year of twelve 30-day months. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in paragraph 1
above (except defaulted interest) to the person who is the registered Holder of
this Note at the close of business on the February 1 or August 1 next preceding
the Interest Payment Date. The Holder must surrender this Note to a Paying
Agent to collect principal payments. Except to the extent that interest is paid
through the issuance of Additional Notes pursuant to paragraph 1 above, the
Company will pay principal, premium, if any, and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts; provided, however, that the Company may pay principal, premium,
if any, and interest by check payable in such money. It may mail an interest
check to the Holder's registered address.
A-5
<PAGE>
3. PAYING AGENT AND REGISTRAR.
Initially, Bank of Montreal Trust Company (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to the Holders of the Notes. Neither the Company nor
any of its Subsidiaries or Affiliates may act as Paying Agent but may act as
registrar or co-registrar.
4. INDENTURE; LIMITATIONS.
The Company issued this Note under an Indenture dated as of February
22, 1994, as amended, restated or supplemented (the "Indenture") between the
Company and the Trustee. The terms of this Note include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code {{ 77aaa-77bbbb) as in effect on the date of
the Indenture. This Note is subject to all such terms, and the Holder of this
Note is referred to the Indenture and said Trust Indenture Act for a statement
of them. All capitalized terms in this Note, unless otherwise defined, have the
meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Company. The
Indenture imposes certain restrictions on, among other things, the incurrence of
indebtedness, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock and subordinated debt of the Company and certain
other restricted payments by the Company and its subsidiaries, certain
A-6
<PAGE>
transactions with, and investments in, its affiliates, and a provision regarding
change-of-control transactions.
5. [IF NOTE IS A SERIES A NOTE, INSERT: EFFECT OF REGISTRATION ON
INTEREST RATE.
The Series A Notes will bear interest at a rate of 10% per annum until
such date as a registration statement with respect to an offer to exchange the
Series A Notes for Series B Notes or a shelf registration statement with respect
to the resale of the Series A Notes by the Holders is declared effective by the
SEC at and from which date the interest rate payable on the principal amount of
the Series A Notes shall decrease to 9.5% per annum.]
[IF NOTE IS A SERIES B NOTE, INSERT: ACCRUED INTEREST. If this Note
was issued pursuant to an effective registration statement for an exchange offer
registered under the Securities Act, and was exchanged for a Series A Note of
like aggregate amount, accrued interest on the Series A Note so exchanged, up to
but not including the issuance date for this Note, will be paid on the first
interest payment date for this Note to the Holder of this Note on the first
record date with respect to this Note.]
6. REDEMPTION.
The Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after February 15, 1999 at the following redemption
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<PAGE>
prices (expressed as a percentage of principal amount) if redeemed during the
twelve-month period beginning on the dates set forth below:
February 15, 1999................. 103.56%
February 15, 2000................. 102.38%
February 15, 2001................. 101.19%
and from February 15, 2002 and thereafter at 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date. In
addition, in the event of a sale by the Company prior to February 15, 1996 of
its Capital Stock to a Strategic Equity Investor in a single transaction for an
aggregate purchase price equal to or exceeding $100 million, up to a maximum of
33-1/3% of the then outstanding Notes will, at the option of the Company, be
redeemable from the net proceeds of such sale (but only to the extent such
proceeds consist of cash or readily marketable cash equivalents received in
respect of the Company's Capital Stock so sold, in each case net of all
commissions, discounts, fees, expenses and taxes incurred in respect thereof) at
a redemption price equal to 109.50% of principal amount, together with accrued
interest to the Redemption Date.
In the event of redemption of fewer than all of the Notes, the Trustee
shall select by lot or in such manner as it shall deem fair and equitable the
Notes to be redeemed. The Notes will be redeemable pursuant to the paragraph
above on not less than 30 nor more than 60 days' prior notice and in the case of
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<PAGE>
redemption as a result of the purchase of the Company's Capital Stock by a
Strategic Equity Investor as described in the paragraph above given within 30
days after (and not before) such sale. Such notice shall be mailed by first
class mail to the Holder's last address as it shall appear on the register of
the Notes maintained by the Registrar. On and after any Redemption Date,
interest will cease to accrue on this Note or any portion thereof called for
redemption unless the Company shall fail to redeem such Note or portion thereof.
7. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons. A Holder may
register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
certifications, endorsements, transfer documents or other appropriate
documentation and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Note
selected for redemption or register the transfer of or exchange any Note for a
period of 15 days before a selection of Notes to be redeemed or any Note after
it is called for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part.
A-9
<PAGE>
8. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of it
for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any Note
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to money must
look to the Company for payment as general creditors unless an "abandoned
property" law designates another person.
10. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Company or the Trustee with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding and any existing default or compliance with any provision may be
waived in a particular instance with the consent of the Holders of a majority in
principal amount of the Notes then outstanding.
11. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and immediately thereafter no
Default exists, the predecessor corporation will be released from those
obligations.
A-10
<PAGE>
12. DEFAULTS AND REMEDIES.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of any principal of or
premium, if any, on any Note when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise;
(2) the Company defaults in the payment of any interest on any
Note when the same becomes due and payable and the Default continues
for a period of 30 days;
(3) the Company defaults in the observance or performance of
any other covenant in the Notes or the Indenture for 60 days after
written notice from the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Notes then Outstanding;
(4) the Company fails to pay when due principal, interest or
premium aggregating $10,000,000 or more with respect to any
Indebtedness of the Company or any Restricted Subsidiary, or any such
Indebtedness is accelerated which default shall not be cured or waived
or which acceleration shall not be rescinded or annulled, within ten
days after written notice to the Company as provided in the Indenture;
(5) a court of competent jurisdiction enters a final judgment
or judgments for the payment of money in excess of $10,000,000 against
the Company or any Restricted Subsidiary and such judgment remains
A-11
<PAGE>
undischarged for a period of 60 consecutive days during which a stay of
enforcement of such judgment shall not be in effect;
(6) the Company, or any Restricted Subsidiary with liabilities
of greater than $10,000,000 under GAAP as of the date of the event
described in this clause (6), pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company, or any Restricted
Subsidiary with liabilities of greater than $10,000,000 under
GAAP as of the effective date of such order or decree, in an
involuntary case,
(B) appoints a Custodian of the Company, or any Restricted
Subsidiary with liabilities of greater than $10,000,000 under
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<PAGE>
GAAP as of the effective date of such order or decree, or for
all or substantially all of its property, or
(C) orders the liquidation of the Company, or any
Restricted Subsidiary with liabilities of greater than
$10,000,000 under GAAP as of the effective date of such order or
decree, and the order or decree remains unstayed and in effect
for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clauses (3) and (4) is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes notify the Company and the Trustee, of the Default
and the Company does not cure the Default within (a) 60 days after receipt of
such notice in the case of a Default under clause (3) and (b) 10 days after
receipt of such notice in the case of a Default under clause (4). The notice
must specify the Default, demand that it be remedied and state that the notice
is a "Notice of Default." If the Holders of at least 25% in principal amount of
the outstanding Notes request the Trustee to give such notice on their behalf,
the Trustee shall do so.
A-13
<PAGE>
The Trustee may withhold notice to the Holders of the Notes of any
Default (except in payment of principal, premium, if any, or interest on the
Notes) if the Trustee considers it to be in the best interest of the Holders of
the Notes to do so.
If an Event of Default (other than an Event of Default resulting from
certain events of bankruptcy, insolvency or reorganization) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding, may
declare to be immediately due and payable the principal amount of all the Notes
then outstanding plus accrued but unpaid interest to the date of acceleration;
provided, however, that after such acceleration but before a judgment or decree
based on such acceleration is obtained by the Trustee, the Holders of a majority
in aggregate principal amount of the outstanding Notes by written notice to the
Trustee and the Company may rescind and annul such acceleration and its
consequences if all existing Events of Default, other than the nonpayment of
accelerated principal, premium, if any, or interest, have been cured or waived.
In case of an Event of Default involving certain events of bankruptcy,
insolvency or reorganization specified in the Indenture, such amount with
respect to all of the Notes shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the Notes.
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<PAGE>
13. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
14. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect or by reason of, such
obligations or their creation as more fully described in the Indenture. The
Holder of this Note by accepting this Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of this Note.
15. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
16. ABBREVIATIONS.
Customary abbreviations may be used in the name of a
Holder of a Note or an assignee, such as: TEN COM (= tenants in
A-15
<PAGE>
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
17. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP Numbers to be
printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
A-16
<PAGE>
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: ADELPHIA
COMMUNICATIONS CORPORATION, 5 WEST THIRD STREET, P.O. BOX 472, COUDERSPORT,
PENNSYLVANIA 16915, ATTENTION: CHIEF FINANCIAL OFFICER.
A-17
<PAGE>
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
_________________________________________________________________
_________________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[IF NOTE IS A SERIES A NOTE, INSERT THE FOLLOWING PROVISIONS:
In connection with any transfer of this Note, each transferor hereof
shall certify as follows:
This is to certify that with respect to the transfer of this Note, and
any presentation or surrender of this Note for registration of transfer, or for
exchange where the securities issuable upon such exchange are to be registered
in a name other than that of the undersigned (each such transaction being a
"transfer"), the undersigned certifies that the transfer of this Note complies
with the restrictive legend set forth on the face of the Note for the reason
checked below:
[_] This Note is being transferred to the Company; or
[_] this Note is being transferred in compliance with Rule
144 under the U.S. Securities Act of 1933, as amended
(the Securities Act"); or
[_] this Note is being transferred to a qualified
institutional buyer in compliance with the exemption provided by
Rule 144A under the Securities Act; or
[_] this Note is being transferred in an offshore
transaction in compliance with Regulation S under the Securities
Act.
A-18
<PAGE>
Date:___________ Your Signature:________________________
______________________________
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee: ________________________________
A-19
<PAGE>
EXHIBIT 5.01
Buchanan Ingersoll Professional Corporation
Attorneys
58th Floor, 600 Grant Street
Pittsburgh, PA 15219-2887
March 4, 1994
Adelphia Communications Corporation
5 West Third Street
Coudersport, PA 16915
Dear Sirs:
We have acted as counsel to Adelphia Communications Corporation, a Delaware
corporation (the "Company"), in connection with the proposed exchange (the
"Exchange Offer") by the Company of 9-1/2% Senior Pay-In-Kind Notes Due 2004,
Series B (the "New Notes") for an equal principal amount of its outstanding
9-1/2% Senior Pay-In-Kind Notes Due 2004, Series A (the "Old Notes"), of which
an aggregate of $150,000,000 in principal amount is outstanding as of the date
hereof.
In connection with the proposed Exchange Offer, we have examined the
Certificate of Incorporation of the Company, the Bylaws of the Company, as
amended, the relevant corporate proceedings of the Company, the Registration
Statement on Form S-4 covering the exchange of the New Notes filed by the
Company with the Securities and Exchange Commission (the "Registration
Statement"), including the Prospectus filed as a part of the Registration
Statement, the Indenture dated February 22, 1994 with respect to the New Notes
(the "Indenture"), and such other documents, records, certificates of public
officials, statutes and decisions as we considered necessary to express the
opinions contained herein. In the examination of such documents, we have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity to the original documents of all
documents submitted to us as certified or photostatic copies.
We understand that the New Notes are to be issued and exchanged in the manner
described in the Prospectus which is a part of the Registration Statement.
Based on the foregoing, we are of the opinion that:
1. The issuance and exchange of the New Notes pursuant to the terms of the
Registration Statement have been duly authorized by proper corporate
action of the Company.
2. When the Registration Statement shall have been declared effective by
order of the Securities and Exchange Commission and when the New Notes
have been duly issued and exchanged in accordance with the terms thereof
<PAGE>
Exhibit 10.01
ADELPHIA COMMUNICATIONS CORPORATION
PURCHASE AGREEMENT
$150,000,000
9-1/2% Senior Pay-In-Kind Notes Due 2004, Series A
New York, New York
February 14, 1994
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Adelphia Communications Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to you (the "Purchaser") $150,000,000
aggregate principal amount of its 9-1/2% Senior Pay-In-Kind Notes Due 2004,
Series A (the "Securities"), to be issued under an indenture (the "Indenture")
between the Company and Bank of Montreal Trust Company, as trustee (the
"Trustee"). Except to the extent otherwise provided herein or as may be
mutually agreed to by the Company and the Purchaser, the terms of the Indenture
will be substantially similar to the terms of the indenture governing the
Company's 10-1/4% Senior Notes Due 2000.
The sale of the Securities to you will be made without registration of
the Securities under the Securities Act of 1933, as amended (the "Securities
Act"), in reliance upon the exemption from the registration requirements of the
Securities Act provided by Section 4(2) thereof. You have advised the Company
that you will make an offering of the Securities purchased by you hereunder in
accordance with Section 4 hereof on the terms to be set forth in the Offering
Memorandum (as defined herein), as soon as you deem advisable after this
Purchase Agreement (this "Agreement") has been executed and delivered.
In connection with the sale of the Securities, the Company will
prepare an offering memorandum (the "Offering Memorandum") which will set
forth or will include certain information concerning the Company and the
Securities, including a description of the terms of the Securities, the
terms of the offering, a description of the Company and any material
developments relating to the Company occurring after the date of
<PAGE>
Salomon Brothers Inc
Page 2
the most recent financial statements included therein. The Company hereby
confirms that it has authorized the use of the Offering Memorandum in
connection with the offering and resale by the Purchaser of the Securities.
Any references herein to the Offering Memorandum shall be deemed to include
all exhibits thereto and all documents included therein which were filed, or
will be filed, under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the Closing Date (as
defined herein).
The Offering Memorandum and the Registration Rights Agreement to be
entered into between the Company and the Purchaser with respect to the
Securities (the "Registration Rights Agreement") shall provide that the Company
shall use its best efforts to cause (i) a registration statement with respect to
an offer to exchange the Securities for an issue of notes of the Company having
terms substantially identical to the Securities (the "Exchange Securities") to
be declared effective by the Commission or (ii) a shelf registration statement
with respect to the resale of the Securities by the holders thereof to be
declared effective by the Commission. The Offering Memorandum and the
Registration Rights Agreement shall further provide that in the event a
registration statement with respect to an offer to exchange the Securities for
Exchange Securities is declared effective by the Commission, the Company shall
be required to (a) keep such offer in effect for a minimum of 30 days and (b)
consummate such offer within a period of 120 days after such registration
statement has been declared effective by the Commission (unless Purchaser agrees
to, or requests, an extension of such period). The Indenture shall provide that
the interest rate with respect to the Securities shall be 10%; provided,
--------
however, that upon the effectiveness of (i) a registration statement with
- -------
respect to an offer to exchange the Securities for Exchange Securities or (ii) a
shelf registration statement with respect to the resale of the Securities by the
holders thereof, the interest rate with respect to the Securities shall decline
to 9-1/2%.
1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, the Purchaser as follows:
(a) The Offering Memorandum, as of its date and in the form used by
the Purchaser to confirm sales and (as the same may have been amended or
supplemented) as of the Closing Date, will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
-------- -------
set forth in this Section 1(a) do not apply to statements or omissions in the
<PAGE>
Salomon Brothers Inc
Page 3
Offering Memorandum made in reliance upon and in conformity with information
furnished to the Company in writing by the Purchaser expressly for inclusion in
the Offering Memorandum (and any amendment or supplement thereto). All
documents to be included in the Offering Memorandum which were filed under the
Exchange Act on or before the Closing Date complied or will comply in all
material respects with the applicable requirements of the Exchange Act and the
rules thereunder.
(b) Each of the Company and its Subsidiaries (as defined herein) has
been duly incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, has full corporate power
and authority to own, lease and operate the properties material to the business
of the Company, its Subsidiaries and the Partnerships (as defined herein) taken
as a whole and to conduct its business (which business will be completely and
accurately described in all respects material to the Company, its Subsidiaries
and the Partnerships taken as a whole in the Offering Memorandum) and is duly
qualified and authorized to do business as a foreign corporation and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification or authorization
and where the failure to be so qualified would have a materially adverse effect
on the business, assets, properties or condition (financial or otherwise) of the
Company, its Subsidiaries and the Partnerships taken as a whole.
(c) Each of the Partnerships has been duly formed and is validly
existing as a partnership under the laws of its jurisdiction of organization,
with full power and authority to own, lease and operate the properties material
to the business of the Company, its Subsidiaries and the Partnerships taken as a
whole and to conduct its business (which business will be completely and
accurately described in all respects material to the Company, its Subsidiaries
and the Partnerships taken as a whole in the Offering Memorandum); all necessary
filing with respect to the formation of the Partnerships as partnerships under
such laws have been made and all of the statements in the certificates of
partnership of the Partnerships are true and correct in all material respects;
each of the Partnerships is duly qualified or registered to do business in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification or registration and where the failure to be
so qualified would have a materially adverse effect on the business, assets,
properties or condition (financial or otherwise) of the Company, its
Subsidiaries and the Partnerships taken as a whole.
(d) The Company has full corporate power and authority and has taken
all corporate actions necessary to authorize it to enter into, and to perform
<PAGE>
Salomon Brothers Inc
Page 4
its obligations under, this Agreement, the Indenture, the Registration Rights
Agreement and the Securities and to consummate the transactions to be described
in the Offering Memorandum under "Summary: The Offering -- Use of Proceeds";
the execution, delivery and performance by the Company of this Agreement, the
Indenture, the Registration Rights Agreement and the Securities have been duly
authorized by all requisite corporate action; this Agreement constitutes, and
the Indenture and the Registration Rights Agreement, when executed and
delivered, and the Securities when executed and delivered by the Company and
paid for by you, will constitute, the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms, except as
(A) the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium (whether general or specific), or similar
laws affecting the enforcement of creditors' rights and remedies generally, (B)
the remedy of specific performance and other remedies or forms of relief may be
limited by equitable defenses and the discretion of the court before which a
proceeding therefor may be brought (whether such proceeding is at law or in
equity or in a bankruptcy proceeding), (C) rights to indemnification may be
limited by the laws of any governmental authority or agency thereof, or by
public policy and (D) the waiver as to usury and stay or extension laws
contained in the Indenture and the Securities may be unenforceable.
(e) The execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement and the Securities and the
consummation of the transactions to be described in the Offering Memorandum
under "Summary: The Offering -- Use of Proceeds" will not (A) contravene the
certificate or articles of incorporation or bylaws of the Company or any
Subsidiary or the certificates or agreements of partnership of the Partnerships
or, except as to the following clauses (B), (C) or (D) in cases in which such
contravention would not have a material adverse effect on the business, assets,
properties or condition (financial or otherwise) of the Company, its
Subsidiaries and Partnerships taken as a whole, (B) contravene any provision of
law applicable to the Company or any of its Subsidiaries or any of the
Partnerships or (C) contravene any agreement or other instrument (including any
franchise agreement, license, permit or other governmental authorization granted
by the Federal Communications Commission (the "FCC"), the State of New York
Commission on Cable Television, the Massachusetts Community Cablevision
Commission, the New Jersey Office of Cable Television and Board of Public
Utilities, the Vermont Public Service Board or any other governing body having
jurisdiction over cable television operations) binding upon the Company or any
of its Subsidiaries or any of the Partnerships or (D) contravene any order,
judgment or decree of any court or governmental agency or authority; and will
<PAGE>
Salomon Brothers Inc
Page 5
not conflict with or result in the creation of imposition of any lien, charge or
other encumbrance upon any of the assets of the Company or any of its
Subsidiaries or any of the Partnerships pursuant to the terms of, or constitute
a default under, any franchise agreement, contract, ordinance, easement,
license, permit, right of way, resolution or other form of operating
authorization granted by governmental authorities, except in cases in which such
conflict, creation, imposition or default would not have a material adverse
effect on the business, assets, properties or condition (financial or otherwise)
of the Company, its Subsidiaries and Partnerships taken as a whole.
(f) Prior to the Closing Date, the Company, the Subsidiaries and the
Partnerships will (A) have obtained, except in cases in which the failure to do
so would not have a material adverse effect on the business, assets, properties
or condition (financial or otherwise) of the Company, its Subsidiaries and
Partnerships taken as a whole, all licenses, consents, approvals,
authorizations, permits, franchises and other agreements (including, without
limitation, all governmental authorizations) as are necessary to be obtained by
the Company in connection with (1) the execution and delivery of this Agreement
and the Registration Rights Agreement, (2) the consummation of any of the
transactions contemplated hereby and under the Registration Rights Agreement,
(3) the consummation of the transactions to be described in the Offering
<PAGE>
Salomon Brothers Inc
Page 6
Memorandum under "Summary: The Offering -- Use of Proceeds" and (4) the conduct
of their respective businesses, each of which will, on the closing Date, be in
full force and effect, except (i) such licenses, consents, approvals,
authorizations, permits, franchises or other agreements as may be required by
the securities or Blue sky laws of the various states in connection with the
offer and sale of the Securities and (ii) such licenses, consents, approvals,
authorizations, permits, franchises or other agreements as may be required by
the Securities Act and the securities or Blue Sky laws of the various states in
connection with an exchange offer for, or registration of, the Securities
pursuant to the Registration Rights Agreement, and (B) have filed, except in
cases in which the failure to do so would not have a material adverse effect on
the business, assets, properties or condition (financial or otherwise) of the
Company, its Subsidiaries and Partnerships taken as a whole, all notices,
registrations, declarations and other filings with, any lender, regulatory body,
administrative agency, governmental body or other pubic authority required on or
prior to the closing Date to be filed by the Company, any Subsidiary or any
Partnership in connection with (1) the execution and delivery of this Agreement
and the Registration Rights Agreement, (2) the consummation of any of the
transactions contemplated hereby and under the Registration Rights Agreement,
(3) the consummation of the transactions to be described in the Offering
Memorandum under "Summary: The Offering -- Use of Proceeds" and (4) the conduct
of their respective businesses (including, without limitation, all governmental
authorizations and agreements with public utilities or microwave transmission
companies, and pole access and rental agreement), except (i) such notices,
registrations, declarations and other filings as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities and (ii) such notices, registrations, declarations
and other filings as may be required by the Securities Act and the securities or
Blue Sky laws of the various states in connection with an exchange offer for, or
registration of, the Securities pursuant to the Registration Rights Agreement;
the Company, its Subsidiaries and the Partnerships are on the date hereof, and
will be on the Closing Date, in full compliance, except in cases in which the
failure to be in compliance would not have a material adverse effect on the
business, assets, properties or condition (financial or otherwise) of the
Company, its Subsidiaries and Partnerships taken as a whole, with the foregoing
licenses, consents, approvals, authorizations, permits, franchises and other
agreements, none of which contain any restrictions materially burdensome to the
Company, its Subsidiaries and Partnerships taken as a whole.
(g) Except as will be disclosed in the Offering Memorandum, as of the
Closing Date there will be no action, claim, suit, proceeding, order or
investigation pending, nor, to the best of the Company's knowledge after due
inquiry, threatened, against the Company, any Subsidiary or any Partnership, or
to which the business or any of the properties of the Company, any Subsidiary or
any Partnership is subject, before any court or before or by any governmental
department, commission, board, bureau, agency or instrumentality, which seeks to
restrain, enjoin, prevent consummation of or otherwise challenge this Agreement,
the Indenture, the Registration Rights Agreement or any of the transactions
contemplated hereby or thereby (including, without limitation, the
authorization, issuance, sale and delivery of the Securities) or transactions to
be described in the Offering Memorandum under "Summary: The Offering -- Use of
Proceeds", or which if finally determined adversely to the Company, any
Subsidiary or any Partnership would, individually or in the aggregate, have a
material adverse effect on their businesses, assets, properties, operations,
prospects or conditions (financial or otherwise) taken as a whole.
(h) Except as will be disclosed in the Offering Memorandum, as of the
Closing Date there will have been no material adverse change in the business,
operations, assets, properties or prospects, or in the condition (financial or
otherwise) of the Company, its Subsidiaries and Partnerships taken as a whole;
<PAGE>
Salomon Brothers Inc
Page 7
except as will be disclosed in the Offering Memorandum, the Company has not
entered into or performed in whole or in part any material transaction or taken
any other material action or there is no fact known to the Company which
materially and adversely affects, or in the future would materially and
adversely affect, the business, prospects, condition, affairs, operations,
properties or assets of the Company, its Subsidiaries and Partnerships taken as
a whole, or the ability of the Company to perform fully its obligations under
this Agreement, the Indenture, the Registration Rights Agreement or the
Securities.
(i) As of the Closing Date, the Company, its Subsidiaries and
Partnerships taken as a whole will not have any material liabilities, contingent
or otherwise, (whether or not such liabilities must be disclosed on a balance
sheet), except as will be disclosed in the Offering Memorandum.
(j) Neither the Company nor any Subsidiary nor any Partnership is (1)
in the case of the Company or any Subsidiary, in violation of their respective
articles or certificates of incorporation or, in the case of a Partnership, in
violation of its certificate or agreement of partnership or, except as to the
following clauses (2) or (3) in cases in which such violation would not have a
material adverse effect on the business, assets, properties or condition
(financial or otherwise) of the Company, its Subsidiaries and Partnerships taken
as a whole, (2) in violation of any law, administrative regulation, ordinance,
order, judgment or decree of any court or governmental agency, arbitration panel
or authority applicable to the Company, any Subsidiary or any Partnership, or to
any of their respective properties or assets, or (3) in violation of or default
under any obligation, agreement, covenant or condition contained in any loan
agreement, bond, debenture, mortgage, deed of trust, note or any other evidence
of indebtedness or in any indenture or any other agreement, contract or
instrument to which the Company, any Subsidiary or any Partnership is a party or
by which the Company or any Subsidiary or any Partnership is bound or to which
any of their respective properties or assets are bound or subject; no condition
or event has, and as of the Closing Date, none will have occurred which, with
notice or lapse of time or both, would constitute a default under any such
document or instrument or result in the imposition of any penalty or
acceleration of any indebtedness, except in cases in which such default,
imposition or acceleration would not have a material adverse effect on the
business, assets, properties or condition (financial or otherwise) of the
Company, its Subsidiaries and Partnerships taken as a whole and in cases where
waivers have been previously obtained.
<PAGE>
Salomon Brothers Inc
Page 8
(k) Except as will be set forth in the Offering Memorandum or in
Schedule I attached hereto, (i) the Company owns, directly or through a
Subsidiary or Partnership, all of the outstanding shares of capital stock of
each of its Subsidiaries; all of such shares have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by the Company
or one of its Subsidiaries or Partnerships free and clear of any security
interest, claim, lien or other encumbrance; (ii) the general partnership
interests in the Partnerships are validly issued and fully paid, are owned by
the Company, or a Subsidiary or Partnership free and clear of any security
interest, claim, lien or other encumbrance, and constitute the sole general
partnership interest in each Partnership; and (iii) there are no outstanding
rights, warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of capital stock of the Company or any Subsidiary
or any partnership interest in any Partnership.
(l) Except as will be disclosed in the Offering Memorandum, the
Company, its Subsidiaries or the Partnerships, as the case may be, have good and
marketable title in fee simple to all real property owned thereby which is
material to the business of the Company, its Subsidiaries and Partnerships taken
as a whole, subject to no liens, restrictions or encumbrances, or title
retention or other similar agreements, devices or arrangements, except such as
are not material in the aggregate and will not materially interfere with the
business, operations or condition (financial or otherwise) of the Company, its
Subsidiaries and Partnerships taken as a whole; except as will be disclosed in
the Offering Memorandum, the Company, its Subsidiaries and the Partnerships
enjoy peaceful and undisturbed possession and use under all leases pursuant to
which the Company, its Subsidiaries or the Partnerships hold any such real
property or tangible personal property which is material to the business of the
Company, its Subsidiaries and Partnerships taken as a whole as will be described
in the Offering Memorandum, none of which leases contain any provision which
materially and adversely affects the business, operations or condition
(financial or otherwise) of the Company, its Subsidiaries and the Partnerships
taken as a whole, and all of such leases are valid and subsisting and in full
force and effect, except as would not have a material adverse effect on the
operations of the Company, its Subsidiaries and Partnerships taken as a whole.
(m) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Rule 10b-6 under the Exchange Act in
connection with the offering of Securities.
(n) Neither the Company nor any affiliate, as defined in Rule 501(b)
of Regulation D under the Securities Act (an "Affiliate"), of the Company has
directly, or through any agent (i) sold, offered for sale, solicited offers to
<PAGE>
Salomon Brothers Inc
Page 9
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or should be integrated with the sale of the Securities
in a manner that would require the registration under the Securities Act of the
Securities or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities (as those terms
are used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(o) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(p) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Purchaser in the manner contemplated by this
Agreement and the Offering Memorandum to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(q) None of the Company, its affiliates or any person acting on
behalf of the Company or its affiliates has engaged in any directed selling
efforts (as that terms is defined in Regulation S under the Securities Act
("Regulation S")) with respect to the Securities, and the Company and its
affiliates and any person acting on its or their behalf have complied with the
offering restrictions of Regulation S with respect to the Securities.
(r) The Company is subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act.
(s) The Securities satisfy the requirements set forth in Rule
144A(d)(3) of the Securities Act.
(t) The terms which follow, when used in this Agreement, shall have
the meanings indicated. "Commission" shall mean the Securities and Exchange
Commission of the United States. "Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the parties hereto.
"Partnership" shall mean any general or limited partnership in which the Company
or any subsidiary thereof, or any Partnership, holds a general partnership
interest. "Subsidiary" means any corporation of which the Company, or any
Subsidiary or Partnership, owns, directly or indirectly, more than 50% of the
outstanding shares of stock of such corporation entitled to one or more votes to
elect the directors, officers or trustees thereof.
<PAGE>
Salomon Brothers Inc
Page 10
2. Purchase and Sale. Subject to the terms and conditions and in
-----------------
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the
Company, $150,000,000 aggregate principal amount of Securities at a purchase
price of 98.25% of the principal amount thereof. You have advised the Company
that you intend to offer the Securities for resale on the terms to be set forth
in the Offering Memorandum.
3. Delivery and Payment. Payment for the Securities shall be
--------------------
made against delivery of the Securities at a closing to be held at the offices
of Cleary, Gottlieb, Steen & Hamilton, at 10:00 A.M., New York City time, on
February 22, 1994, or at such other place and such other time, on the same or
such other date, as shall be designated in writing by the Purchaser. The time
and date of such payment are herein referred to as the "Closing Date." Payment
for the Securities shall be made to or upon the order of the Company by
certified or official bank check or checks drawn on or by a New York Clearing
House bank and payable in next day funds. Certificates for the Securities shall
be in definitive form and registered in such names and in such denominations as
the Purchaser shall request in writing not less than two full business days
prior to the Closing Date. The certificates evidencing the Securities shall be
delivered to the Purchaser on the Closing Date, with any transfer taxes payable
in connection with the transfer of the Securities to the Purchaser duly paid,
against payment of the purchase price therefor. The Company agrees to have the
Securities available for inspection, checking and packaging by the Purchaser in
New York, New York, not later than 1:00 P.M. on the business day prior to the
Closing Date.
4. Offering of Securities; Restrictions on Transfer.
------------------------------------------------
(a) The Purchaser represents and warrants to and agrees with the
Company that (i) it has not solicited any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act or, with respect to Securities sold in reliance on Regulation S, by means of
any directed selling efforts and (ii) it has solicited and will solicit offers
to buy the Securities only from, and has offered and will offer, to sell or
deliver the Securities only to, (A) persons who it reasonably believes to be
Qualified Institutional Buyers (as defined in Rule 144A under the Securities Act
("QIBs")) or, if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, only when such
person has represented to it that each such account is a QIB, to whom notice has
<PAGE>
Salomon Brothers Inc
Page 11
been given that such sale or delivery is being made in reliance on Rule 144A,
and, in each case, in transactions under Rule 144A or (B) persons to whom, and
under circumstances which, it reasonably believes offers and sales of Securities
may be made without registration of the Securities under the Securities Act in
reliance upon Regulation S thereunder. In connection with sales in reliance
upon Regulation S, the Purchaser agrees that it will send to any dealer to whom
it sells Securities during the period prior to 40 days after the closing of the
offering hereunder a confirmation or other notice setting forth the restrictions
on offers and sales of the Securities within the United States or to, or for the
account or benefit of, U.S. persons. The Purchaser also represents and warrants
and agrees that it has offered and will offer to sell the Securities only to,
and has solicited and will solicit offers to buy the Securities only from,
persons that in purchasing such Securities will be deemed to have represented
and agreed as provided under "Investor Representations and Restrictions on
Resale" in Exhibit A hereto. The Purchaser shall acknowledge as of the Closing
Date that it has received a copy of the Offering Memorandum and such other
information as it deems necessary in order to make its investment decision, and
that it has been afforded an opportunity to request from the Company and to
review, and has received, all additional information considered by it to be
necessary to verify the accuracy of, or to supplement, the information contained
in the Offering Memorandum. The Company shall cooperate with the Purchaser in
all respects to enable it to make the acknowledgements contemplated in the
preceding sentence. In addition, the Purchaser acknowledges that it is not
purchasing the Securities as the result of any general solicitation or general
advertising.
(b) The Purchaser represents and warrants that (i) it has not offered
or sold, and will not offer or sell, in the United Kingdom, by means of any
document, any Securities other than to persons whose ordinary business it is to
buy or sell shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public within the meaning
of the United Kingdom Companies Act 1985, (ii) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986 of the United
Kingdom and (iii) it has only issued or passed on, and will only issue or pass
on, in the United Kingdom, any document received by it in connection with the
issue of the Securities to a person who is of the kind described in Article 9(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1988 or is a person to whom the document may otherwise lawfully be issued
or passed on.
<PAGE>
Salomon Brothers Inc
Page 12
5. Covenants of the Company. In further consideration of the
------------------------
agreements of the Purchaser contained in this Agreement, the Company covenants
as follows:
(a) The Company will prepare the Offering Memorandum which, as
described above, will set forth or will include a description of the terms of
the Securities, the terms of the Offering, a description of the Company and any
material developments relating to the Company occurring after the date of the
most recent financial statements included herein.
(b) The Company will furnish to you, without charge, during the
period mentioned in paragraph (d) below, as many copies of the Offering
Memorandum, and any supplements and amendments thereto, as you may reasonably
request.
(c) Before amending or supplementing the Offering Memorandum, the
Company will furnish to you a copy of each such proposed amendment or supplement
at least two business days prior to use of any such proposed amendment or
supplement and the Company will not use any such proposed amendment or
supplement to which you reasonably object unless the Company is advised by
counsel that such proposed amendment or supplement is required by applicable
law.
(d) If, during such period after the date hereof and prior to the
date on which all of the Securities shall have been sold by the Purchaser, any
event shall occur or condition exist as a result of which it is necessary in
your reasonable judgment to amend or supplement the Offering Memorandum
(including any document included therein which was filed under the Exchange Act
or Securities Act) in order to make the statements therein, in the light of
circumstances when such Offering Memorandum is delivered to a purchaser, not
misleading, or if, in the opinion of counsel to the Purchaser it is necessary to
amend or supplement such Offering Memorandum to comply with applicable law, the
Company will forthwith prepare and furnish, at its own expense, to the
Purchaser, either amendments or supplements to the Offering Memorandum so that
the statements in the Offering Memorandum as so amended or supplemented will
not, in the light of the circumstances when such Offering Memorandum is
delivered to a purchaser, be misleading or so that the Offering Memorandum, as
so amended or supplemented, will comply with applicable law, and, in the case of
such an amendment or supplement which is to be filed under the Exchange Act, the
Company will file such amendment or supplement with the Commission.
(e) The Company will endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions in the United
States as you shall reasonably request and will maintain such qualifications in
<PAGE>
Salomon Brothers Inc
Page 13
effect so long as required for the sale of the Securities. The Company will
promptly advise the Purchaser of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(f) Whether or not any sale of such Securities is consummated, the
Company will pay all expenses incident to the performance of its obligations
under this Agreement, including: (i) the preparation of the Offering Memorandum
and all amendments and supplements thereto, (ii) the preparation, issuance and
delivery of the Securities to initial purchasers thereof, (iii) the fees and
disbursements of the Company's counsel and accountants and the Trustee, (iv) the
qualification of such Securities under securities or Blue Sky laws in accordance
with the provisions of Section 5(e), including filing fees and the reasonable
fees and disbursements of counsel for the Purchaser in connection therewith and
in connection with the preparation of any Blue Sky or legal investment
memoranda, (v) the printing and delivery to the Purchaser in quantities as
hereinabove stated of copies of the Offering Memorandum and any amendments or
supplements thereto, (vi) any fees charged by rating agencies for the rating of
such Securities, and (vii) the fees and expenses, if any, incurred in connection
with the admission of such Securities for trading in the PORTAL system.
(g) Neither the Company nor any Affiliate of the Company will sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which should be integrated with the
sale of the Securities in a manner which would require the registration under
the Securities Act of the Securities.
(h) Neither the Company nor any Affiliate of the Company will solicit
any offer to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
(i) While any of the Securities remain outstanding, the Company will
make available, upon request, to any seller of such Securities the information
specified in Rule 144A(d)(4) under the Securities Act ("Rule 144A Information"),
unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.
(j) Neither the Company, its affiliates nor any person acting on
behalf of the Company or its affiliates will engage in any directed selling
<PAGE>
Salomon Brothers Inc
Page 14
efforts with respect to the Securities within the meaning of Regulation S, and
the Company, its affiliates and each such person acting on its or their behalf
will comply with the offering restrictions requirement of Regulation S.
(k) The Company will include information substantially in the
form set forth in Exhibit A in the Offering Memorandum.
(l) If requested by you, the Company will use its best efforts to
cooperate with the Purchaser in order to permit the Securities to be designated
PORTAL securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
PORTAL Market.
(m) The Company will use the proceeds from the sale of the Securities
in the manner set forth in the Offering Memorandum under "Summary: The Offering
- -- Use of Proceeds," and in a manner that will not result in the Company
becoming an investment company within the meaning of the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
(n) The Company will use its best efforts in cooperation with the
Purchaser to permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(o) The Company will not, until the forty-fifth (45th) day following
the Closing Date, offer, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any debt securities issued
or guaranteed by the Company (other than the Securities) without the prior
written consent of the Purchaser.
6. Conditions to Closing. The obligations of the Purchaser to
---------------------
purchase the Securities shall be subject to the accuracy of the representations
and warranties on the part of the Company contained herein as of the Execution
Time and the Closing Date, to the accuracy of the statements of the Company made
in any certificate pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
<PAGE>
Salomon Brothers Inc
Page 15
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by
any "nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company, its
Subsidiaries or the Partnerships, taken as a whole, from that which will be
set forth in the Offering Memorandum (exclusive of any amendment or
supplement thereof or thereto) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market the
Securities on the terms and in the manner as will be contemplated in the
Offering Memorandum (exclusive of any amendment or supplement thereof or
thereto).
(b) The Company and the Purchaser shall have entered into the
Registration Rights Agreement substantially in the form attached hereto as
Exhibit B, with such modifications as may be mutually agreed to by the Company
and the Purchaser.
(c) The Company shall have furnished to the Purchaser the opinion of
Buchanan Ingersoll Professional Corporation ("Buchanan Ingersoll"), counsel for
the Company, or Colin H. Higgin, Deputy General Counsel to the Company, dated
the Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own, lease or operate its properties and to conduct its business
(in all respects material to the Company, its Subsidiaries and
Partnerships, taken as a whole) as will be described in the Offering
Memorandum, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership or
leasing of its property requires such qualification and where the
failure to be so qualified would have a materially adverse effect on
the business, assets, properties or condition (financial or otherwise)
of the Company, its Subsidiaries and Partnerships, taken as a whole;
(ii) each of this Agreement, the Indenture, the Registration
Rights Agreement and the Securities (at such time as they have been
<PAGE>
Salomon Brothers Inc
Page 16
duly executed and authenticated in accordance with the Indenture and
delivered to and paid for by the Purchaser pursuant to this Agreement)
constitute the valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except as (a)
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or similar
laws affecting the enforcement of creditors' rights and remedies
generally, (b) the remedy of specific performance and other remedies
or forms of relief may be limited by equitable defenses and the
discretion of the court before which any proceeding therefor may be
brought (whether such proceeding is at law or in equity or in a
bankruptcy proceeding), (c) rights to indemnification may be limited
by the laws of any governmental authority or agency thereof or by
public policy, and (d) waivers as to usury and stay or extension laws
may be unenforceable;
(iii) the execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Indenture and the
consummation of the transactions to be described in the Offering
Memorandum under "Summary: The Offering -- Use of Proceeds" will not
(A) contravene the Certificate or articles of incorporation or by-laws
of the Company or any of its Subsidiaries or the certificates or
agreements of partnership of the Partnerships or, except as to the
following clauses (B), (C) or (D) in cases in which such contravention
would not have a material averse effect on the business, assets,
properties or condition (financial or otherwise) of the Company, its
Subsidiaries and Partnerships taken as a whole, (B) contravene any
provision of law applicable to the Company or any of its Subsidiaries
or any of the Partnerships or (C) contravene to the best knowledge of
such counsel after due inquiry any agreement or other instrument
(including any franchise agreement, license, permit or other
governmental authorization granted by the State of New York Commission
on Cable Television, the Massachusetts Community Cablevision
Commission, the New Jersey Office of Cable Television and Board of
Public Utilities, the Vermont Public Service Board, or any other
governing body having jurisdiction over cable television operations)
binding upon the Company, any Subsidiary or any Partnership or (D)
contravene any order, judgment or decree of any court or governmental
agency or authority; and will not conflict with or result in the
creation or imposition of any lien, charge or other encumbrance upon
<PAGE>
Salomon Brothers Inc
Page 17
any of the assets of the Company, any Subsidiaries or any Partnership
pursuant to the terms of, or constitute a default under, any franchise
agreement, contract, ordinance, easement, license, permit, right of
way, resolution or other form of operating authorization granted by
governmental authorities, except in cases in which such conflict,
creation, imposition or default would not have a material adverse
effect on the business, assets, properties or condition (financial or
otherwise) of the Company, its Subsidiaries and Partnerships taken as
a whole; no license, permit, consent, approval, authorization or
declaration of any governmental body or agency is required, except in
cases in which the failure to have obtained such license, permit,
consent, approval, authorization or declaration would not have a
material adverse effect on the business, assets, properties or
condition (financial or otherwise) of the Company, its Subsidiaries
and Partnerships taken as a whole, for the performance by the Company
of this Agreement and the consummation of the transactions
contemplated hereby and the consummation of the transactions to be
described in the Offering Memorandum under "Summary: The Offering --
Use of Proceeds" except such as will be described in the Offering
Memorandum or have been obtained and except such as may be required
under state securities and Blue Sky laws:
(iv) to the best knowledge of such counsel after due
inquiry, there is no action, claim, suit, proceeding, order or
investigation pending or threatened against the Company, any of its
Subsidiaries or any Partnership, or to which the business or any of
the properties of the Company, any of its Subsidiaries or any
Partnership is subject, before any court or before or by any
governmental department, commission, board, bureau, agency or
instrumentality, which seeks to restrain, enjoin, prevent consummation
of or otherwise challenge this Agreement, the Indenture or any of the
transactions contemplated hereby or thereby (including, without
limitation, the authorization, issuance, sale and delivery of the
Securities), or which if finally determined adversely to the Company
or any Subsidiary or Partnership would, individually or in the
aggregate, have a material adverse effect on the business, assets,
operations, prospects or condition (financial or otherwise) of the
Company, its Subsidiaries and the Partnerships taken as a whole, or
which are otherwise required to be described in the Offering
Memorandum and will not have been so described;
<PAGE>
Salomon Brothers Inc
Page 18
(v) assuming (i) the accuracy of the representations of each
of the Company and the Purchaser contained in this Agreement or in
instruments to be delivered at the closing hereof and (ii) that
neither the Company nor any person acting on its behalf has offered
the Securities by any form of general solicitation or general
advertisement, and except as contemplated by the Registration Rights
Agreement, the offering, issue and sale of the Securities by the
Company to the Purchaser as contemplated by this Agreement do not
require the registration of the Securities under the Securities Act;
(vi) such counsel shall state that during the course of
preparation of the Offering Memorandum, such counsel participated in
conferences with officers and other representatives of the Company,
its Subsidiaries and Partnerships and the representatives and counsel
of the Purchaser, at which conferences the contents of the Offering
Memorandum and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Offering Memorandum and has not made an independent investigation
of facts for the purpose of rendering this opinion, such counsel
advises the Purchaser that, on the basis of the foregoing (relying as
to certain factual matters on the information provided to such counsel
by the Company) no facts have come to the attention of such counsel
which lead such counsel to believe that the Offering Memorandum as of
the Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(vii) such counsel may state that it expresses no opinion
as to financial statements (including the notes and schedules thereto)
or any other financial or statistical data or calculations directly or
indirectly contained or referred to in or related to the Offering
Memorandum.
In rendering the foregoing opinions, Buchanan Ingersoll or Colin H.
Higgin may rely (a) as to matters involving the laws of any jurisdiction other
than Pennsylvania, the United States, and Delaware general corporate law, upon
the opinion of local counsel satisfactory to the Purchaser, and (b) as to all
matters of fact, on certificates and written statements of officers and
<PAGE>
Salomon Brothers Inc
Page 19
employees of, and accountants for, the Company; provided, however, that all such
-------- -------
opinions, certificates and statements shall be satisfactory to the Purchaser in
all material respects, with originally executed copies attached to such
counsel's opinion, said satisfaction being within the sole discretion of the
Purchaser. Notwithstanding the foregoing, the Company and the Purchaser agree
that such opinions required to be delivered hereunder by Buchanan Ingersoll and
Colin H. Higgin may be in substantially the same form with respect to the
matters specified above as the corresponding opinions relating to such matters
that were delivered by Buchanan Ingersoll and Colin H. Higgin to Purchaser in
connection with the issuance and sale of the Company's 10-1/4% Senior Notes Due
2000, Series A.
(d) The Purchaser shall have received from Cleary, Gottlieb, Steen &
Hamilton, counsel for the Purchaser, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the Indenture,
the Registration Rights Agreement, the Offering Memorandum (together with any
amendments or supplements thereto) and other related matters as the Purchaser
may reasonably require, and the Company shall have furnished to such counsel
such documents as they may request for the purpose of enabling them to pass upon
such matters.
(e) The Company shall have furnished to the Purchaser a certificate
of the Company, signed by the Senior Vice President who is the principal
financial or accounting officer of the Company, dated the Closing Date, to the
effect that the signer of such certificate has carefully examined the Offering
Memorandum, any supplement to the Offering Memorandum and this Agreement and
that:
(i) the representations and warranties of the Company in
this Agreement are complete, true and correct in all material respects
on and as of the Closing Date with the same force and effect as if
made on the Closing Date and the Company has complied in all material
respects with all the agreements and satisfied all the conditions on
its part to be performed or satisfied on or prior to the Closing Date;
(ii) since the date of the most recent financial statements
included in the Offering Memorandum (exclusive of any supplement
thereto), there has been no material adverse change in the condition
(financial or other), earnings, business or properties of the Company,
its Subsidiaries and Partnerships taken as a whole, whether or not
arising from transactions in the ordinary course of business, except
as will be set forth in or contemplated in the Offering Memorandum
(exclusive of any supplement thereto).
<PAGE>
Salomon Brothers Inc
Page 20
(f) Prior to the Closing Date, the Company shall have furnished to
the Purchaser such further information, certificates and documents as the
Purchaser may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions, letters or certificates mentioned above or elsewhere
in this Agreement shall not be in all material respects reasonably satisfactory
in form and substance to the Purchaser and its counsel, this Agreement and all
obligations of the Purchaser hereunder may be cancelled on, or at any time prior
to, the Closing Date by the Purchaser. Notice of such cancellation shall be
given to the Company in writing or by telephonic facsimile, or by telephone or
telegraph confirmed in writing.
7. Reimbursement of Expenses. If the sale of the Securities provided
-------------------------
for herein is not consummated because any condition to the obligations of the
Purchaser set forth in Section 6 hereof is not satisfied, because of any
termination pursuant to Section 9 hereof or because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof other than by reason of a default by the Purchaser,
the Company will reimburse the Purchaser upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been incurred by it in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the Purchaser,
the directors, officers, employees and agents of the Purchaser and each person
who controls the Purchaser within the meaning of either the Securities Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Offering Memorandum or any Rule 144A Information provided by the Company to
any holder or prospective purchaser of the Securities, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
<PAGE>
Salomon Brothers Inc
Page 21
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Offering Memorandum, or in any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Purchaser specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
its directors, its officers, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to the Purchaser, but only with
reference to written information relating to the Purchaser furnished to the
Company by or on behalf of the Purchaser specifically for inclusion in the
Offering Memorandum, or in any amendment thereof or supplement thereto. This
indemnity agreement will be in addition to any liability which the Purchaser may
otherwise have. The Company acknowledges that the statements to be set forth
under the headings "Plan of Distribution" and "The Purchase Agreement" and Blue
Sky legends, if any, in the Offering Memorandum will constitute the only
information furnished in writing by or on behalf of the Purchaser for inclusion
in the Offering Memorandum.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
<PAGE>
Salomon Brothers Inc
Page 22
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchaser agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and the Purchaser
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and by the Purchaser from the offering of the
Securities; provided, however, that in no case shall the Purchaser be
-------- -------
responsible for any amount in excess of the purchase discount or commission
applicable to the Securities purchased by the Purchaser hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Purchaser shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Purchaser in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
<PAGE>
Salomon Brothers Inc
Page 23
the total net proceeds from the offering (before deducting expenses), and
benefits received by the Purchaser shall be deemed to be equal to the total
purchase discounts and commissions. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission related to
information provided by the Company or the Purchaser. The Company and the
Purchaser agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls the Purchase within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee and
agent of a Purchaser shall have the same rights to contribution as such
Purchaser, and each person who controls the Company within the meaning of either
the Securities Act or the Exchange Act and each officer and director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination, in
-----------
the absolute discretion of the Purchaser, by notice given to the Company prior
to delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's Common Stock shall have been suspended by the Commission or the
National Association of Securities Dealers Automated Quotation National Market
System ("NASDAQ") or trading in securities generally on NASDAQ/NMS shall have
been suspended or limited or minimum process shall have been established on such
market system, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the judgment of the Purchaser,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Offering Memorandum (exclusive of any
amendment or supplement thereof or thereto).
10. Representations and Indemnities to Survive. The respective
------------------------------------------
agreement, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchaser or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
<PAGE>
Salomon Brothers Inc
Page 24
will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
11. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered or telecopied and confirmed to it, at Seven World trade Center, New
York, New York, 10048, attention of David Kirshenbaum; or, if sent to the
Company, will be mailed, delivered or telecopied and confirmed to it at 5 West
Third Street, Coudersport, Pennsylvania, 16915, attention of Timothy J. Rigas.
12. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
13. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
--------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW RULES THEREOF.
14. Section Headings. The headings of the sections of this Agreement
----------------
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
15. Counterparts. This Agreement maybe signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
<PAGE>
Salomon Brothers Inc
Page 25
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between the Company and the
Purchaser.
Very truly yours,
ADELPHIA COMMUNICATIONS
CORPORATION
By:_______________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
/s/ Nancy Peretsman
By:_______________________
Name: Nancy Peretsman
Title: Managing Director
<PAGE>
Salomon Brothers Inc
Page 25
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between the Company and the
Purchaser.
Very truly yours,
ADELPHIA COMMUNICATIONS
CORPORATION
By: /s/ Michael J. Rigas
--------------------------
Name: Michael J. Rigas
Title: Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
/s/ Nancy Peretsman
By: _______________________
Name: Nancy Peretsman
Title: Managing Director
<PAGE>
Schedule I
----------
Except as will be set forth in the Offering Memorandum (including the
Prospectus, the Form 10-K for the fiscal year ended March 31, 1993, and the
other documents which are incorporated by reference therein), Subsidiaries or
Partnerships whose stock or general partnership interests are not wholly-owned
by the Company and its Subsidiaries and Partnerships, or the stock or general
partnership interests in Subsidiaries or Partnerships which are held by the
Company any its Subsidiaries and Partnerships and which are pledged or
encumbered, are as follows:
(a) Greater Louisa County Cable - 55.66% general partner interest
owned and pledged or encumbered.
(b) Media Partners of Massachusetts - 60% general partner interest
owned.
(c) Hyperion Telecommunications, Inc. - 89% common stock owned.
(d) Hyperion Telecommunications of New York, Inc.*
(e) Hyperion Telecommunications of Florida, Inc.*
(f) Hyperion Telecommunications of Kansas, Inc.*
(g) Hyperion Telecommunications of Massachusetts, Inc.*
(h) Hyperion Telecommunications of Michigan, Inc.*
(i) Hyperion Telecommunications of New Jersey, Inc.*
(j) Hyperion Telecommunications of North Carolina, Inc.*
(k) Hyperion Telecommunications of Ohio, Inc.*
(l) Hyperion Telecommunications of Pennsylvania, Inc.*
(m) Hyperion Telecommunications of South Carolina, Inc.*
(n) Hyperion Telecommunications of Tennessee, Inc.*
(o) Hyperion Telecommunications of Vermont, Inc.*
(p) Hyperion Telecommunications of Virginia, Inc.*
(q) Hyperion Enhanced Networks of Virginia, Inc.*
(r) NHT - 50% general partner interest owned.
(s) Palm Beach Group Cable Joint Venture - 50% general partner
interest owned by Palm Beach Group Cable, Inc., an indirect
subsidiary of Olympus Communications, L.P.
(t) Stock or partnership interests in all Subsidiaries and
Partnerships are pledged or encumbered, except for ACP Holdings,
Inc., Olympus Communications, L.P., Plato Communications, Inc.,
Kalinaki, Inc., Brazas Communications, Inc., Programming Services,
Inc., Mihalis Communications, L.P., Timotheos Communications,
L.P., and Hyperion Telecommunications Inc. and its Subsidiaries
and Partnerships.
____________________
*100% common stock by Hyperion Telecommunications, Inc. Subsidiaries of
Hyperion Telecommunications, Inc. hold general partnership interests, ranging
from approximately 15% to 50% of the respective general partnership interests,
in six joint venture partnerships.
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT A
Offers and Sales by the Initial Purchaser.
- -----------------------------------------
The Securities have not been registered under the Securities Act and
may not be offered or sold in the United States or to, or for the account or
benefit of, U.S. persons except in accordance with an applicable exemption from
the registration requirements thereof. Accordingly, the Securities are being
offered and sold only (1) in the United States to qualified institutional buyers
("Qualified Institutional Buyers") under Rule 144A under the Securities Act in a
private sale exempt from the registration requirements of the Securities Act and
(2) outside the United States to non-U.S. persons ("foreign purchasers") in
reliance upon Regulation S under the Securities Act.
Investor Representations and Restrictions on Resale.
- ---------------------------------------------------
Each purchaser of the Securities will be deemed to have represented
and agreed as follows:
(1) it is acquiring the Securities for its own account or for an
account with respect to which it exercises sole investment discretion, and
that it or such account (x) is a Qualified Institutional Buyer acquiring
the Securities for investment purposes and not for distribution or (y) a
foreign purchaser outside the United States.
(2) it understands and agrees (x) that such Securities are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act, and (y) that (A) if within three years after
the later of the date of original issuance of the Securities or the sale
thereof by the Company or an affiliate (within the meaning of Rule 144
under the Securities Act) of the Company (computed in accordance with
paragraph (d) of Rule 144 under the Securities Act) or, if it was at the
date of such transfer or during the three months preceding such date of
transfer an Affiliate of the Company, it decides to resell, pledge or
otherwise transfer such Securities on which the legend set forth below
appears, such Securities may be resold, pledged or transferred only (i) to
the Company, (ii) so long as such Security is eligible for resale pursuant
to Rule 144A, to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that purchases for its own account or for the
account of a Qualified Institutional Buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A (as
indicated by the box checked by the transferor on the Certificate of
Transfer on the reverse of the Security) or (iii) in an offshore
transaction in accordance with Regulation S under the Securities Act (as
<PAGE>
indicated by the box checked by the transferor on the Certificate of
Transfer on the reverse of the Security), in each case in accordance with
any applicable securities laws of any state of the United States, and (B)
the purchaser will, and each subsequent holder is required to, notify any
purchaser of Securities from it of the resale restrictions referred to in
(A) above, if then applicable; and
(3) it understands that the notification requirement referred to in (2)
above will be satisfied, in the case only of transfers by physical delivery
of certificates other than the Global Securities, by virtue of the fact
that the following legend will be placed on the Securities unless otherwise
agreed by the Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE THIRD ANNIVERSARY OF THE LATER OF THE ISSUANCE HEREOF (OR
ANY PREDECESSOR SECURITY HERETO) OR THE SALE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) BY THE COMPANY OR AN AFFILIATE OF THE
COMPANY (COMPUTED IN ACCORDANCE WITH PARAGRAPH (D) OF RULE 144 UNDER
THE SECURITIES ACT) OR (Y) BY AN AFFILIATE OF THE COMPANY OR BY ANY
HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE
THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE,
OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) OR (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR
THE BENEFIT OF THE COMPANY THAT IT IS A (1) QUALIFIED INSTITUTIONAL
-2-
<PAGE>
BUYER WITHIN THE MEANING OF RULE 144A AND THAT IT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (2)
NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (O)(2) OF RULE 902
UNDER) REGULATION S UNDER THE SECURITIES ACT."
The Offering Memorandum shall also contain language substantially
to the following effect:
"Each person receiving this Offering Memorandum acknowledges that such
person (i) has been afforded an opportunity to request from the Company and
to review, and has received, all additional information considered by it to
be necessary to verify the accuracy of, or to supplement, the information
herein, (ii) has not relied on Salomon Brothers Inc in connection with its
investigation of the accuracy of such information or its investment
decision and (iii) no person has been authorized to give any information or
to make any representation concerning the Company or the Securities offered
hereby other than as contained herein and information given by duly
authorized officers and employees of the Company in connection with
investor's examination of the Company and the terms of the offering, and,
if given or made, such other information or representations, should not be
relied upon as having been authorized by the Company or Salomon Brothers
Inc."
-3-
<PAGE>
Exhibit 10.02
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of February 22, 1994, among ADELPHIA COMMUNICATIONS CORPORATION,
a Delaware corporation (the "Company"), and SALOMON BROTHERS INC, a Delaware
corporation (the "Purchaser").
This Agreement is made pursuant to the Purchase Agreement, dated
February 14, 1994, between the Company and the Purchaser (the "Purchase
Agreement"), which provides for the sale by the Company to the Purchaser of an
aggregate of $150,000,000 principal amount of the Company's 9-1/2% Senior Pay-
In-Kind Notes due 2004, Series A. In order to induce the Purchaser to enter
into the Purchase Agreement and for the benefit of the holders from time to time
of the Securities (including the Purchaser) (each of the foregoing a "Holder"
and collectively the "Holders"), the Company has agreed to provide to the
Purchaser and its direct and indirect transferees the registration rights set
forth in this Agreement. The execution of this Agreement is a condition to the
closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
-----------
defined terms shall have the following meanings:
"1993 Act" means the Securities Act of 1933, as amended from time to
--------
time.
"1934 Act" means the Securities Exchange Act of 1934, as amended from
--------
time to time.
"Closing Date" means the Closing Date as defined in the Purchase
------------
Agreement.
"Company" has the meaning set forth in the preamble and also includes
-------
the Company's successors.
"Exchange Offer" means the exchange offer by the Company of Exchange
--------------
Securities for Registrable Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" means a registration under the 1933 Act
---------------------------
effected pursuant to Section 2(a) hereof.
<PAGE>
"Exchange Offer Registration Statement" means an exchange offer
-------------------------------------
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchange Securities" means 9-1/2% Senior Pay-In-Kind Notes due 2004
-------------------
issued by the Company under an indenture containing terms identical to the
Securities (except that on the first Interest Payment Date, as defined in the
Indenture, with respect to the Exchange Securities, the holder of Exchange
Securities shall receive (i) accrued interest from the date of issuance of the
Exchange Securities, with respect to the Exchange Securities and (ii) unpaid
interest accrued up to, but not including, the date of issuance of the Exchange
Securities, with respect to the Securities), to be offered to Holders of
Securities in exchange for Securities pursuant to the Exchange Offer.
"Exchanging Dealer" means any beneficial owner (which may include the
-----------------
Purchaser) of Registrable Securities under the Indenture which is a broker-
dealer, electing to exchange Registrable Securities acquired, for its own
account as a result of market making activities or other trading activities, for
Exchange Securities.
"Exchanging Dealer Registration Period" has the meaning set forth in
-------------------------------------
Section 2(a) hereof.
"Indenture" means the indenture relating to the Securities dated as of
---------
February 22, 1994, between the Company and Bank of Montreal Trust Company, as
trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"Majority Holders" means the Holders of a majority of the aggregate
----------------
principal amount of outstanding Registrable Securities.
"Person" means an individual, partnership, corporation, trust or
------
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities or Exchange Securities, as applicable, covered by a Shelf
Registration Statement, and by all other amendments and supplements to a
2
<PAGE>
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" has the meaning set forth in the preamble.
------------------
"Purchaser" has the meaning set forth in the preamble.
---------
"Purchaser Registration Period" has the meaning set forth in Section
-----------------------------
2(a) hereof.
"Registrable Securities" means the Securities; provided, however, that
---------------------- -------- -------
the Securities shall cease to be Registrable Securities (i) when a Registration
Statement with respect to such Securities shall have been declared effective
under the 1933 Act and such Securities shall have been disposed of pursuant to
such Registration Statement, (ii) when such Securities have been sold pursuant
to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under
the 1933 Act, (iii) when such Securities shall have ceased to be outstanding or
(iv) except with respect to Securities held by the Purchaser, upon the
consummation of the Exchange Offer.
"Registration Expenses" means any and all expenses incident to
---------------------
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, Stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or Blue
Sky laws (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with Blue Sky qualification of any of the
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, and (v) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits, "cold comfort" or special
procedures letters required by or incident to such performance and compliance,
but, excluding fees of counsel for the underwriters or the Holders and
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Registrable Securities by a Holder.
"Registration Statement" means any registration statement of the
----------------------
Company which covers any of the Exchange Securities or Registrable Securities
pursuant to the provisions of this Agreement, and all amendments and supplements
3
<PAGE>
to any such Registration Statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Securities" means the Company's 9-1/2% Senior Pay-In-Kind Notes due
----------
2004, Series A, issued pursuant to the Indenture.
"SEC" means the Securities and Exchange Commission.
---
"Shelf Registration" means a registration effected pursuant to Section
------------------
2(b) hereof.
"Shelf Registration Statement" means a "shelf" registration statement
----------------------------
of the Company pursuant to the provisions of Section 2(b) of this Agreement
which covers some or all of the Registrable Securities or Exchange Securities,
as applicable, on an appropriate form under Rule 415 under the 1933 Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" means the trustee with respect to the Securities under the
-------
Indenture.
"Underwriter" means any underwriter of Registrable Securities in
-----------
connection with an offering thereof under a Shelf Registration Statement.
2. Registration Under the 1933 Act. (a) Exchange Offer
------------------------------- --------------
Registration. To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Company shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the offer
by the Company to the Holders to exchange all of the outstanding Registrable
Securities for Exchange Securities, to have such Exchange Offer Registration
Statement declared effective by the SEC and to have such Registration Statement
remain effective (i) until the earlier of the close of business on the 180th day
following the closing of the Exchange Offer and December 31, 1994 (such period
being called the "Exchanging Dealer Registration Period"), for use by Exchanging
Dealers as contemplated in Section 3(e)(ii) below and (ii) for so long as the
Purchaser is required to deliver a prospectus under the 1933 Act, any rules and
regulations thereunder or interpretations of the staff of the SEC (such period
being called the "Purchaser Registration Period") for use by the Purchaser as
contemplated in Section 3(e)(ii) below; provided, that the Exchanging Dealer
--------
Registration Period shall be extended by the number of days, if any, that an
Exchange Offer Registration Statement is deemed not to be effective under
Section 2(d)(i) or (ii) hereof. Notwithstanding any other provisions hereof,
4
<PAGE>
the Company will ensure that (i) any Exchange Offer Registration Statement and
the related Prospectus complies in all material respects with the 1933 Act and
the rules and regulations thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any related Prospectus does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading. The Company further agrees, if necessary, to supplement or amend
the Exchange Offer Registration Statement, if required by the rules, regulations
or instructions applicable to the registration form used by the Company for such
Exchange Offer Registration Statement or by the 1933 Act, any other rules and
regulations thereunder, or interpretations of the staff of the SEC in connection
with the offers and sales of the securities that, pursuant to this Agreement,
are to be covered by the Exchange Offer Registration Statement.
The Company shall commence the Exchange Offer promptly after the
Exchange Offer Registration Statement has been declared effective by the SEC,
shall keep the Exchange Offer in effect for a minimum of 30 days and, in any
event, shall consummate the Exchange Offer within 120 days of the date the
Exchange Offer Registration Statement is declared effective by the SEC (unless
the Purchaser agrees to, or requests an extension of, such period). The Company
shall commence the Exchange Offer by mailing the related Exchange Offer
Prospectus and accompanying documents to each Holder stating in addition to such
other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Registrable Securities validly tendered will be accepted for
exchange;
(ii) the date or dates of acceptance for exchange (the latest date of
acceptance for exchange shall be after a period of at least 30 days from the
date such notice is mailed) (the "Exchange Date[s]");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest, but, except with respect to
Registrable Securities held by the Purchaser, will not retain any rights under
this Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such Registrable
Security, together with the enclosed letters of transmittal, to the institution
5
<PAGE>
and at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the latest Exchange
Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the latest Exchange Date, by sending to the
institution and at the address (located in the Borough of Manhattan, The City of
New York) specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Securities delivered for exchange, and a statement that such Holder
is withdrawing his election to have such Securities exchanged.
As soon as practicable after the latest Exchange Date, the Company
shall:
(i) accept for exchange Registrable Securities or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company, and promptly authenticate and mail to each Holder, a
new Exchange Security equal in principal amount to the principal amount of the
Registrable Securities surrendered by such Holder.
The Company shall use its best efforts to complete the Exchange Offer
as provided above, and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws in connection with the Exchange
Offer. The Exchange Offer shall not be subject to any conditions, other than
that the Exchange Offer does not violate applicable law or any applicable
interpretation of the staff of the SEC. The Company shall inform the Purchaser
of the names and addresses of the Holders to whom the Exchange Offer is made,
and the Purchaser shall have the right to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
The Company acknowledges that, pursuant to current interpretations by
the SEC's staff of Section 5 of the 1933 Act and in the absence of an applicable
exemption therefrom, (i) each Exchanging Dealer is required to deliver a
prospectus containing the information set forth in Section 3(b) below in
connection with a sale of any Exchange Securities received by such Exchanging
Dealer pursuant to the Exchange Offer in exchange for Registrable Securities
acquired for its own account as a result of market making activities or other
trading activities and (ii) if the Purchaser elects to sell Exchange Securities
6
<PAGE>
acquired in exchange for Registrable Securities constituting any portion of an
unsold allotment, it is required to deliver a prospectus, containing the
information required by Items 507 and/or 508 of Regulation S-K under the 1933
Act, as applicable, in connection with such a sale.
(b) Shelf Registration. In the event that (i) the Company determines
------------------
that the Exchange Offer Registration provided in Section 2(a) above is not
available or may not be consummated as soon as practicable after the latest
Exchange Date because it would violate applicable law or the applicable
interpretations of the staff of the SEC, or (ii) the Purchaser so requests with
respect to Registrable Securities held by it following consummation of the
Exchange Offer, or (iii) if the Purchaser determines that any Exchange
Securities received or to be received by it, pursuant to the Exchange Offer or
otherwise, cannot be resold by it pursuant to the Exchange Offer Registration
Statement, the Company shall use its best efforts to cause to be filed as soon
as practicable after such determination or date as the case may be, a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, or the Purchaser of any such Registrable Securities or
Exchange Securities, as applicable, and to have such Shelf Registration
Statement declared effective by the SEC. The Company agrees to use its best
efforts to keep the Shelf Registration Statement continuously effective (i)
until the third anniversary of the date such Shelf Registration Statement is
declared effective by the SEC or such shorter period which will terminate when
all of the Registrable Securities covered by the Shelf Registration Statement
have been sold pursuant to the Shelf Registration Statement, for use by the
Holders of all the Registrable Securities and (ii) for so long as the Purchaser
is required to deliver a prospectus with respect to resales by the Purchaser of
any such Registrable Securities or Exchange Securities, as applicable, under the
1933 Act, any rules and regulations thereunder or interpretations of the staff
of the SEC, for use by the Purchaser. Notwithstanding any other provisions
hereof, the Company will ensure that (i) any Shelf Registration Statement and
the related Prospectus complies in all material respects with the 1933 Act and
the rules and regulations thereunder, (ii) any Shelf Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any related Prospectus does not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements,
in the light of the circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
7
<PAGE>
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to the
Holders of Registrable Securities and the Purchaser copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company shall pay all Registration Expenses in
--------
connection with the registration pursuant to Section 2(a) or 2(b). Each Holder
shall pay all expenses of its counsel, underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities or Exchange Securities, as applicable, pursuant to the
Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
--------------------------------
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that, with
-------- -------
respect to use of an Exchange Offer Registration Statement by an Exchanging
Dealer as contemplated in Section 2(a)(i) hereof, if, after it has been declared
effective, the offering of Exchange Securities pursuant to an Exchange Offer
Registration Statement (i) is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
or (ii) is not able to be effected because such Registration Statement or the
related Prospectus has not been updated, in accordance with the proviso to
Section 3(j) hereof, such Registration Statement will be deemed not to be
effective during the period of such interference, until Exchange Securities may
again be sold by such Exchanging Dealers pursuant to such Registration
Statement.
3. Registration Procedures. In connection with the obligations of
-----------------------
the Company with respect to the Registration Statements pursuant to Sections
2(a) and (b) hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall, (i) in the case of a Shelf Registration, be available for
the sale of the Registrable Securities by the selling Holders thereof and
Registrable Securities and Exchange Securities by the Purchaser, as applicable,
and (ii) in the case of an Exchange Offer Registration Statement, be available
for the Exchange Offer and the sale of Exchange Securities by any Exchanging
Dealers or the Purchaser as contemplated in Section 3(e)(ii) hereof and (z)
shall comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
8
<PAGE>
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
(b) include the information set forth in Annex A hereto on the cover,
in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution"
section of the Prospectus forming a part of the Exchange Offer Registration
Statement (or in substantively analogous sections thereof), and include the
information set forth in Annex D hereto in the Letter of Transmittal delivered
pursuant to the Exchange Offer; and (iii) if requested by the Purchaser, include
the information required by Items 507 and/or 508 of Regulation S-K under the
1933 Act, as applicable, in the Prospectus forming a part of the Exchange Offer
Registration Statement or a posteffective amendment thereto;
(c) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period; and cause each
Prospectus to be supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the 1933 Act;
(d) (i) in the case of a Shelf Registration Statement, furnish to
each Holder of Registrable Securities and the Purchaser, without charge, at
least one conformed copy of each Registration Statement and any post-effective
amendment thereto, including financial statements and schedules (without
documents incorporated therein by reference or exhibits thereto, unless
requested in writing) and (ii) in the case of an Exchange Offer Registration
Statement, furnish to each Exchanging Dealer or the Purchaser, as applicable,
which so requests, without charge, at least one conformed copy of the Exchange
Offer Registration Statement and any post-effective amendment thereto, including
financial statements and schedules (without documents incorporated therein by
reference or exhibits thereto, unless requested in writing);
(e) (i) in the case of a Shelf Registration Statement, furnish to
each Holder of Registrable Securities and to each underwriter of an underwritten
offering of Registrable Securities, if any, and the Purchaser, without charge,
as many copies of each Prospectus, including each preliminary prospectus, and
any amendment or supplement thereto and such other documents as such Holder,
underwriter or the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of the Registrable Securities or Exchange
Securities, as applicable, and (ii) during the Exchanging Dealer Registration
Period and/or the Purchaser Registration Period, as applicable, promptly,
deliver to each Exchanging Dealer or the Purchaser, as applicable, without
9
<PAGE>
charge, as many copies of the Prospectus included in the Exchange Offer
Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer or the Purchaser, as applicable, may reasonably request for
delivery by (y) such Exchanging Dealer in connection with a sale of Exchange
Securities received by it pursuant to the Exchange Offer or (z) the Purchaser in
connection with a sale of Exchange Securities received by it in exchange for
Registrable Securities constituting any portion of an unsold allotment; and the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by any such Exchanging Dealer or the Purchaser, as applicable, as
aforesaid;
(f) use its best efforts to register or qualify the Registrable
Securities and Exchange Securities, as applicable, under all applicable state
securities or "Blue Sky" laws of such jurisdictions as any Holder of Registrable
Securities covered by a Registration Statement or the Purchaser, as applicable,
shall reasonably request in writing by the time the applicable Registration
Statement is declared effective by the SEC, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such Holder or
the Purchaser, as applicable, to consummate the disposition in each such
jurisdiction of such Registrable Securities or Exchange Securities, as
applicable, owned by such Holder or the Purchaser; provided, however, that the
-------- -------
Company shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(f), (ii) file any general consent to
service of process or (iii) subject itself to taxation in any such jurisdiction
if it is not otherwise so subject;
(g) notify each Holder promptly and, if requested by such Holder,
confirm such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements to a
Registration Statement and Prospectus have become effective, (ii) of any request
by the SEC for additional information after a Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities authority of
any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the effective
date of a Registration Statement and the closing of any sale of Registrable
Securities or Exchange Securities covered thereby, the representations and
warranties of the Company obtained in any underwriting agreement, securities
sales agreement or other similar agreement, if any, relating to the offering
cease to be true and correct in all material respects or if the Company receives
any notification with respect to the suspension of the qualification of the
Registrable Securities or Exchange Securities for sale in any jurisdiction or
the initiation or any proceeding for such purpose, and (v) of the happening of
any event during the period a Registration Statement is effective which makes
10
<PAGE>
any statement made in such Registration Statement or the related Prospectus
untrue in any material respect or which requires the making of any changes in
such Registration Statement or Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (which advice shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made);
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(i) cooperate with the selling Holders of Registrable Securities and
the Purchaser, as applicable, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities or Exchange Securities, as
applicable, to be sold and not bearing any restrictive legends; and enable such
Registrable Securities or Exchange Securities, as applicable, to be in such
denominations (consistent with the provisions of the Indenture) and registered
in such names as the selling Holders and the Purchaser, as applicable, may
reasonably request at least two business days prior to the closing of any sale
of Registrable Securities or Exchange Securities, as applicable;
(j) upon the occurrence of any event contemplated by Section 3(g)(v)
hereof, use its reasonable best efforts, consistent with the Company's past
practices, to prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities or Exchange Securities, as
applicable, such Prospectus will not 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, in light of the circumstances under which they
were made, not misleading; provided, that the Company shall not be required to
--------
update, pursuant to this Section 3(j), any such document during a period where
the Company shall, in good faith and using reasonable business judgment, believe
that such updating would materially adversely affect a publicly undisclosed
ongoing transaction which is material to the Company;
(k) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus after
the initial filing of a Registration Statement, provide copies of such document
to the Purchaser; make reasonably available for inspection by the Purchaser and
11
<PAGE>
counsel for the Purchaser all relevant financial and other records, pertinent
corporate documents and properties of the Company; cause the Company's officers,
directors and employees to supply all relevant information reasonably requested
by the Purchaser or such counsel; make such of the representatives of the
Company as shall be reasonably requested by the Purchaser, available for
discussion of any such Registration Statement, Prospectus or document; and
provide any documents reasonably requested by counsel for the Purchaser in
connection with the delivery of an opinion of counsel to the Purchaser or the
Exchanging Dealers, as applicable;
(l) obtain a CUSIP number for all Exchange Securities, or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement;
(m) cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended (the "TIA") in connection with the registration of the
Exchange Securities, or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(n) in the case of any Shelf Registration Statement, if requested by
any Holders of Registrable Securities or the Purchaser, use its best efforts to
cause, on and as of the effective date of such Shelf Registration Statement and
any post-effective amendment thereto, (x) its counsel to deliver an opinion
relating to the Shelf Registration Statement (and the statements contained
therein or omitted therefrom) and the Registrable Securities or Exchange
Securities, as applicable, in customary form, (y) its officers to execute and
deliver all customary documents and certificates requested by any underwriters
of the Registrable Securities or the Purchaser, as applicable, and (z) its
independent public accountants to provide to the selling Holders and any
underwriter therefor and the Purchaser, as applicable, a comfort letter in
customary form; and
(o) in the case of any Exchange Offer Registration Statement, if
requested by Salomon Brothers Inc or the Purchaser, as applicable, in connection
with any prospectus delivery as contemplated in Section 3(e)(ii) above, use its
best efforts to cause, on and as of the closing of the Exchange Offer and on and
as of the effective date of any post-effective amendment to the Exchange Offer
Registration Statement, (x) its counsel to deliver an opinion relating to the
Exchange Offer Registration Statement (and the statements contained therein or
omitted therefrom) and the Exchange Securities in customary form, (y) its
officers to execute and deliver all customary documents and certificates
requested by Salomon Brothers Inc or the Purchaser, as applicable, and (z) its
independent public accountants to provide a comfort letter in customary form.
In the case of a Shelf Registration Statement, the Company may (as a
condition to such Holder's participation in the Shelf Registration) require each
Holder of Registrable Securities to furnish to the Company such information
12
<PAGE>
regarding the Holder and the proposed distribution by such Holder of such
Registrable Securities as the Company may from time to time reasonably request
in writing in order to comply with Items 507 and/or 508 of Regulation S-K or any
other applicable rule, regulation or interpretation.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(g)(v) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities or
Exchange Securities, as applicable, pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(j) hereof, and, if so directed by the Company, such
Holder will deliver to the Company (at its expense) all copies in its
possession, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities or Exchange Securities,
as applicable, current at the time of receipt of such notice.
4. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Purchaser, each Holder and each Person, if any,
who controls such Purchaser or such Holder within the meaning of either Section
15 of the 1933 Act or Section 20 of the 1934 Act, or who is under common control
with, or is controlled by, such Purchaser or such Holder, from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred by any Purchaser, Holder or any
such controlling or affiliated person in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement (or any amendment thereto) pursuant to which Exchange Securities or
Registrable Securities were registered under the 1933 Act, including all
documents incorporated therein by reference, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or caused by any
untrue statement or alleged untrue statement or a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary to make the statements therein
13
<PAGE>
in light of the circumstances under which they were made not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Purchaser or Holder furnished to the Company in
writing by such Purchaser or Holder expressly for use therein. The Company also
agrees to indemnify any underwriters of the Registrable Securities, their
officers and directors and each Person who controls such underwriters on
substantially the same basis as that of the indemnification of the Purchaser and
the selling Holders provided in this Section 4(a).
(b) The Purchaser and (as a condition to such Holder's participation
in such registration) each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Purchaser, each underwriter and the
other selling Holders, and each of their respective directors, officers and each
Person, if any, who controls the Company, the Purchaser, any underwriter or any
other selling Holder within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act to the same extent as the foregoing indemnity from
the Company to the Purchaser or such Holder, but only with reference to
information relating to the Purchaser furnished to the Company in writing by the
Purchaser or such Holder expressly for use in the Registration Statement, such
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
14
<PAGE>
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm of attorneys (in addition to any local counsel), such
firm shall be designated in writing by the indemnified parties. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior, to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional, release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 4 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i)(A) as
between the Company, the Purchaser and the Holders on the one hand and the
underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Purchaser and the Holders on the
one hand and the underwriters on the other hand from the offering of the
Exchange Securities or Registrable Securities included in such offering or (B)
if the allocation provided by clause (A) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (A) above but also the relative fault of the
Company, the Purchaser and the Holders on the one hand and the underwriters on
the other hand in connection with the statements or omissions that resulted in
any losses, claims, damages or liabilities, as well as any other relevant
equitable considerations and (ii) as between the Company on the one hand and the
15
<PAGE>
Purchaser and each Holder on the other hand in such proportion as is appropriate
to reflect the relative fault of the Company and of each Purchaser and Holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative benefits received by,the Company, the
Purchasers and the Holders on the one hand and the underwriters on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company, the Purchaser and the Holders bear to the
total underwriting discounts and commissions received by the underwriters, in
each case as set forth in the table on the cover page of the prospectus. The
relative fault of the Company, the Purchaser and the Holders on the one hand and
of the underwriters on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact that relates to
information supplied by the Company, the Purchaser and the Holders or by the
underwriters. The relative fault of the Company on the one hand and of the
Purchaser and the Holders on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact relates to information supplied by the Company or by the Purchaser or by
the Holders and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company, the Purchaser and the Holders agree that it would
not be just or equitable if contribution pursuant to this Section 4 were
determined by pro rata allocation (even if the underwriters or the Holders were
--- ----
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4, no underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the securities purchased by such underwriter, and neither the
Purchaser nor any Holder shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities of the
Purchaser or such Holder were offered to the public exceeds the amount of any
damages which such Purchaser or Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
16
<PAGE>
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Purchaser's
and Holders' obligations to contribute pursuant to this Section 4 are several in
proportion to the proceeds of the offering received by such Purchaser or Holder
bears to the total proceeds of the offering received by the Purchaser and all
the Holders and not joint.
5. Miscellaneous. (a) No Inconsistent Agreements. The Company has
------------- --------------------------
not entered into nor will the Company on or after the date of this Agreement
enter into any agreement which is inconsistent with the rights granted to the
Holders of Registrable Securities or the Purchaser in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders and the Purchaser hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of (i)
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or departure, and (ii) the Purchaser, if also so affected; provided,
--------
however, no amendment, modification or supplement or waiver or consent to the
- -------
departure with respect to the provisions of Section 4 hereof shall be effective
as against any Holder of Registrable Securities unless consented to in writing
by such Holder of Registrable Securities.
(c) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the provisions of this
Section 5(c), which address initially is, with respect to the Purchaser, the
address set forth in the Purchase Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 5(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
17
<PAGE>
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
--------
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Registrable
Securities such person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
person shall be entitled to receive the benefits hereof.
(e) Third Party Beneficiaries. The Purchaser shall be a third party
-------------------------
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Holders, on the other hand, and shall have the right to enforce
such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
ADELPHIA COMMUNICATIONS
CORPORATION
By: _______________________
Name:
Title:
Confirmed and accepted
as of the date first
above written:
SALOMON BROTHERS INC
/s/ N. B. Peretsman
By: _______________________
Name: N.B. Peretsman
Title: Managing Director
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
ADELPHIA COMMUNICATIONS
CORPORATION
/s/ James Brown
By: _______________________
Name:
Title: VP
Confirmed and accepted
as of the date first
above written:
SALOMON BROTHERS INC
By: _______________________
Name:
Title:
19
<PAGE>
ANNEX A
Annex A
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Each broker-dealer that receives Exchange Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Registrable Securities where such Registrable Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date (as
defined herein) and ending on the earlier of the close of business on the 180th
day following the Expiration Date and December 31, 1994, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
20
<PAGE>
ANNEX B
Annex B
-------
Each broker-dealer that receives Exchange Securities for its own account in
exchange for Registrable Securities, where such Registrable Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities. See "Plan of
Distribution."
21
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
--------------------
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Securities received in
exchange for Registrable Securities where such Registrable Securities were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, starting on the Expiration Date and ending on the
earlier of the close of business on the 180th day following the Expiration Date
and December 31, 1994 it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Securities. Any broker-dealer that resells Exchange Securities that
were received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Securities
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit of any such resale of Exchange Securities and any commissions or
concessions received by an such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Starting on the Expiration Date and ending on the earlier of the close
of business on the 180th day following the Expiration Date and December 31,
1994, the Company will promptly send additional copies of this Prospectus and
22
<PAGE>
any amendment or supplement to this Prospectus to any broker-dealer that
requests such documents in the Letter of Transmittal. The Company has agreed to
pay certain expenses incident to the Exchange Offer other than commissions or
concessions of any brokers or dealers and will indemnify the holders of the
Registrable Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
23
<PAGE>
ANNEX D
Rider A
-------
[_] CHECK HERE IF YOU ARE A BROKER-DEALER
AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name: _______________________________
Address: ____________________________
____________________________
Rider B
-------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Registrable Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
24
<PAGE>
EXHIBIT 12.01
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
---------------------------------------------------- ------------------
1989 1990 1991 1992 1993 1992 1993
--------- --------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Loss before Income Tax-
es, Extraordinary Loss
and Cumulative Effect
of Change in Accounting
Principle.............. $(123,645) $(156,939) $(141,360) $(121,605) $(99,766) $(71,902) $(72,288)
Add:
Fixed Charges, Excluding
Capitalized Interest... 114,889 157,045 167,249 168,909 170,376 124,385 140,964
Equity in Net Loss of
Olympus Joint Venture
Partnership............ -- 25,357 61,975 52,718 46,841 36,309 23,408
Minority Interest in Net
Loss of Subsidiary..... (261) (122) -- -- -- -- --
--------- --------- --------- --------- -------- -------- --------
Net Earnings (Loss)
Available for Fixed
Charges................ (9,017) 25,341 87,864 100,022 117,451 88,792 92,084
--------- --------- --------- --------- -------- -------- --------
Fixed Charges:
Interest Expense....... 111,331 150,263 163,637 164,839 164,859 120,318 136,757
Capitalized
Interest............. 3,173 2,908 2,992 1,498 1,009 922 1,008
Amortization of Debt
Issuance Costs....... 2,561 5,500 2,304 2,781 4,155 3,116 3,264
Interest Portion of
Rent Expense.......... 997 1,282 1,308 1,289 1,362 951 943
--------- --------- --------- --------- -------- -------- --------
Total Fixed Charges..... 118,062 159,953 170,241 170,407 171,385 125,307 141,972
Ratio of Earnings to
Fixed Charges.......... -- .16 .52 .59 .69 .71 .65
Deficiency in Earnings
Required to Cover Fixed
Charges................ $ 127,079 $ 134,612 $ 82,377 $ 70,385 $53,934 $36,515 $49,888
</TABLE>
<PAGE>
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Adelphia Communications Corporation on Form S-4 of our reports dated June
25, 1993 and March 17, 1993 for Adelphia Communications Corporation and
subsidiaries and Olympus Communications, L.P. and subsidiaries, respectively,
appearing in the Annual Report on Form 10-K of Adelphia Communications
Corporation for the year ended March 31, 1993, and to the reference to us under
the heading "Experts" in the Prospectus, which is part of this Registration
Statement.
Deloitte & Touche
March 4, 1994
Pittsburgh, Pennsylvania
<PAGE>
Exhibit 25
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) __________________________
BANK OF MONTREAL TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-4941093
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
77 Water Street
New York, New York 10005
(Address of trustee's (Zip Code)
principal executive offices)
---------------------------
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
23-2417713
(I.R.S. employer identification no.)
5 West Third Street - P.O. Box 472
Coudersport, Pennsylvania 16915
(Address of principal executive offices) (Zip Code)
---------------------------
9-1/2% Senior Pay-In-Kind Notes due February 15, 2004
(Title of indenture securities)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
-2-
Item 1. General Information.
---------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York
33 Liberty Street, New York, N.Y. 10045
State of New York Banking Department
2 Rector Street, New York N.Y. 10006
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with the Obligor.
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
Item 4. Trusteeships under Other Indentures.
------------------------------------
If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or participation
in any other securities, of the obligor are outstanding, furnish
the following information:
(a) Title of the securities outstanding under each such indenture
Adelphia Communications Corporation and Bank of Montreal Trust
Company, Trustee Indenture dated as of May 7, 1992, $400,000,000
principal amount Adelphia Communications Corporation 12-1/2%
Senior Notes due May 15, 2002.
Adelphia Communications Corporation and Bank of Montreal Trust
Company, Trustee Indenture dated as of September 2, 1992.
$125,000,000 principal amount Adelphia Communications Corporation
11-7/8% Senior Debentures due September 15, 2004.
Adelphia Communications Corporation and Bank of Montreal Trust
Company, Trustee Indenture dated as of July 28, 1993, $110,000,000
principal amount Adelphia Communications Corporation 10-1/4%
Senior Notes due July 15, 2000.
Adelphia Communications Corporation and Bank of Montreal Trust
Company, Trustee Indenture dated as of March 11, 1993, $130,000,000
principal amount Adelphia Communications Corporation 9-7/8%
Senior Debentures due March 1, 2005.
Adelphia Communications Corporation and Bank of Montreal Trust
Company, Trustee Indenture dated as of February 22, 1994,
$150,000,000 principal amount Adelphia Communications Corporation
9-1/2% Senior Pay-In-Kind Notes due February 15, 2004.
<PAGE>
-3-
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section
310(b)(1) of the Act arises as a result of the trusteeship under
any such other indenture, including a statement as to how the
indenture securities will rank as compared with the securities
issued under such other indenture.
The indenture to be qualified and the indenture(s) referred to in
paragraph A above are wholly unsecured and rank pari passu.
Item 16. List of Exhibits.
-----------------
A. Copy of Organization Certificate of Bank of Montreal Trust Company
to transact business and exercise corporate trust powers;
incorporated herein by reference as Exhibit "A" filed with Form
T-1 Statement. Registration No. 33-46118
B. Copy of the existing By-Laws of Bank of Montreal Trust Company;
incorporated herein by reference as Exhibit "B" filed with Form
T-1 Statement, Registration No. 33-46118
C. The consent of the Trustee required by Section 321(b) of the Act;
incorporated herein by reference as Exhibit "C" with Form T-1
Statement, Registration No. 33-46118
D. A copy of the latest report of condition of Bank of Montreal
Trust Company published pursuant to law or the requirements of its
supervising or examining authority, attached hereto as Exhibit "D"
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Bank of Montreal Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 24th
day of February, 1994
BANK OF MONTREAL, TRUST COMPANY
/s/ Amy S. Roberts
By ____________________
Amy S. Roberts
Assistant Vice President
<PAGE>
EXHIBIT "D"
STATEMENT OF CONDITION
BANK OF MONTREAL TRUST COMPANY
NEW YORK
--------------------------
<TABLE>
<S> <C>
ASSETS
Due From Banks $ 2,181,295
-----------
Investment Securities:
State and Municipal 14,960,260
-----------
Other 100
Total Securities 14,960,360
-----------
Loans and Advances
Federal Funds Sold 10,964,974
Overdrafts 8,772
-----------
Total Loans and Advances 10,973,736
-----------
Investment in Harris Trust, NY 5,364,778
Premises and Equipment 1,604,096
Other Assets 4,303,769
-----------
TOTAL ASSETS $37,206,732
-----------
LIABILITIES
Trust Deposits $18,702,167
Other Deposits 826,919
-----------
TOTAL LIABILITIES 19,529,086
-----------
CAPITAL ACCOUNTS
Capital Stock, Authorized, Issued and
Fully Paid - 10,000 Shares of $100 Each 1,000,000
Surplus 4,222,188
Retained Earnings 12,455,458
-----------
TOTAL CAPITAL ACCOUNTS 17,677,646
-----------
TOTAL LIABILITIES
AND CAPITAL ACCOUNTS $37,206,732
-----------
</TABLE>
I, Mark F. McLaughlin, Vice President, of the above-named bank
do hereby declare that this Report of Condition is true and correct to the best
of my knowledge and belief.
Mark F. McLaughlin
December 31, 1993
We, the undersigned directors, attest to the correctness of
this statement of resources and liabilities. We declared that it has been
examined by us, and to the best of our knowledge and belief has been prepared
in conformance with the instructions and is true and correct.
John M. Denson
Kevin O. Healey
Steven R. Rothbloom
<PAGE>
EXHIBIT 99.01
LETTER OF TRANSMITTAL
ADELPHIA COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS 9 1/2% SENIOR PAY-IN-KIND NOTES DUE 2004, SERIES B
("NEW NOTES")
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND
ALL OF ITS OUTSTANDING 9 1/2% SENIOR PAY-IN-KIND NOTES DUE 2004, SERIES A
("OLD NOTES")
PURSUANT TO THE PROSPECTUS, DATED , 1994
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1994 OR SUCH LATER DATE AND TIME TO WHICH THE EXCHANGE OFFER MAY
BE EXTENDED (THE "EXPIRATION DATE"), TENDERS MAY BE WITHDRAWN PRIOR TO THE
EXPIRATION DATE.
To: Bank of Montreal Trust Company, Exchange Agent
By Certified Mail, by Hand or Overnight By Facsimile:
Delivery: Bank of Montreal Trust
Bank of Montreal Trust Company 77 Water Company Attn: Corporate
Street New York, NY 10005 Attn: Trust Department (212)
Corporate Trust Department 701-7684
Confirm by Telephone:
(212) 701-7653
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX BELOW
----------------
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal
amount of Old Notes should be listed on a separate signed schedule affixed
hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES (1) (2) (3)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRINCIPAL
AMOUNT
NAME(S) AND ADDRESS(ES) OF PRINCIPAL OF OLD NOTES
REGISTERED HOLDER(S) CERTIFICATE AMOUNT TENDERED (IF
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OF OLD NOTES LESS THAN ALL)**
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------
------------------
------------------
------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by the amount indicated in
column (2).
<PAGE>
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1994 (the "Prospectus"), of Adelphia Communications
Corporation, a Delaware corporation ("Adelphia"), and this Letter of
Transmittal (the "Letter"), which together constitute Adelphia's offer (the
"Exchange Offer") to exchange up to $150,000,000 aggregate principal amount of
9 1/2% Senior Pay-In-Kind Notes due 2004, Series B (the "New Notes") of
Adelphia for a like principal amount of Adelphia's issued and outstanding 9
1/2% Senior Pay-In-Kind Notes due 2004, Series A (the "Old Notes") from the
holders thereof.
The undersigned has completed the appropriate boxes above and below and
signed this Letter to indicate the action the undersigned desires to take with
respect to the Exchange Offer.
This Letter is to be used either if certificates of Old Notes are to be
forwarded herewith or if delivery of Old Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company, pursuant to the procedures set forth in "The Exchange Offer--
Procedures for Tendering" in the Prospectus. Delivery of this Letter and any
other required documents should be made to the Exchange Agent. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent
on or prior to the Expiration Date must tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 1.
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________________
Depository Trust Company Account Number ________________________________________
Transaction Code Number ________________________________________________________
[_]CHECK HERE IF OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) ___________________________________________________
Name of Eligible Institution that Guaranteed Delivery _________________________.
If delivered by book entry transfer:
Depository Trust Company Account Number ________________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLE- MENTS
THERETO.
Name ___________________________________________________________________________
Address ________________________________________________________________________
_______________________________________________________________________________
Telephone/Contact Person _______________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to conditions of the Exchange Offer, the
undersigned hereby tenders to Adelphia the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the
<PAGE>
acceptance for exchange of the Old Notes tendered hereby, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Adelphia all
right, title and interest in and to such Old Notes as are being tendered
hereby.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that Adelphia will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim when the same are accepted by Adelphia. The undersigned
will, upon request, execute and deliver any additional documents deemed by
Adelphia or the Exchange Agent to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC") in no-action letters issued to third parties. Based upon
such interpretations, Adelphia believes that the New Notes issued in exchange
for the Old Notes pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by holders thereof (other than any such holder
that is an "affiliate" of Adelphia within the meaning of Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act") ) without compliance
with the registration and prospectus delivery provisions of the Securities Act
provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such New Notes. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, a distribution of New Notes. If the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes, it represents that the Old Notes to be exchanged for New Notes were
acquired by it as a result of market-making activities or other trading
activities and acknowledges that it will deliver a prospectus in connection
with any resale of such New Notes; however, by so acknowledging and by
delivering a prospectus, the undersigned will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby acknowledges and agrees that, upon
receipt of notice by Adelphia of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires
the making of any changes in the Prospectus in order to make the statements
therein not misleading (which notice Adelphia agrees to deliver promptly to
such broker-dealer), such broker-dealer will suspend use of the Prospectus
until Adelphia has amended or supplemented the Prospectus to correct such
misstatement or omission and has furnished copies of the amended or
supplemented prospectus to such broker-dealer.
The undersigned represents that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of such holder's
business, (ii) such holder has no arrangements with any person to participate
in the distribution of such New Notes, and (iii) such holder is not an
"affiliate," as defined in Rule 405 under the Securities Act, of Adelphia or,
if such holder is an affiliate, that such holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
All authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in the instructions
contained in this Letter.
The undersigned understands that tenders of the Old Notes pursuant to any one
of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and Adelphia in accordance with the
terms and subject to the conditions of the Exchange Offer.
<PAGE>
The undersigned understands that if its Old Notes are accepted for exchange,
such holder will not receive accrued interest thereon on the date of exchange.
Instead, interest accruing on the Old Notes from February 22, 1994 through the
date of exchange will be payable on August 15, 1994 to the holders of the New
Notes as of August 1, 1994.
The undersigned recognizes that, under certain circumstances set forth in the
Prospectus under "The Exchange Offer--Conditions," Adelphia may not be required
to accept for exchange any of the Old Notes tendered. Old Notes not accepted
for exchange or withdrawn will be returned to the undersigned at the address
set forth below unless otherwise indicated under "Special Delivery
Instructions" below.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby requests that the New Notes (and,
if applicable, substitute certificates representing Old Notes for any Old Notes
not exchanged) be issued in the name of the undersigned. Similarly, unless
otherwise indicated under the box entitled "Special Delivery Instructions"
below, the undersigned hereby requests that the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
be sent to the undersigned at the address shown above in the box entitled
"Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
X........................... ...........................
X........................... ...........................
Signature(s) of Owner(s) Date
Area Code and Telephone Number.................
If a holder is tendering any Old Notes, this Letter must be
signed by the registered holder(s) as the name(s) appear(s)
on the certificate(s) for the Old Notes or by any person(s)
authorized to become registered holder(s) by endorsements
and documents transmitted herewith. If signature is by a
trustee, executor, administrator, guardian, officer or
other person acting in a fiduciary or representative
capacity, please set forth full title below. See
Instruction 3.
Name(s): ......................................
...............................................
(Please Type or Print)
Capacity: .....................................
Address:.......................................
...............................................
(Include Zip Code)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by an Eligible
Institution:...................................
(Authorized Signature)
...............................................
(Title)
...............................................
(Name of Firm)
Dated: ........................................
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4) (SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if To be completed ONLY if
certificates for New Notes are certificates for New Notes are
to be issued in the name of and to be sent to someone other
sent to someone other than the than the person or persons
person or persons whose whose signature(s) appear(s) on
signature(s) appear(s) on this this Letter above or to such
Letter above. person or persons at an address
other than that shown in the
Issue New Notes to: box entitled "Description of
Old Notes" on this Letter
Name............................ above.
(Please Type or Print)
................................ Mail New Notes to:
(Please Type or Print)
Name............................
Address......................... (Please Type or Print)
................................ ................................
(Please Type or Print)
(Zip Code)
(Complete Substitute Form W-9) Address.........................
................................
(Zip Code)
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATE(S) FOR OLD NOTES OR
A CONFIRMATION OF BOOK-ENTRY TRANSFER OF SUCH OLD NOTES AND ALL OTHER REQUIRED
DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter and Old Notes; Guaranteed Delivery Procedure. The
Letter is to be used to forward, and must accompany, all certificates
representing Old Notes tendered pursuant to the Exchange Offer. Certificates
representing the Old Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at the
book-entry transfer facility) as well as a properly completed and duly executed
copy of this Letter and all other documents required by this Letter, must be
received by the Exchange Agent at its address set forth herein on or before the
Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER, THE OLD NOTES AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDERS, BUT THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE
EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO PERMIT TIMELY DELIVERY.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (iii) who cannot complete the procedures for book-entry
transfer of Old Notes to the Exchange Agents account with DTC prior to the
Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution (as defined
below):
(b) On or prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes (if possible) and the principal amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five business days after the Expiration Date, (i) the Letter
of Transmittal (or facsimile thereof) together with the certificates
representing the Old Notes and any other documents required by this Letter
and the instructions hereto, will be deposited by such Eligible Institution
with the Exchange Agent, or (ii) that book-entry transfer of such Old Notes
into the Exchange Agent's account at DTC will be effected and confirmation
of such book-entry transfer will be delivered to the Exchange Agent; and
(c) this Letter, or a facsimile thereof, properly completed, as well as
the certificate(s) representing all tendered Old Notes in proper form for
transfer and all other required documents, or confirmation of book-entry
transfer of the Old Notes into the Exchange Agent's account at DTC, are
received by the Exchange Agent within five business days after the
Expiration Date.
See "The Exchange Offer" in the Prospectus.
2. Withdrawals. Any holder who has tendered Old Notes may withdraw the tender
by delivering written notice of withdrawal to the Exchange Agent prior to the
Expiration Date. For a withdrawal to be effective, a telegram, telex, facsimile
transmission or letter indicating notice of withdrawal must be received by the
Exchange Agent at its address set forth herein. Any such notice of withdrawal
must (i) specify the name of the person having tendered the Old Notes to be
withdrawn (the "Depositor"), (ii) identify the Old Notes to be withdrawn
(including the certificate number or numbers and principal amount of such Old
Notes), (iii) be signed by the holder in the same manner as the original
signature on the Letter by which such Old Notes were tendered or as otherwise
set forth in Instruction 3 below (including any required signature guarantees),
or be accompanied by documents of transfer sufficient to have the Trustee (as
defined in the Prospectus) register the transfer of such Old Notes into the
name of the person withdrawing the tender and (iv) specify the name in which
any such Old Notes are to be registered, if different from that of the
Depositor. If Old
<PAGE>
Notes have been tendered pursuant to the procedure for book-entry transfer, any
notice of withdrawal must specify the name and number of the account at DTC to
be credited with the withdrawn Old Notes or otherwise comply with the DTC's
procedures. See "The Exchange Offer--Withdrawal of Tender" in the Prospectus.
3. Signatures on this Letter; Bond Powers and Endorsements; Guarantees of
Signatures. If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond with the name as written on the
face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
If this Letter or any Old Notes or powers of attorney are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should indicate when signing, and unless waived by Adelphia, proper
evidence satisfactory to Adelphia of their authority so to act must be
submitted.
The signatures on this Letter or a notice of withdrawal, as the case may be,
must be guaranteed by an Eligible Institution (as defined below) unless the Old
Notes surrendered for exchange pursuant thereto are tendered (i) by a
registered holder of the Old Notes who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" in this
Letter or (ii) for the account of an Eligible Institution (as defined below).
In the event that the signatures in this Letter or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantees must be by a
firm which is a member of a registered national securities exchange or a member
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securites Exchange Act of 1934, as amended (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than
the signer of this Letter, the Old Notes surrendered for exchange must be
endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by Adelphia in its
sole discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering holders of Old Notes
should indicate in the applicable box the name and address to which New Notes
issued pursuant to the Exchange Offer are to be issued or sent, if different
from the name or address of the person signing this Letter. In the case of
issuance in a different name, the employer identification or social security
number of the person named must also be indicated. If no such instructions are
given, any New Notes will be issued in the name of, and delivered to, the name
or address of the person signing this Letter and any Old Notes not accepted for
exchange will be returned to the name or address of the person signing this
Letter.
5. Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
federal income tax laws, payments that may be made by Adelphia on account of
New Notes issued pursuant to the Exchange Offer may be subject to backup
withholding at the rate of 31%. In order to avoid such backup withholding, each
tendering holder should complete and sign the Substitute Form W-9 included in
this Letter and either (a) provide the correct taxpayer identification number
("TIN") and certify, under penalties of perjury, that the TIN provided is
correct and that (i) the holder has not been notified by the Internal Revenue
Service (the "IRS") that the holder is subject to backup withholding as a
result of failure to report all interest or dividends or (ii) the IRS has
notified the holder that the holder is no longer subject to backup withholding;
or (b) provide an adequate basis for exemption. If the tendering holder has not
been issued a TIN and has applied for one, or intends to apply for one in the
near future, such holder should write "Applied For" in the space
<PAGE>
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, Adelphia (or the
Paying Agent under the Indenture governing the New Notes) shall retain 31% of
payments made to the tendering holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent or Adelphia with its TIN within sixty (60) days after the date
of the Substitute Form W-9, Adelphia (or the Paying Agent) shall remit such
amounts retained during the sixty (60) day period to the holder and no further
amounts shall be retained or withheld from payments made to the holder
thereafter. If, however, the holder has not provided the Exchange Agent or
Adelphia with its TIN within such sixty (60) day period, Adelphia (or the
Paying Agent) shall remit such previously retained amounts to the IRS as backup
withholding. In general, if a holder is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Exchange Agent or Adelphia is not provided with the correct taxpayer
identification number, the holder may be subject to a $50 penalty imposed by
the IRS. Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such holder must submit a statement (generally, IRS Form W-8),
signed under penalties of perjury, attesting to that individual's exempt
status. Such statements can be obtained from the Exchange Agent. For further
information concerning backup withholding and instructions for completing the
Substitute Form W-9 (including how to obtain a taxpayer identification number
if you do not have one and how to complete the Substitute Form W-9 if Old Notes
are registered in more than one name), consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require Adelphia (or the Paying
Agent) to withhold 31% of the amount of any payments made on account of the New
Notes. Backup withholding is not an additional federal income tax. Rather, the
federal income tax liability of a person subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
6. Transfer Taxes. Adelphia will pay all transfer taxes, if any, applicable
to the transfer of Old Notes to it or its order pursuant to the Exchange Offer.
If, however, New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Notes tendered
hereby, or if tendered Old Notes are registered in the name of any person other
than the person signing this Letter, or if a transfer tax is imposed for any
reason other than the exchange of Old Notes pursuant to the Exchange Offer, the
amount of any such transfer taxes (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted
herewith, the amount of such transfer taxes will be billed directly to such
tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
7. Waiver of Conditions. Adelphia reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
8. No Conditional Tenders. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither Adelphia nor any other person is obligated to give notice of defects
or irregularities in any tender, nor shall any of them incur any liability for
failure to give any such notice.
9. Inadequate Space. If the space provided herein is inadequate, the
aggregate principal amount of Old Notes being tendered and the certificate
number or numbers (if available) should be listed on a separate schedule
attached hereto and separately signed by all parties required to sign this
Letter.
<PAGE>
10. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated above for further instructions.
11. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter, may be directed to the Exchange Agent at the
address and telephone number indicated above.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYER'S NAME: ADELPHIA COMMUNICATIONS CORPORATION
PART I--Taxpayer
SUBSTITUTE Identification Number
Enter your taxpayer ------------------------
FORM W-9 identification number in Social Security Number
DEPARTMENT OF THE the appropriate box. For OR
TREASURY most individuals, this ------------------------
INTERNAL REVENUE is your social security Employer Identification
SERVICE number. If you do not Number
have a number, see how
to obtain a "TIN" in the
enclosed Guidelines.
NOTE: If the account is
in more than one name,
see the chart on page 2
of the enclosed
Guidelines to determine
what number to give.
PAYER'S REQUEST FOR ------------------------------------------------------
TAXPAYER IDENTIFICATION PART II--For Payees Exempt From Backup Withholding
NUMBER (TIN) AND (see enclosed Guidelines)
CERTIFICATION ------------------------------------------------------
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT:
(1) the number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
(2) I am not subject to backup withholding either
because I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends or the IRS has
notified me that I am no longer subject to
backup withholding.
-------------------------------------------------------
SIGNATURE---------------------- DATE-----------------
- --------------------------------------------------------------------------------
Certification Guidelines--You must cross out item (2) of the above
certification if you have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or dividends on
your tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the IRS
that you are no longer subject to backup withholding, do not cross out item
(2).
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification Number
has not been issued to me, and that I mailed or delivered an application to
receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31 percent of all
payments made to me on account of the New Notes shall be retained until I
provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within sixty (60) days, such retained
amounts shall be remitted to the Internal Revenue Service as backup withholding
and 31 percent of all reportable payments made to me thereafter will be
withheld and remitted to the Internal Revenue Service until I provide a
Taxpayer Identification Number.
SIGNATURE ________________________________________________ DATE _______________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE NEW NOTES. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social Security numbers have nine digits separated by two hyphens: i.e., 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <S>
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------------------------------------------------------------------------
1. An individual's account The individual 6. Sole proprietorship The owner(3)
2. Two or more individuals (joint account) The actual owner of the 7. A valid trust, estate or The legal entity
account or, if combined pension trust (Do not
funds, the first individual furnish the
on the account(1) identifying number
of the personal
representative
or trustee unless
the legal entity
itself is not
designated in the
account title.)(4)
3. Custodian account for a minor (Uniform The minor(2)
Gift to Minors Act
8. Corporate The corporation
4. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee) 9. Association, club, religious, The organization
charitable, educational or
other tax-exempt
organization
b. So-called trust account that is
not a The actual owner(1) legal
or valid trust under State law
5. Sole proprietorship The owner(3) 10. Partnership The partnership
11. A broker or registered The broker or
nominee nominee
12. Account with the The public entity
Department of
Agriculture in the name
of a public entity (such
as a state or local
government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- --------------------------------------------------------------------------------
1) List first and circle the name of the person whose number you furnish.
2) Circle the minor's name and furnish the minor's social security number.
3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
4) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on interest payments
include the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of
1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the
payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest or other payments to give correct taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) Misuse of TINs.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
EXHIBIT 99.02
Notice of Guaranteed Delivery
for Tender of
9 1/2% Senior Pay-In-Kind Notes due 2004, Series A
(the "Old Notes")
of
ADELPHIA COMMUNICATIONS CORPORATION
This form, or one substantially equivalent hereto, must be used to tender Old
Notes pursuant to the Exchange Offer described in the Prospectus dated ,
1994 (the "Prospectus") of Adelphia Communications Corporation, a Delaware
corporation (the "Company"), if a holder of Old Notes cannot deliver a Letter
of Transmittal to the Exchange Agent listed below (the "Exchange Agent") or
cannot either deliver the Old Notes to be tendered or complete the procedure
for book-entry transfer prior to 5:00 P.M., New York City time, on ,
1994 or such later date and time to which the Exchange Offer may be extended
(the "Expiration Date"). This form, or one substantially equivalent hereto,
must be delivered by hand or sent by facsimile transmission or mail to the
Exchange Agent, and must be received by the Exchange Agent on or prior to the
Expiration Date. See "The Exchange Offer--Procedure for Tendering" in the
Prospectus. Capitalized terms used herein and not defined herein shall have the
meanings ascribed thereto in the Prospectus.
To: Bank of Montreal Trust Company, Exchange Agent
By Mail, by Hand or Overnight Delivery:
Bank of Montreal Trust Company
77 Water Street New York, NY 10005
Attn: Corporate Trust Department
By Facsimile:
(212) 701-7684
Confirm by Telephone:
(212) 701-7653
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of the Old
Notes indicated below and that the Letter of Transmittal cannot be delivered to
the Exchange Agent and/or either the certificates representing such Old Notes
cannot be delivered to the Exchange Agent or the procedure for book-entry
transfer cannot be completed prior to the Expiration Date. The undersigned
hereby tenders the Old Notes indicated below pursuant to the guaranteed
delivery procedures set forth in the Prospectus and the Letter of Transmittal,
receipt of which is hereby acknowledged.
Name(s) of Tender Holder(s): ...................................................
................................................................................
PLEASE PRINT OR TYPE
................................................................................
SIGNATURES
Address(es):....................................................................
................................................................................
Telephone Number(s): ...........................................................
Name(s) in which Old Notes are registered:......................................
................................................................................
<TABLE>
<CAPTION>
CERTIFICATE NO(S). PRINCIPAL AMOUNT
(IF APPLICABLE)* TRANSFERRED
------------------ ----------------
<S> <C>
........................................... ...........................................
........................................... ...........................................
........................................... ...........................................
........................................... ...........................................
........................................... ...........................................
</TABLE>
- --------
*Need not be completed by book-entry holders.
<PAGE>
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank
or trust company having an office or a correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees that the
undersigned will deliver to the Exchange Agent the certificates representing
the Old Notes being tendered hereby in proper form for transfer (or a
confirmation of book-entry transfer of such Old Notes, into the Exchange
Agent's account at the book-entry transfer facility) with delivery of a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other required
documents, all within five business days after the Expiration Date.
Name of Firm......................... .....................................
AUTHORIZED SIGNATURE
Address..............................
Name.................................
..................................... PLEASE PRINT OR TYPE
ZIP CODE
Title................................
Telephone No.........................
Dated:...............................
The institution that completes this form must communicate the guarantee to
the Exchange Agent and must deliver the certificates representing any Old Notes
(or a confirmation of book-entry transfer of such Old Notes into the Exchange
Agent's account at the book-entry transfer facility) and the Letter of
Transmittal to the Exchange Agent within the time period shown herein. Failure
to do so could result in a financial loss to such institution.
