SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported) February 22, 1999
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-16014 23-2417713
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
Main at Water Street - Coudersport, PA 16915-1141
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (814) 274-9830
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Item 5. Other Events
The Registrant recently announced by press release, previously filed on
Form 8-K, that it had reached an agreement to acquire Century Communications
Corp. ("Century"). The Registrant and Century entered into a definitive
agreement for the merger of Century with Adelphia. In connection with the merger
agreement, which is filed herewith as Exhibit 2.01, Adelphia, and Leonard Tow
and trusts of the family of Leonard Tow, the controlling Class B shareholders of
Century, entered into a voting agreement, which is filed herewith as Exhibit
10.01, and Century and members of the family of John Rigas, the controlling
Class B stockholders of Adelphia, entered into a voting agreement, which is
filed herewith as Exhibit 10.02. All of said exhibits are filed under Item 7
hereof and are incorporated by reference herein.
The Registrant is also filing under Item 7 hereof an agreement
regarding the recently announced acquisition of FrontierVision Partners, L. P.,
which is incorporated herein by reference and is filed as Exhibit 2.02 hereof.
The Registrant is also filing under Item 7 hereof certain other
exhibits with respect to the recently announced offering of 12% Senior
Subordinated Notes due 2007 by its subsidiary, Hyperion Communications
Corporation. These exhibits are incorporated by reference herein and are filed
as Exhibits 4.01, 4.02, 10.03, 10.04 and 10.05 hereof.
Item 7. Financial Statements and Exhibits
Exhibit No. Description
2.01 Agreement and Plan of Merger by and among Adelphia
Communications Corporation, Adelphia Acquisition
Subsidiary, Inc., and Century Communications Corp.,
dated as of March 5, 1999. (Filed Herewith)
2.02 Purchase Agreement, dated as of February 22, 1999,
among FrontierVision Partners, L. P., FVP GP, L. P.,
and certain direct and indirect Limited Partners of
FrontierVision Partners, L. P., as sellers, and
Adelphia Communications Corporation, as buyer. (Filed
Herewith)
4.01 Indenture, dated as of March 2, 1999, between
Hyperion Telecommunications, Inc. and the Bank of
Montreal Trust Company with respect to the 12% Senior
Subordinated Notes due 2007 of Hyperion
Telecommunications, Inc. (Filed Herewith)
4.02 Form of 12% Senior Subordinated Note due 2007.
(contained in Exhibit 4.01 above)
10.01. Class B Voting Agreement, dated as of March 5, 1999,
among Adelphia Communications Corporation, Leonard
Tow, The Claire Tow Trust, and the Trust Created by
Claire Tow under date of December 10, 1979. (Filed
Herewith)
10.02. Rigas Class B Voting Agreement , dated as of March 5,
1999, among Century Communications Corp., John Rigas,
Michael Rigas, Timothy Rigas and James Rigas. (Filed
Herewith)
10.03 Purchase Agreement between Hyperion
Telecommunications, Inc. and the Initial Purchasers
named therein, dated as of February 25, 1999,
regarding Hyperion's 12% Senior Subordinated Notes
due 2007 (Filed Herewith)
10.04 Registration Rights Agreement between Hyperion
Telecommunications, Inc. and the Initial Purchasers
named therein, dated as of March 2, 1999 regarding
Hyperion's 12% Senior Subordinated Notes due 2007
(Filed Herewith)
10.05 Purchase Agreement between Hyperion
Telecommunications, Inc. and Highland Holdings, dated
as of February 25, 1999, regarding Hyperion's 12%
Senior Subordinated Notes due 2007 (Filed Herewith)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 9, 1999 ADELPHIA COMMUNICATIONS CORPORATION
(Registrant)
By: /s/ Timothy J. Rigas
Timothy J. Rigas
Executive Vice President, Treasurer
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2.01 Agreement and Plan of Merger by and among Adelphia
Communications Corporation, Adelphia Acquisition
Subsidiary, Inc., and Century Communications Corp.,
dated as of March 5, 1999. (Filed Herewith)
2.02 Purchase Agreement, dated as of February 22, 1999,
among FrontierVision Partners, L. P., FVP GP, L. P.,
and certain direct and indirect Limited Partners of
FrontierVision Partners, L. P., as sellers, and
Adelphia Communications Corporation, as buyer. (Filed
Herewith)
4.01 Indenture, dated as of March 2, 1999, between
Hyperion Telecommunications, Inc. and the Bank of
Montreal Trust Company with respect to the 12% Senior
Subordinated Notes due 2007 of Hyperion
Telecommunications, Inc. (Filed Herewith)
4.02 Form of 12% Senior Subordinated Note due 2007.
(contained in Exhibit 4.01 above)
10.01. Class B Voting Agreement, dated as of March 5, 1999,
among Adelphia Communications Corporation, Leonard
Tow, The Claire Tow Trust, and the Trust Created by
Claire Tow under date of December 10, 1979. (Filed
Herewith)
10.02. Rigas Class B Voting Agreement , dated as of March 5,
1999, among Century Communications Corp., John Rigas,
Michael Rigas, Timothy Rigas and James Rigas. (Filed
Herewith)
10.03 Purchase Agreement between Hyperion
Telecommunications, Inc. and the Initial Purchasers
named therein, dated as of February 25, 1999,
regarding Hyperion's 12% Senior Subordinated Notes
due 2007 (Filed Herewith)
10.04 Registration Rights Agreement between Hyperion
Telecommunications, Inc. and the Initial Purchasers
named therein, dated as of March 2, 1999 regarding
Hyperion's 12% Senior Subordinated Notes due 2007
(Filed Herewith)
10.05 Purchase Agreement between Hyperion
Telecommunications, Inc. and Highland Holdings, dated
as of February 25, 1999, regarding Hyperion's 12%
Senior Subordinated Notes due 2007 (Filed Herewith)
<PAGE>
EXHIBIT 2.01
AGREEMENT AND PLAN OF MERGER
by and among
ADELPHIA COMMUNICATIONS CORPORATION
ADELPHIA ACQUISITION SUBSIDIARY, INC.
and
CENTURY COMMUNICATIONS CORP.
------------------------------
Dated as of March 5, 1999
------------------------------
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TABLE OF CONTENTS
Page
ARTICLE I
<S> <C>
THE MERGER.................................................................................................4
Section 1.01 The Merger...................................................................................4
Section 1.02 Conversion of Shares.........................................................................5
Section 1.03 Merger Consideration.........................................................................5
Section 1.04 Letter of Transmittal........................................................................6
Section 1.05 Deposit of Merger Consideration..............................................................6
Section 1.06 Surrender and Payment........................................................................6
Section 1.07 Adjustments..................................................................................7
Section 1.08 Fractional Shares............................................................................7
Section 1.09 Withholding of Tax...........................................................................7
Section 1.10 Lost Certificates............................................................................8
Section 1.11 Stock Transfer Books.........................................................................8
Section 1.12 Shareholder Approval.........................................................................8
Section 1.13 Stock Options and Restricted Stock...........................................................8
ARTICLE II
THE SURVIVING CORPORATION..................................................................................9
Section 2.01 Certificate of Incorporation.................................................................9
Section 2.02 Bylaws 9....................................................................................9
Section 2.03 Directors....................................................................................9
Section 2.04 Officers....................................................................................10
Section 2.05 Name........................................................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................10
Section 3.01 Corporate Existence and Power...............................................................10
Section 3.02 Corporate Authorization.....................................................................10
Section 3.03 Governmental Authorization..................................................................11
Section 3.04 Non-contravention...........................................................................11
Section 3.05 Capitalization..............................................................................12
Section 3.06 Significant Subsidiaries....................................................................13
Section 3.07 SEC Filings.................................................................................13
Section 3.08 Financial Statements........................................................................13
Section 3.09 Disclosure Documents........................................................................14
Section 3.10 Absence of Certain Changes or Events........................................................14
Section 3.11 Litigation..................................................................................15
Section 3.12 Taxes 15
Section 3.13 Employee Benefit Plans......................................................................15
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Section 3.14 Brokers 17
Section 3.15 Compliance with Applicable Laws.............................................................17
Section 3.16 Environmental Matters.......................................................................17
Section 3.17 Opinion of Financial Advisor................................................................17
Section 3.18 No Other Representations....................................................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...................................................17
Section 4.01 Corporate Existence and Power...............................................................18
Section 4.02 Corporate Authorization.....................................................................18
Section 4.03 Governmental Authorization..................................................................18
Section 4.04 Non-contravention...........................................................................19
Section 4.05 Capitalization..............................................................................19
Section 4.06 Significant Subsidiaries....................................................................20
Section 4.07 SEC Filings.................................................................................21
Section 4.08 Financial Statements........................................................................21
Section 4.09 Disclosure Documents........................................................................21
Section 4.10 Absence of Certain Changes or Events........................................................22
Section 4.11 Litigation..................................................................................22
Section 4.12 Brokers 22
Section 4.13 Compliance with Applicable Laws.............................................................22
Section 4.14 Interested Shareholder......................................................................23
Section 4.15 Ownership of Merger Sub; No Prior Activities................................................23
Section 4.16 Opinion of Financial Advisor................................................................23
Section 4.17 No Other Representations....................................................................23
ARTICLE V
COVENANTS OF THE COMPANY..................................................................................23
Section 5.01 Conduct of the Company......................................................................23
Section 5.02 Other Transactions..........................................................................25
Section 5.03. Affiliates.................................................................................26
ARTICLE VI
COVENANTS OF PARENT, MERGER SUB AND THE SURVIVING CORPORATION.............................................24
Section 6.01 Indemnification; Directors' and Officers' Insurance.........................................26
Section 6.02 Employee Benefit Arrangements...............................................................27
Section 6.03 Listing, Registration.......................................................................28
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Section 6.04 Conduct of Parent...........................................................................28
Section 6.05. Obligations of Merger Sub..................................................................28
ARTICLE VII
COVENANTS OF PARENT, MERGER SUB AND THE COMPANY...........................................................26
Section 7.01 Reasonable Best Efforts.....................................................................28
Section 7.02. Registration Statement.....................................................................28
Section 7.03 Company Shareholder Meeting.................................................................29
Section 7.04 Consents....................................................................................29
Section 7.05 Public Announcements........................................................................29
Section 7.06 Notification of Certain Matters.............................................................29
Section 7.07 Antitrust Matters...........................................................................30
Section 7.08 Access to Information.......................................................................31
Section 7.09. Tax-free Reorganization....................................................................31
Section 7.10 Dissenting Shareholders......................................................................31
Section 7.11 Registration Rights..........................................................................31
Section 7.12 Board of Directors...........................................................................32
Section 7.13 Citizens Joint Venture.......................................................................32
ARTICLE VIII
CONDITIONS TO THE MERGER..................................................................................32
Section 8.01 Conditions to the Obligations of Each Party.................................................32
Section 8.02 Conditions Precedent to the Obligations of Merger Sub.......................................33
Section 8.03 Conditions Precedent to the Obligations of the Company......................................33
ARTICLE IX
TERMINATION 34
Section 9.01 Termination.................................................................................34
Section 9.02 Effect of Termination.......................................................................35
Section 9.03 Fees and Expenses...........................................................................35
ARTICLE X
MISCELLANEOUS 35
Section 10.01 Notices....................................................................................35
Section 10.02 Survival of Representations, Warranties and Agreements.....................................37
Section 10.03 Amendment..................................................................................37
Section 10.04 Extension; Waiver..........................................................................37
Section 10.05 Successors and Assigns.....................................................................37
Section 10.06 Governing Law..............................................................................37
Section 10.07 Jurisdiction...............................................................................37
Section 10.08 Counterparts; Effectiveness................................................................37
Section 10.09 Entire Agreement; No Third-party Beneficiaries.............................................37
Section 10.10 Headings...................................................................................38
Section 10.11 Severability...............................................................................38
Section 10.12 Definitions................................................................................38
Exhibit A: Class B Voting Agreement
Exhibit B: Rigas Class B Voting Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated
as of March 5, 1999 among Adelphia Communications Corporation, a Delaware
corporation ("Parent"), Adelphia Acquisition Subsidiary, Inc., a Delaware
corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub") and
Century Communications Corp., a New Jersey corporation (the "Company").
RECITALS
A........The respective Boards of Directors of Parent, Merger
Sub and the Company have approved, and deem it advisable and in the best
interests of their respective shareholders to consummate, the acquisition of the
Company by Parent on the terms and conditions set forth herein.
B........The parties intend that the acquisition contemplated
by this Agreement constitute a "reorganization" within the meaning of Section
368(a) of the Code (as defined in Section 10.12(a)).
C........As an inducement to Parent to enter into this
Agreement and to incur the obligations set forth herein, all of the holders of
Class B Company Common Stock (as defined in Section 1.02(a)) (the "Class B
Shareholders"), concurrently with the execution and delivery of this Agreement,
are entering into a Voting Agreement with Parent in the form of Exhibit A (the
"Class B Voting Agreement") pursuant to which the Class B Shareholders have
agreed to vote the shares of the Class B Company Common Stock (as defined in
Section 1.02(a)) owned by them in favor of this Agreement and the Merger.
D........As an inducement to the Company to enter into this
Agreement and to incur the obligations set forth herein, certain shareholders of
Parent (the "Parent Shareholders"), concurrently with the execution and delivery
of this Agreement, are entering into a Voting Agreement with the Company in the
form of Exhibit B (the "Rigas Class B Voting Agreement") pursuant to which the
Parent Shareholders have agreed to vote the shares of Parent Common Stock (as
defined in Section 1.03(a)) owned by them in favor of this Agreement and the
Merger.
In consideration of the premises and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties agree as follows.
ARTICLE I
THE MERGER
Section 1.01 The Merger.
(a)......At the Effective Time (as defined in Section
1.01(c)), the Company shall be merged (the "Merger") with and into Merger Sub in
<PAGE>
accordance with the New Jersey Business Corporation Act (the "NJBCA") and the
General Corporation Law of the State of Delaware, whereupon the separate
existence of the Company will cease, and Merger Sub shall be the surviving
corporation (the "Surviving Corporation").
(b)......The closing of the Merger (the "Closing") will take
place at 10:00 a.m. (New York City time) on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second Business
Day after satisfaction of the conditions set forth in Article VIII, at the
offices of Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, New York
10166, unless the parties agree in writing to another time, date or place.
(c)......Upon the Closing, the Company and Merger Sub will
file a certificate of merger with the Secretaries of State of the States of New
Jersey and Delaware and make all other filings or recordings required by New
Jersey and Delaware law in connection with the Merger. The Merger will become
effective at such time as the certificates of merger are filed with the
Secretaries of State of the States of New Jersey and Delaware or at such later
time as is specified in the certificates of merger (the "Effective Time").
(d)......From and after the Effective Time, the Surviving
Corporation will possess all the rights, powers, privileges and franchises and
be subject to all of the obligations, liabilities, restrictions and disabilities
of the Company and Merger Sub, all as provided under the Delaware General
Corporation Law.
Section 1.02 Conversion of Shares. At the Effective Time:
(a)......Each share of (i) Class A capital stock of the
Company, par value $0.01 per share (the "Class A Company Common Stock") issued
and outstanding immediately prior to the Effective Time will be converted into
the right to receive the Class A Merger Consideration (as defined in Section
1.03(a)) and (ii) Class B capital stock of the Company, par value $0.01 per
share (the "Class B Company Common Stock" and together with the Class A Company
Common Stock, the "Company Common Stock"), issued and outstanding immediately
prior to the Effective Time will be converted into the right to receive the
Class B Merger Consideration (as defined in Section 1.03(b)).
(b)......Each share of Company Common Stock held by the
Company as treasury stock or owned by Parent or any of the Parent Subsidiaries
immediately prior to the Effective Time will be canceled, and no payment will be
made with respect thereto.
(c)......Each issued and outstanding share of capital stock of
Merger Sub will remain outstanding and will be unchanged as a result of the
Merger.
Section 1.03 Merger Consideration.
(a)......The term "Class A Merger Consideration" means the
right to receive, for each share of Class A Company Common Stock, $9.16426528 in
cash and 0.61222732 shares of Parent Class A Common Stock, par value $.01 per
share ("Parent Common Stock").
<PAGE>
(b)......The term "Class B Merger Consideration" means the
right to receive, for each share of Class B Company Common Stock, $11.81417001
in cash and 0.63595483 shares of Parent Common Stock. The Class B Merger
Consideration and the Class A Merger Consideration are referred to herein as the
"Merger Consideration."
Section 1.04 Letter of Transmittal. On or prior to the
Effective Time, Parent will authorize one or more commercial banks acceptable to
the Company, organized under the laws of the United States or any state thereof,
to act as Exchange Agent hereunder (the "Exchange Agent"). Promptly after the
Effective Time, Parent will cause the Exchange Agent to mail to each record
holder of Company Common Stock at the Effective Time (i) a letter of transmittal
(the "Letter of Transmittal") that will specify that delivery will be effected,
and risk of loss and title to the certificates formerly representing the Company
Common Stock will pass, upon delivery of such certificates to the Exchange Agent
and will be in such form and have such other provisions, including appropriate
provisions with respect to back-up withholding, as Parent reasonably may specify
and (ii) instructions for use in effecting the surrender of the certificates
formerly representing shares of Company Common Stock in exchange for the Merger
Consideration.
Section 1.05 Deposit of Merger Consideration. On or prior to
the Effective Time, Parent will deposit with the Exchange Agent, for the benefit
of the former holders of Company Common Stock, cash and certificates sufficient
to pay the Merger Consideration for all the shares of Company Common Stock. The
shares of Parent Common Stock into which shares of Company Common Stock will be
converted pursuant to the Merger will be deemed to have been issued at the
Effective Time for purposes of entitlement to dividends declared, if any, after
the Effective Time.
Section 1.06 Surrender and Payment.
(a)......Upon surrender for cancellation to the Exchange Agent
of a certificate formerly representing shares of Company Common Stock, together
with the Letter of Transmittal, duly executed and completed in accordance with
the instructions thereto, the holder thereof will be entitled to receive (i) a
certified or bank cashier's check in the amount equal to the aggregate amount of
Merger Consideration that takes the form of cash which such holder has the right
to receive pursuant to the provisions of this Article I (including any dividends
or distributions related thereto which such former holder of Company Common
Stock is entitled to receive pursuant to the provisions of Section 1.06(c) and
any cash in lieu of fractional shares of Parent Common Stock pursuant to Section
1.08) and (ii) certificates representing the aggregate number of shares of
Parent Common Stock with respect to the Merger Consideration that takes the form
of Parent Company Stock which such holder has the right to receive pursuant to
the provisions of this Article I, less the amount of any required withholding
taxes, if any, in accordance with Section 1.09. After the Effective Time and
until so surrendered, each certificate representing shares of Company Common
Stock will represent for all purposes only the right to receive the Merger
Consideration.
(b)......If the Merger Consideration (or any portion thereof)
is to be delivered to a Person other than the Person in whose name the
surrendered certificate or certificates are registered, it will be a condition
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of such delivery that the surrendered certificate or certificates shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay any transfer or other Taxes required by
reason of the delivery of the Merger Consideration to a Person other than the
registered holder of the surrendered certificate or certificates or such Person
shall establish to the satisfaction of the Exchange Agent that any such Tax has
been paid or is not applicable.
(c)......No dividends or other distributions declared or made
with respect to Parent Common Stock on or after the Effective Time will be paid
to the holder of any certificate that theretofore evidenced shares of Company
Common Stock until such certificate is surrendered as provided in this Section
1.06. Upon such surrender, Parent will be pay to the holder of the certificates
evidencing shares of Parent Common Stock issued in exchange therefor, without
interest, the amount of dividends or other distributions with a record date
after the Effective Time payable with respect to shares of Parent Common Stock.
(d)......Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to Section 1.05 that remains unclaimed
by holders of shares of Company Common Stock two years after the Effective Time
will be returned to Parent upon demand. Any such holder who has not exchanged
shares of Company Common Stock for the Merger Consideration in accordance with
this Article I prior to that time thereafter will look only to Parent for
payment of the Merger Consideration in respect of such shares of Company Common
Stock.
Section 1.07 Adjustments. If at any time during the period
between the date of this Agreement and the Effective Time, any change in the
outstanding shares of capital stock of Parent occurs, including by means of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the Merger Consideration will be adjusted appropriately.
Section 1.08 Fractional Shares. No fractional shares of Parent
Common Stock will be issued in the Merger. All fractional shares of Parent
Common Stock that a holder of shares of Company Common Stock otherwise would be
entitled to receive as a result of the Merger will be aggregated. If a
fractional share results from such aggregation, in lieu thereof such holder will
be entitled to receive from Parent, promptly after the Effective Time, an amount
in cash determined by multiplying the closing price of a share of Parent Common
Stock on the Nasdaq National Market on the trading day immediately preceding the
Effective Time by the fraction of a share of Parent Common Stock to which such
holder would otherwise have been entitled.
Section 1.09 Withholding of Tax. Parent or the Exchange Agent
will be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any former holder of Company Common Stock such
amounts as Parent or the Exchange Agent are required to deduct and withhold with
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respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax law. To the extent that amounts are so withheld by Parent
or the Exchange Agent, such withheld amounts will be treated for all purposes of
this Agreement as having been paid to the former holder of Company Common Stock
in respect of whom such deduction and withholding was made by Parent.
Section 1.10 Lost Certificates. If any certificate evidencing
Company Common Stock has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if reasonably required by Parent, the posting by such
Person of a bond in such reasonable amount as Parent may direct as indemnity
against claims that may be made against it with respect to such certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate the Merger Consideration to which such Person may be entitled
pursuant to this Article I and cash and any dividends or other distributions to
which such Person may be entitled pursuant to Section 1.06(a).
Section 1.11 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company will be closed and there will be no further
registration of transfers of shares of Company Common Stock on the records of
the Company. Certificates formerly representing shares of Company Common Stock
that are presented to the Surviving Corporation after the Effective Time will be
canceled and exchanged for certificates representing shares of Parent Common
Stock.
Section 1.12 Shareholder Approval. This Agreement will be
submitted for adoption and approval to the holders of shares of Class A Company
Common Stock and the holders of shares of Class B Company Common Stock at the
Company Shareholder Meeting (as defined in Section 7.03) in accordance with the
provisions of this Agreement. The affirmative vote of a majority of the votes
cast by the holders of shares entitled to vote thereon of Class A Company Common
Stock and Class B Company Common Stock (voting as separate classes) is required
to approve this Agreement. No other approval of the Company's shareholders is
required in order to consummate the Merger.
Section 1.13 Stock Options and Restricted Stock. As of
the Effective Time:
(a)......Each outstanding option (an "Option") to purchase
shares of Class A Company Common Stock granted under the Company's 1985 Stock
Option Plan, the 1993 Non-Employee Directors' Stock Option Plan and the 1994
Stock Option Plan, or any similar plan or arrangement (collectively, the "Option
Plans"), whether or not then exercisable or vested, will become fully
exercisable and vested. Any restricted shares of Class A Company Common Stock
issued pursuant to the 1992 Management Equity Incentive Plan will become fully
vested and will cease to be restricted.
(b)......Each outstanding Option, at the election of each
holder of such Option, which election will be available on an option-by-option
basis, either:
(i) will be exercised, effective as of the Effective
Time, and each share of Class A Company Common Stock issuable with
respect thereto will be converted into the right to receive the Merger
Consideration as provided in Section 1.03; or
<PAGE>
(ii) will be assumed by Parent and will become an
option to acquire, on the same terms and conditions as were applicable
under the Option Plans (except as provided in Section 1.13(a)), the
number of shares of Parent Common Stock as the holder of such Option
would have been entitled to receive pursuant to the Merger had such
holder exercised such Option in full immediately prior to the Effective
Time and received the Merger Consideration, at a price per share equal
to (x) the aggregate exercise price for the shares of Class A Company
Common Stock otherwise issuable pursuant to such Option divided by (y)
the number of full shares of Parent Common Stock deemed purchasable
under such Option. In the case of any Option to which Section 421 of
the Code applies by reason of its qualification under Section 422 of
the Code, the option price, the number of shares purchasable pursuant
to such Option and the terms and conditions of exercise of such option
will be determined in order to comply with Section 424 of the Code.
(c)......Parent will take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Options assumed by it in accordance with this Section
1.14. Promptly after the Effective Time, Parent will file with the SEC a
registration statement on Form S-3 or S-8, as appropriate, covering the shares
of Parent Common Stock subject to such Options and will use its commercially
reasonable efforts to cause such registration statement to remain effective for
so long as such Options remain outstanding.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.01 Certificate of Incorporation. The certificate of
incorporation of Merger Sub in effect at the Effective Time will be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
Section 2.02 Bylaws. Subject to the provisions of Section
6.01, the by-laws of Merger Sub in effect at the Effective Time will be the
by-laws of the Surviving Corporation until amended in accordance with applicable
law.
Section 2.03 Directors. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, the directors of Merger Sub at the Effective Time will be the
directors of the Surviving Corporation.
Section 2.04 Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, the officers of Merger Sub at the Effective Time will be the
officers of the Surviving Corporation.
Section 2.05 Name. The name of the Surviving Corporation at
the Effective time will be Arahova Communications, Inc.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that, except for
inaccuracies in the representations and warranties resulting from compliance by
the Company with any of its obligations under this Agreement or actions taken by
the Company in accordance with this Agreement and except as disclosed in the
Company Disclosure Schedule:
Section 3.01 Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New Jersey and has all corporate power required to carry on
its business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified or be in good standing would not have a Material
Adverse Effect. The Company has delivered to Parent copies of the Company's
certificate of incorporation and by-laws as currently in effect.
Section 3.02 Corporate Authorization. The execution, delivery
and performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby are within the Company's
corporate powers and, except for the approval and adoption by the Company's
shareholders of this Agreement and the Merger, have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery of this Agreement by Parent and
Merger Sub and receipt of all required approvals by the Company's shareholders
in connection with the consummation of the Merger, constitutes a valid and
binding agreement of the Company, enforceable in accordance with its terms
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
and by equitable principles of general applicability. The Board of Directors of
the Company (the "Company Board") has approved the Merger, this Agreement, the
Class B Voting Agreement and the transactions contemplated hereby and thereby
and such approval, assuming the accuracy of the representation in Section 4.14,
is sufficient to render the provisions of Article 14A:10A of the NJBCA
inapplicable to the Merger, this Agreement, the Class B Voting Agreement and the
transactions contemplated hereby and thereby. No other corporate proceedings on
the part of the Company are necessary to authorize or approve this Agreement or
to consummate the transactions contemplated hereby (other than the approval and
adoption of the Merger and this Agreement by the shareholders of the Company to
the extent required by the Company's certificate of incorporation and by
applicable law).
Section 3.03 Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the Merger and the other transactions contemplated hereby
require no consent, waiver, approval, authorization or permit by or from, or
action by or in respect of, or filing with, any Governmental Entity, other than:
<PAGE>
(i) the filing of certificates of merger as contemplated by Section 1.01(c);
(ii) compliance with any applicable requirements of state takeover laws; (iii)
compliance with the applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 as amended and the rules and regulations thereunder
(the "HSR Act"); (iv) compliance with any applicable requirements of the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act") and the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"); (v) compliance with any applicable requirements
of the Communications Act of 1934, as amended (together with the rules,
regulations and published decisions of the FCC (as defined below), the
"Communications Act"); (vi) filings under state securities or "blue-sky" laws;
(vii) notice to, or consents, approvals or waivers from, the relevant
Franchising Authorities or other third parties in connection with a change of
control of the holder of the Franchises of the Company and the Company
Subsidiaries and of the Federal Communications Commission (the "FCC") in
connection with a change of control or a transfer of assets of the holder of the
FCC licenses of the Company and the Company Subsidiaries; and (viii) such
consents, waivers, approvals, authorizations, permits, filings or actions that,
if not taken, made or obtained, would not in the aggregate have a Material
Adverse Effect.
Section 3.04 Non-contravention. Assuming compliance with the
matters referred to in Section 3.03, the execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not: (i) assuming receipt of
the approval of shareholders of the Company referred to in Section 3.02,
contravene or conflict with the certificate of incorporation or by-laws of the
Company; (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to the Company or any Company Subsidiary that would be a
significant subsidiary within the meaning of Regulation S-X under the Exchange
Act (a "Significant Subsidiary of the Company"); (iii) result in a breach or
violation of or constitute a default (or an event that with the giving of notice
or the lapse of time or both would constitute a default) under or give rise to a
right of termination, amendment, cancellation or acceleration of any right or
obligation of the Company or any Significant Subsidiary of the Company or to a
loss of any material benefit to which the Company or any Significant Subsidiary
of the Company is entitled or require any consent, approval or authorization
under any provision of any material agreement, contract or other instrument
binding upon the Company or any Significant Subsidiary of the Company or any of
their respective assets (including any material license, franchise, permit or
other similar authorization held by the Company or any Significant Subsidiary of
the Company); or (iv) result in the creation or imposition of any Lien on any
material asset of the Company or any Significant Subsidiary of the Company,
except for such contraventions, conflicts or violations referred to in clause
(ii) and breaches, violations, defaults, rights of termination, amendment,
cancellation or acceleration, losses, Liens or other occurrences referred to in
clauses (iii) and (iv) (each, a "Violation") that in the aggregate would not
have a Material Adverse Effect. Upon consummation of the Company's joint venture
agreement with TCI Communications, Inc., the Company will amend the Company
Disclosure Schedule with respect to this Section 3.04 to give effect to such
transaction.
<PAGE>
Section 3.05 Capitalization.
(a)......As of February 11, 1999, the authorized capital stock
of the Company consisted of the following: (i) 400,000,000 shares of Class A
Company Common Stock, of which 32,879,755 were issued and outstanding; (ii)
300,000,000 shares of Class B Company Common Stock, of which 42,322,059 were
issued and outstanding; and (iii) 100,000,000 shares of preferred stock, of
which no shares were issued and outstanding.
(b)......As of February 11, 1999, there were outstanding
Options to purchase an aggregate of 2,666,049 shares of Class A Company Common
Stock (of which Options to purchase an aggregate of 1,784,659 shares of Class A
Company Common Stock were exercisable).
(c)......All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section 3.05 and except for changes
since February 11, 1999 resulting from the exercise of Options outstanding on
such date, there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company
(other than the shares of Class B Company Common Stock, which are convertible
into shares of Class A Company Common Stock) and (iii) no options or other
rights to acquire from the Company, and no obligation of the Company to issue,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (other than
the shares of Class B Company Common Stock, which are convertible into shares of
Class A Company Common Stock). The securities described in Section 3.05(a) and
Section 3.05(b) are referred to collectively as the "Company Securities").
Except pursuant to the terms of the Company Securities, there are no outstanding
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any Company Securities.
(d)......Except with respect to the interests in the Persons
listed in the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any Company Subsidiary to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any other Person other than to wholly-owned Company Subsidiaries or in the
ordinary course of business consistent with past practice.
<PAGE>
Section 3.06 Significant Subsidiaries.
(a)......Each Significant Subsidiary of the Company is a
corporation or other legal entity duly organized, validly existing and (if
applicable) in good standing under the laws of its jurisdiction of organization,
has all corporate, partnership or similar powers required to carry on its
business as now conducted and is duly qualified to do business as a foreign
corporation or other legal entity and (if applicable) is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except where
the failure to be duly organized, validly existing and in good standing or to
have such powers would not have a Material Adverse Effect. All Significant
Subsidiaries of the Company and their respective jurisdictions of organization
are identified in the Company Disclosure Schedule.
(b)......All of the outstanding shares of capital stock of, or
other ownership interests in, each Significant Subsidiary of the Company, are
owned by the Company, directly or indirectly, free and clear of any Lien and
free of any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests). There are no outstanding (i) securities of the Company or
any Significant Subsidiary of the Company convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
Significant Subsidiary of the Company or (ii) options or other rights to acquire
from the Company or any Significant Subsidiary of the Company, and no other
obligation of the Company or any Significant Subsidiary of the Company to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Significant Subsidiary of the Company.
The securities described in clauses (i) and (ii) above are referred to
collectively as the "Company Subsidiary Securities". There are no outstanding
obligations of the Company or any Significant Subsidiary of the Company to
repurchase, redeem or otherwise acquire any outstanding Company Subsidiary
Securities or pay any dividend or make any other distribution in respect thereof
to a Person other than the Company or a wholly-owned Significant Subsidiary of
the Company.
Section 3.07 SEC Filings. The Company has filed with the SEC
all forms, reports, definitive proxy statements, schedules and registration
statements required to be filed with the SEC since May 31, 1998 (the "Company
SEC Reports"). No Company Subsidiary is required to file any report, form or
document with the SEC pursuant to the Exchange Act or the Securities Act. As of
their respective filing dates, no Company SEC Report 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 made therein, in the light
of the circumstances under which they were made, not misleading. The Company SEC
Reports when filed complied in all material respects with applicable
requirements of the Securities Act and the Exchange Act.
Section 3.08 Financial Statements . The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in the Company SEC Reports fairly present, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto or in the case of unaudited interim financial statements as permitted by
Form 10-Q of the SEC), the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and its consolidated
statements of operations, shareholders' equity and cash flows for the periods
then ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
Section 3.09 Disclosure Documents.
(a)......The Proxy Statement/Prospectus and any amendment or
supplement thereto, when filed, will comply as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange Act. At
the time the Proxy Statement/Prospectus or any amendment or supplement thereto
is first mailed to shareholders of the Company and at the time such shareholders
<PAGE>
vote on the approval and adoption of this Agreement, the Proxy
Statement/Prospectus, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading. The
representations and warranties in this Section 3.09(a) do not apply to
statements in or omissions from the Proxy Statement/Prospectus or any amendment
or supplement thereto based upon information furnished to the Company by Parent
for use therein.
(b)......None of the information furnished to Parent for use
in (or incorporation by reference in) the Registration Statement (as defined in
Section 4.09) or any amendment or supplement thereto will contain, at the time
the Registration Statement or any amendment or supplement thereto becomes
effective, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
Section 3.10 Absence of Certain Changes or Events. Since May
31, 1998, except (x) as contemplated by this Agreement or disclosed in the
Company SEC Reports and (y) for any change resulting from the transactions
contemplated by this Agreement or general economic, financial, competitive or
market conditions or conditions or circumstances generally affecting the cable
television or communications industries, there has not been: (i) any change in
the business, operations or financial condition of the Company or any of the
Company Subsidiaries that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or other distribution with
respect to any shares of capital stock of the Company, or any repurchase,
redemption or other acquisition by the Company or any of the Company
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of the Company Subsidiaries;
(iii) any incurrence, assumption or guarantee by the Company or any of the
Company Subsidiaries of any material indebtedness for borrowed money other than
in the ordinary course and in amounts and on terms consistent with past
practices; or (iv) as of the date hereof, any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the business or
assets of the Company or any of the Company Subsidiaries that has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
Section 3.11 Litigation. Except as set forth in the Company
SEC Reports filed prior to the date hereof, there is, as of the date hereof, no
action, suit or proceeding pending, or to the knowledge of the Company
threatened, against the Company or any Company Subsidiary before any court,
arbitrator or other Governmental Entity that would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
Section 3.12 Taxes. Except to the extent that failure to do so
would not have a Material Adverse Effect, each of the Company and its
Significant Subsidiaries has filed all Tax returns and reports required to be
filed by it and has paid, or established adequate reserves for, all Taxes
required to be paid by it. No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company that would have a Material Adverse
Effect. No requests for waivers of the time to assess any such Taxes are
<PAGE>
pending, other than waivers relating to property taxes and sales and use taxes.
Section 3.13 Employee Benefit Plans.
(a)......The Company Disclosure Schedule identifies each
material employment, severance or similar contract or arrangement or any plan,
policy, fund, program or contract or arrangement providing for compensation,
bonus, profit-sharing, stock option or other stock-related rights or other forms
of incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or other benefits) that
(i) is entered into, maintained, administered or contributed to, as the case may
be, by the Company or any Company Subsidiary and (ii) covers any employee or
former employee of any Company or Company Subsidiary employed in the United
States or Puerto Rico (each, an "Employee Plan").
(b)......The Company has furnished or made available to Parent
copies of the Employee Plans (and, if applicable, related trust agreements) and
all amendments thereto and written interpretations thereof together with the
most recent annual report (Form 5500 including, if applicable, Schedule B
thereto) and the most recent actuarial valuation report prepared in connection
with any Employee Plan. There is no material accumulated funding deficiency,
termination or partial termination, or requirement to provide security with
respect to any Employee Plan. The fair market value of the assets of each
material Employee Plan would exceed the value of all liabilities and the
obligations of such Employee Plan if such plan were to terminate on the Closing
Date. The transaction contemplated by this Agreement will not result in any
material liability under ERISA to the Company or any of the Company's
Subsidiaries or Parent, or any of their respective ERISA Affiliates.
(c)......Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be qualified under Section 401(a) of the Code and each trust related
thereto has been determined to be exempt from tax pursuant to Section 501(a) of
the Code. The Company is not aware of any event that has occurred since the date
of such determinations that would adversely affect such qualification or tax
exempt status. The Company has provided Parent with the most recent
determination letter of the Internal Revenue Service relating to each such
Employee Plan. Each Employee Plan has been maintained in compliance in all
material respects with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and regulations, including the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the Code.
(d)......No Employee Plan is a Multiemployer plan as defined
in Section 3(37) of ERISA or is a plan subject to Title IV of ERISA. Neither the
Company nor any Company Subsidiary or any of their ERISA Affiliates (or any
former ERISA Affiliate with respect to the period in which such entity was an
ERISA Affiliate) has ever maintained, adopted or established, contributed or
been required to contribute to, or otherwise participated or been required to
participate in, any such plan.
<PAGE>
(e)......Neither the Company nor any Company Subsidiary has
any current or projected material liability in respect of post-employment or
post-retirement health or medical or life insurance benefits for retired, former
or current employees of the Company, except as required to avoid excise tax
under Section 4980B of the Code.
(f)......There has been no amendment to, written
interpretation of or announcement by the Company, any Company Subsidiary or
their respective Affiliates relating to, or change in employee participation or
coverage under, any Employee Plan that would increase materially the expense of
maintaining such Employee Plan above the level of the expense incurred in
respect thereof for the most recent fiscal year ended prior to the date hereof,
other than ordinary course of business increases related to health, life and
disability insurance plans.
(g)......Other than as disclosed in the Company SEC Reports,
no employee or former employee of the Company or any Company Subsidiary will
become entitled to any bonus, retirement, severance, job security or similar
benefit or an enhancement of such benefit (including acceleration of vesting or
exercise of an incentive award) under any Employee Plan as a result of the
transactions contemplated hereby.
(h)......Other than routine claims for benefits and liability
for premiums due to the Pension Benefit Guaranty Corporation, neither the
Company nor any Company Subsidiary or ERISA Affiliate (or any former ERISA
Affiliate with respect to the period in which such entity was an ERISA
Affiliate) has incurred any material liability with respect to any Employee Plan
that is currently due and owing and has not yet been satisfied, including under
ERISA, the Code or other applicable law. No event has occurred and, to the
knowledge of the Company, there exists no condition or set of circumstances
(other than the accrual of benefits under the normal terms of the Employee
Plans), that could result in the imposition of any material liability on the
Company or any Company Subsidiary or ERISA Affiliate (or any former ERISA
Affiliate with respect to the period in which such entity was an ERISA
Affiliate) with respect to any Employee Plan, including under ERISA, the Code or
other applicable law with respect to any Employee Plan.
Section 3.14 Brokers. Except for the engagement of Donaldson,
Lufkin & Jenrette Securities Corporation, none of the Company or any of the
Company Subsidiaries, or any of their respective officers, directors or
employees, has employed any investment banker, broker, finder or other
intermediary or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the transactions contemplated by this
Agreement.
Section 3.15 Compliance with Applicable Laws. The Company and
the Company Subsidiaries are in substantial compliance with all laws,
regulations and orders of any Governmental Entity applicable to them, except
where the failure to comply would not have a Material Adverse Effect. The
Company and each Company Subsidiary are in material compliance with, and have
obtained, all licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its business,
except where the failure to obtain such licenses, permits, franchises or other
governmental authorizations would not have a Material Adverse Effect.
<PAGE>
Section 3.16 Environmental Matters. Except as would not have a
Material Adverse Effect: (i) to the Company's knowledge, no real property
currently or formerly owned or operated by the Company or any current Company
Subsidiary is contaminated with any Hazardous Substances to an extent or in a
manner or condition now requiring remediation under any Environmental Law; (ii)
no judicial or administrative proceeding is pending or, to the knowledge of the
Company, threatened relating to liability for any off-site disposal or
contamination; and (iii) the Company and the Company Subsidiaries have not
received in writing any claims or notices alleging liability under any
Environmental Law. To the Company's knowledge, neither the Company nor any
Company Subsidiary is in violation of any applicable Environmental Law and no
condition or event has occurred with respect to the Company or any Company
Subsidiary that would constitute a violation of such Environmental Law,
excluding in any event such violations, conditions and events that would not
have a Material Adverse Effect.
Section 3.17 Opinion of Financial Advisor. The Company has
received the written opinion of Donaldson, Lufkin & Jenrette Securities
Corporation to the effect that the Merger Consideration is fair from a financial
point of view to the shareholders of the Company (other than shareholders who
are Affiliates of the Company).
Section 3.18 No Other Representations. Except as specifically
set forth in this Article III, the Company has not made, and Parent and Merger
Sub have not relied upon, any representations or warranties, whether express or
implied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company
that, except for inaccuracies in the representations and warranties resulting
from compliance by Parent and Merger Sub with any of their obligations under
this Agreement or actions taken by Parent or Merger Sub in accordance with this
Agreement and except as disclosed in the Parent Disclosure Schedule:
Section 4.01 Corporate Existence and Power.
(a)......Parent is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
all corporate power required to carry on its business as now conducted. Parent
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. Parent has delivered to
the Company copies of Parent's certificate of incorporation and by-laws as
currently in effect.
<PAGE>
(b)......Merger Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all corporate power required to carry on its business as now conducted.
Merger Sub is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified or be in
good standing would not have a Material Adverse Effect. Merger Sub has delivered
to the Company copies of Merger Sub's certificate of incorporation and by-laws
as currently in effect.
Section 4.02 Corporate Authorization. The execution, delivery
and performance by each of Parent and Merger Sub of this Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
are within the corporate powers of each of Parent and Merger Sub and have been
duly authorized by all necessary corporate action on the part of Parent and
Merger Sub. This Agreement has been duly and validly executed and delivered by
each of Parent and Merger Sub and, assuming the due and valid authorization,
execution and delivery of this Agreement by the Company, constitutes a valid and
binding agreement of each of Parent and Merger Sub, enforceable in accordance
with its terms except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally and by equitable principles of general
applicability. The Board of Directors of each of Parent and Merger Sub, and
Parent as the sole shareholder of Merger Sub, have approved the Merger, this
Agreement and the transactions contemplated hereby. No other corporate
proceedings or shareholder approvals on the part of Parent or Merger Sub are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than approval of the shareholders of
Parent.)
Section 4.03 Governmental Authorization. The execution,
delivery and performance by each of Parent and Merger Sub of this Agreement and
the consummation by each of Parent and Merger Sub of the Merger and the other
transactions contemplated hereby require no consent, waiver, approval,
authorization or permit by or from, or action by or in respect of, or filing
with, any Governmental Entity, other than: (i) the filing of certificates of
merger as contemplated by Section 1.01(a); (ii) compliance with any applicable
requirements of state takeover laws; (iii) compliance with the applicable
requirements of the HSR Act; (iv) compliance with any applicable requirements of
the Securities Act and the Exchange Act; (v) compliance with any applicable
requirements of the Communications Act; (vi) filings under state securities or
"blue-sky" laws; (vii) notice to, or consents, approvals or waivers from, the
relevant Franchising Authorities or other third parties in connection with a
change of control of the holder of the Franchises of the Company and the Company
Subsidiaries and the FCC in connection with a change of control or a transfer of
assets of the holder of the FCC licenses of the Company and the Company
Subsidiaries, and (viii) such consents, waivers, approvals, authorizations,
permits, filings or actions that, if not taken, made or obtained, would not in
the aggregate have a Material Adverse Effect.
Section 4.04 Non-contravention. Assuming compliance with the
matters referred to in Section 4.03, the execution, delivery and performance by
each of Parent and Merger Sub of this Agreement and the consummation by each of
Parent and Merger Sub of the transactions contemplated hereby do not and will
not: (i) assuming receipt of the approval of the shareholders of the Parent
referred to in Section 4.02, contravene or conflict with the certificate of
<PAGE>
incorporation or by-laws of each of Parent and Merger Sub; (ii) contravene or
conflict with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Parent,
Merger Sub or any Subsidiary of Parent that would be a significant subsidiary
within the meaning of Regulation S-X under the Exchange Act (a "Significant
Subsidiary of Parent"); (iii) assuming receipt of the approval of the
shareholders of the Parent referred to in Section 4.02, result in a breach or
violation of or constitute a default (or an event that with the giving of notice
or the lapse of time or both would constitute a default) under or give rise to a
right of termination, amendment, cancellation or acceleration of any right or
obligation of Parent, Merger Sub or any Significant Subsidiary of Parent or to a
loss of any material benefit to which Parent, Merger Sub or any Significant
Subsidiary of Parent is entitled or require any consent, approval or
authorization under any provision of any material agreement, contract or other
instrument binding upon Parent, Merger Sub or any Significant Subsidiary of
Parent or any of their respective assets (including any material license,
franchise, permit or other similar authorization held by Parent, Merger Sub or
any Significant Subsidiary of Parent); or (iv) result in the creation or
imposition of any Lien on any material asset of Parent, Merger Sub or any
Significant Subsidiary of Parent, except for such Violations that in the
aggregate would not have a Material Adverse Effect.
Section 4.05 Capitalization.
(a)......As of February 28, 1999, the authorized capital stock
of Parent consisted of the following: (i) 200,000,000 shares of Class A Common
Stock, par value $.01 per share, of which 42,328,343 were issued and
outstanding; (ii) 25,000,000 shares of Class B Common Stock par value $.01 per
share, of which 10,834,476 were issued and outstanding; and (iii) 5,000,000
shares of preferred stock, of which 1,500,000 shares (issued as 13% Redeemable
Exchangeable Preferred Stock) and 80,000 shares (issued as 8 1/8% Series C
Convertible Preferred Stock convertible into 9,433,962 shares of the Parent's
Class A Common Stock) were issued and outstanding.
(b)......As of February 28, 1999, there were no outstanding
options to purchase Parent Common Stock.
(c)......All outstanding shares of capital stock of Parent
have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section 4.05, as of February 28,
1999, there are outstanding (i) no shares of capital stock or other voting
securities of Parent, (ii) no securities of Parent convertible into or
exchangeable for shares of capital stock or voting securities of Parent and
(iii) no options or other rights to acquire from Parent, and no obligation of
Parent to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Parent. The
securities described in clauses (a) and (b) of this Section 4.05 and the
securities referred to in the Parent SEC Reports are referred to collectively as
the "Parent Securities". Except pursuant to the terms of the Parent Securities,
there are no outstanding obligations of Parent or any Parent Subsidiary to
repurchase, redeem or otherwise acquire any Parent Securities.
<PAGE>
(d)......As of March 5, 1998, except as disclosed in the
Parent SEC Reports and except with respect to the interests in the Persons
listed in the Parent Disclosure Schedule, there are no outstanding contractual
obligations of Parent or any Parent Subsidiary to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person other than to wholly-owned Parent Subsidiaries or in the ordinary
course of business consistent with past practice.
Section 4.06 Significant Subsidiaries.
(a)......Each Significant Subsidiary of Parent is a
corporation or other legal entity duly organized, validly existing and (if
applicable) in good standing under the laws of its jurisdiction of organization,
has all corporate, partnership or similar powers required to carry on its
business as now conducted and is duly qualified to do business as a foreign
corporation or other legal entity and (if applicable) is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except where
the failure to be duly organized, validly existing and in good standing or to
have such powers would not have a Material Adverse Effect. As of March 5, 1999,
all Significant Subsidiaries of Parent and their respective jurisdictions of
organization are identified in the Parent Disclosure Schedule.
(b)......Except as disclosed in the Parent SEC Reports, all of
the outstanding shares of capital stock of, or other ownership interests in,
each Significant Subsidiary of Parent, are owned by Parent, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests). Except as disclosed
in the Parent SEC Reports, there are no outstanding (i) securities of Parent or
any Significant Subsidiary of Parent convertible into or exchangeable for shares
of capital stock or other voting securities or ownership interests in any
Significant Subsidiary of Parent or (ii) options or other rights to acquire from
Parent or any Significant Subsidiary of Parent, and no other obligation of
Parent or any Significant Subsidiary of Parent to issue, any capital stock,
voting securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Significant Subsidiary of Parent. The securities described in
clauses (i) and (ii) above are referred to collectively as the "Parent
Subsidiary Securities"). Except as disclosed in the Parent SEC Reports, there
are no outstanding obligations of Parent or any Significant Subsidiary of Parent
to repurchase, redeem or otherwise acquire any outstanding Parent Subsidiary
Securities or pay any dividend or make any other distribution in respect thereof
to a Person other than Parent or a wholly-owned Significant Subsidiary of
Parent.
Section 4.07 SEC Filings. Parent and Hyperion
Telecommunications, Inc. each have filed with the SEC all forms, reports,
definitive proxy statements, schedules and registration statements required to
be filed with the SEC since March 31, 1998 (collectively, the "Parent SEC
Reports"). Except for Hyperion Telecommunications, Inc., as of March 5, 1999, no
Parent Subsidiary is required to file any report, form or document with the SEC
pursuant to the Exchange Act or the Securities Act. As of their respective
filing dates, no Parent SEC Report contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
<PAGE>
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Parent SEC Reports when filed
complied in all material respects with applicable requirements of the Securities
Act and the Exchange Act.
Section 4.08 Financial Statements . The audited consolidated
financial statements and unaudited consolidated interim financial statements of
Parent included in the Parent SEC Reports fairly present, in conformity with
GAAP applied on a consistent basis (except as may be indicated in the notes
thereto or in the case of unaudited interim financial statements as permitted by
Form 10-Q of the SEC), the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and its consolidated
statements of operations, shareholders' equity and cash flows for the periods
then ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
Section 4.09 Disclosure Documents.
(a)......The registration statement on Form S-4 of Parent to
be filed with the SEC in connection with the Merger (the "Registration
Statement") and any amendment or supplement thereto, when filed, will comply as
to form in all material respects with the applicable requirements of the
Securities Act. At the time the Registration Statement is declared effective by
the SEC, the Registration Statement will not 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 contained therein not misleading. At the time
the Proxy Statement/Prospectus included in the Registration Statement and
forming a part thereof or any amendment or supplement thereto is first mailed to
shareholders of the Company and at the time such shareholders vote on the
approval and adoption of this Agreement, the Proxy Statement/Prospectus, as
supplemented or amended, if applicable, will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements contained therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties in this
Section 4.09(a) do not apply to statements in or omissions from the Registration
Statement or the Proxy Statement/Prospectus or any amendment or supplement
thereto based upon information furnished to Parent by the Company for use
therein.
(b)......None of the information furnished to the Company for
use in (or incorporation by reference in) the Proxy Statement/Prospectus or any
amendment or supplement thereto will contain, at the time the Proxy
Statement/Prospectus included in the Registration Statement and forming a part
thereof or any amendment or supplement thereto is first mailed to shareholders
of the Company and at the time such shareholders vote on the approval and
adoption of this Agreement, any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
Section 4.10 Absence of Certain Changes or Events. Since the
date of the most recent audited financial statements included in the Parent SEC
Reports, except (x) as contemplated by this Agreement or disclosed in the Parent
SEC Reports and (y) for any change resulting from the transactions contemplated
by this Agreement or general economic, financial, competitive or market
<PAGE>
conditions or conditions or circumstances generally affecting the cable
television or communications industries, there has not been: (i) any change in
the business, operations or financial condition of Parent or any of the Parent
Subsidiaries that has had or would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect; (ii) any incurrence, assumption
or guarantee by Parent or any of the Parent Subsidiaries of any material
indebtedness for borrowed money other than in the ordinary course and in amounts
and on terms consistent with past practices; or (iii) as of the date hereof, any
damage, destruction or other casualty loss (whether or not covered by insurance)
affecting the business or assets of Parent or any of the Parent Subsidiaries
that has had or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section 4.11 Litigation. Except as set forth in the Parent SEC
Reports filed prior to the date hereof, there is, as of the date hereof, no
action, suit or proceeding pending, or to the knowledge of Parent threatened,
against Parent or any Parent Subsidiary before any court, arbitrator or other
Governmental Entity that would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
Section 4.12 Brokers. None of Parent, Merger Sub or any Parent
Subsidiary, or any of their respective officers, directors or employees, has
employed any investment banker, broker, finder or other intermediary or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement for or with respect to
which the Company or any Company Subsidiary is or might be liable prior to the
Effective Time, except that Parent has retained Daniels & Associates, as its
financial advisor.
Section 4.13 Compliance with Applicable Laws. Parent and the
Parent Subsidiaries are in substantial compliance with all laws, regulations and
orders of any Governmental Entity applicable to them, except where the failure
to comply would not have a Material Adverse Effect. Parent and each Parent
Subsidiary have obtained all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to the conduct of
its business, except where the failure to obtain such licenses, permits,
franchises or other governmental authorizations would not have a Material
Adverse Effect.
Section 4.14 Interested Shareholder. As of the date of this
Agreement, none of Parent, Merger Sub or any of their Affiliates is an
"Interested Shareholder" as such term is defined in Section 14A:10A-3 of the
NJBCA.
Section 4.15 Ownership of Merger Sub; No Prior Activities.
Merger Sub was formed by Parent solely for the purposes of engaging in the
transactions contemplated hereby and has not engaged in any other activities. As
of the date hereof and the Effective Time, all of the capital stock of Merger
Sub is and will be owned directly by Parent.
<PAGE>
Section 4.16 Opinion of Financial Advisor. Parent has received
the written opinion of Daniels & Associates to the effect that the Merger
Consideration is fair from a financial point of view to the shareholders of
Parent.
Section 4.17 No Other Representations. Except as specifically
set forth in this Article IV, Parent has not made, and the Company has not
relied upon, any representations or warranties, whether express or implied.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.01 Conduct of the Company. From the date hereof
until the Effective Time, the Company will not, and will cause the Company
Subsidiaries not to, take or agree to take any action that would (i) interfere
with the consummation of the transactions contemplated hereby or make such
consummation more difficult or materially delay the consummation of such
transactions, (ii) make any representation or warranty of the Company contained
in this Agreement untrue or incorrect as of the date when made or as of the
Closing Date or (iii) result in any of the conditions to Closing in Article VIII
not being satisfied. Except as contemplated by this Agreement or with the prior
written consent of Parent (which consent will not be unreasonably withheld or
delayed), the Company and the Company Subsidiaries will conduct their business
in the ordinary course consistent with past practice and will use reasonable
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their officers and
employees. From the date hereof until the Effective Time, the Company will not,
and will not permit any of the Company Subsidiaries to, do any of the following:
(a) adopt any amendment to its certificate of incorporation or
by-laws;
(b) except for issuances of Company Subsidiary Securities to
the Company or a wholly-owned Company Subsidiary, issue, reissue or
sell, or authorize the issuance, reissuance or sale of (i) additional
shares of capital stock of any class, or securities convertible into
capital stock of any class, or any rights, warrants or options to
acquire any convertible securities or capital stock, other than (1)
pursuant to the exercise of Options outstanding on the date hereof or
(2) upon the conversion of Class B Company Common Stock outstanding on
the date hereof or (ii) any other securities in respect of, in lieu of
or in substitution for, Company Common Stock outstanding on the date
hereof;
(c) declare, set aside or pay any dividend or any other
actual, constructive or deemed distribution (whether in cash,
securities or property or any combination thereof) in respect of any
class or series of its capital stock or otherwise make any payments to
shareholders of the Company in their capacity as such other than
between the Company and any wholly-owned Company Subsidiary;
(d) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise
acquire, any shares of its capital stock, or any of its other
securities;
<PAGE>
(e) (i) increase the compensation or fringe benefits payable
or to become payable to directors, officers or employees except for (w)
cash bonuses to non-employee directors in an aggregate amount not to
exceed $250,000, (x) increases in salary, wages and benefits of
officers or employees of the Company or the Company Subsidiaries in the
ordinary course consistent with past practice, (y) increases in salary,
wages and benefits granted to officers and employees of the Company or
the Company Subsidiaries in conjunction with new hires, promotions or
other changes in job status , which increases are in the ordinary
course consistent with past practice or (z) increases in salary, wages
and benefits to employees of the Company or the Company Subsidiaries
pursuant to collective bargaining agreements entered into in the
ordinary course of business; (ii) pay any benefit not required by any
existing plan or arrangement (including the granting of stock options,
stock appreciation rights, shares of restricted stock or performance
units), other than (x) the payment of cash bonuses in timing and amount
consistent with past practice and cash bonuses in lieu of stock option
grants and equity incentive awards in timing and amount consistent with
past practice, (y) the payment to five key executive officers of the
Company of amounts designed to reimburse them for the incremental
income taxes payable (as a result of the inability of any such officer
to obtain capital gain treatment) with respect to the conversion into
the right to receive the Merger Consideration of restricted shares
issued under the 1992 Management Equity Incentive Plan and shares of
Class A Company Common Stock issued upon exercise of Options pursuant
to Section 1.14(a) and (z) the payment of approximately $14,000,000 to
a "rabbi trust" to be established for the exclusive purpose of making
premium payments when due on the "split-dollar" life insurance policies
on the lives of Leonard and Claire Tow; (iii) grant any severance or
termination pay to (except pursuant to existing agreements, plans or
policies), or enter into any employment or severance agreement with,
any director, officer or other employee of the Company or any of the
Company Subsidiaries; or (iv) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, savings, welfare,
deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement
for the benefit or welfare of any director, officer or current or
former employee (an "Employee Benefit Arrangement"), except in each
case to the extent required by applicable law or regulation and except
as currently is being negotiated with the Communications Workers of
America local in Los Angeles, California;
(f) acquire, sell, lease, transfer, swap or dispose of any
assets (other than in the ordinary course of business consistent with
past practice) or securities or other interests which are material to
the Company and its Subsidiaries, taken as a whole, or enter into any
commitment to do any of the foregoing or enter into any material
commitment or transaction outside the ordinary course of business other
than transactions between any wholly-owned Company Subsidiary and the
Company or another wholly-owned Company Subsidiary other than the sale,
effective as of the Effective Time, of the shares of capital stock of
Citizens Utilities Company owned by the Company to Leonard Tow or his
designees at a price equal to the fair market value (based on the
closing price of such stock on the date hereof) of such shares as of
<PAGE>
the date hereof as determined by the Company Board;
(g) (i) incur, assume or prepay any long-term debt or incur or
assume any short-term debt, except that the Company and the Company
Subsidiaries may incur, assume or prepay debt in the ordinary course of
business in the ordinary course consistent with past practice or under
existing lines of credit; (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person or Persons that
individually or in the aggregate are material; or (iii) make any loans,
advances or capital contributions to, or investments in, any other
Person or Persons that individually or in the aggregate are material
except for loans, advances, capital contributions or investments
between any wholly-owned Subsidiary of the Company and the Company or
another wholly-owned Subsidiary of the Company, except in each case as
may be necessary or desirable in connection with the financing of
Century-TCI California, L.P.; or
(h) agree to take any of the foregoing actions.
Section 5.02 Other Transactions.
(a)......From the date hereof until the termination of this
Agreement, the Company will not, and will not authorize or permit any of its
Subsidiaries or any of its or the Company Subsidiaries' directors, officers,
employees, agents or representatives, directly or indirectly, solicit, to
initiate or knowingly encourage any inquiries or the making of any proposal with
respect to any Acquisition Transaction or to provide information to or
negotiate, explore or otherwise engage in discussions with any Person (other
than Parent, Merger Sub or any of their directors, officers, employees, agents
and representatives) with respect to any Acquisition Transaction or to enter
into any agreement, arrangement or understanding requiring it to abandon,
terminate or fail to consummate the Merger. As of the date of this Agreement,
the Company has discontinued, and has caused the Company Subsidiaries and its
and their respective directors, officers, employees, agents and representatives
to discontinue, discussions or negotiations with all Persons or groups with whom
discussions or negotiations previously have been held concerning any proposal
with respect to an Acquisition Transaction. The Company promptly will notify
Parent if any proposal or offer is received by, or any information is requested
from, or any discussions or negotiations are sought to be initiated or continued
with, the Company in respect of an Acquisition Transaction.
(b)......The Company Board will not (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation of the Company Board of this Agreement and the Merger or (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Transaction other than the Merger. Nothing contained in this Section 5.02(b),
however, will prohibit the Company Board from complying with Rule 14d-9 and Rule
14e-2 promulgated under the Exchange Act with respect to any proposal relating
to an Acquisition Transaction.
<PAGE>
(c)......"Acquisition Transaction" means any merger,
consolidation or other business combination, tender or exchange offer,
recapitalization transaction or other similar transaction involving the Company
or any Significant Subsidiary of the Company, acquisition of all or any material
portion of the assets or capital stock of the Company or the acquisition of all
or substantially all of the assets or capital stock of any Significant
Subsidiary of the Company. "Acquisition Transaction" does not include the sale
of shares of capital stock of Citizens Utilities Company.
Section 5.03. Affiliates. The Company, prior to the Effective
Time, will deliver to Parent a letter identifying all known persons who are, at
the time of the Company Shareholder Meeting, in the Company's reasonable
judgment, "affiliates" of the Company under Rule 145 of the Securities Act. The
Company will furnish such information and documents as Parent reasonably may
request for the purpose of reviewing such list. The Company will use its
reasonable best efforts to obtain a written agreement in customary form from
each person who may be so deemed as soon as practicable and, in any event, prior
to the Effective Time.
ARTICLE VI
COVENANTS OF PARENT, MERGER SUB AND THE SURVIVING CORPORATION
Section 6.01 Indemnification; Directors' and Officers'
Insurance.
(a)......Parent and Merger Sub agree that all rights to
indemnification existing in favor of each Person (the "Indemnified Parties") who
is at the Effective Time or prior thereto has been an employee, agent, director
or officer of the Company and the Company Subsidiaries as provided in their
respective charters, by-laws or resolutions identified in the Company Disclosure
Schedule, in an agreement between an Indemnified Party and the Company or any of
the Company Subsidiaries (which agreement is identified in the Company
Disclosure Schedule) will survive the Merger and will continue in full force and
effect for a period of not less than six years from the Effective Time. In the
event any claim is asserted or made within such six-year period, all rights to
indemnification in respect of any such claim will continue until final
disposition thereof.
(b)......Parent and the Surviving Corporation jointly and
severally agree to indemnify all Indemnified Parties to the fullest extent
permitted by applicable law with respect to all acts and omissions arising out
of such individuals' services as officers, directors, employees or agents of the
Company or any Company Subsidiary or as trustees or fiduciaries of any plan for
the benefit of employees, or otherwise on behalf of, the Company or any Company
Subsidiary, occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement. In the event any Indemnified Party
is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter occurring at or prior to the
Effective Time, Parent will pay as incurred such Indemnified Party's legal and
other expenses (including the cost of any investigation and preparation)
<PAGE>
incurred in connection therewith. Parent will pay all expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 6.01.
(c)......Parent and the Surviving Corporation will cause to be
maintained in effect for not less than six years from the Effective Time
directors' and officers' liability insurance covering the directors and officers
of the Company similar in scope and coverage to the directors' and officers'
liability insurance maintained by Parent for its directors and officers.
(d)......The provisions of this Section 6.01 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, his
or her heirs and his or her personal representatives and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
Section 6.02 Employee Benefit Arrangements.
(a)......From and after the Effective Time, Parent will, and
will cause the Surviving Corporation to, honor in accordance with their
respective terms all Employee Benefit Arrangements to which the Company or any
of the Company Subsidiaries is a party.
(b)......Parent agrees that, for a period of not less than one
year after the Effective Time, it shall, or shall cause the Surviving
Corporation to, provide Employee Benefit Arrangements for the benefit of the
employees and former employees of the Company and its Subsidiaries, that in the
aggregate are not materially less favorable than the Employee Benefit
Arrangements in effect immediately prior to the Effective Time that are
applicable to such employees or former employees, provided, however, that
Parent, at its sole option, may provide Employee Benefit Arrangements to the
employees and former employees of the Company and the Company Subsidiaries
which, in the aggregate, are no less favorable than those applicable to
similarly situated employees of Parent. Parent will take all actions required so
that each employee of the Company or any Company Subsidiary as of the Effective
Time will receive credit for eligibility and vesting purposes for his or her
service with the Company or any Company Subsidiary prior to the Effective Time
under any Employee Benefit Arrangements established, maintained, continued or
made available by Parent in which any such employee is eligible to participate.
(c)......Nothing in this Section 6.02 shall be construed to
limit the ability of Parent to terminate the employment of any employee or to
review Employee Benefit Arrangements from time to time and make such changes as
it deems appropriate, subject to the terms of such Employee Benefit
Arrangements.
Section 6.03 Listing; Registration. Prior to the Effective
Time, Parent will use its best efforts to cause the Parent Common Stock to be
issued in the Merger to be approved for listing on the Nasdaq National Market,
subject only to notice of official issuance.
Section 6.04 Conduct of Parent. From the date hereof until the
Effective Time, Parent will not, and will cause the Parent Subsidiaries not to,
<PAGE>
take or agree to take any action that would (i) interfere with the consummation
of the transactions contemplated hereby or make such consummation more difficult
or materially delay the consummation of such transactions, (ii) make any
representation or warranty of Parent or Merger Sub contained in this Agreement
untrue or incorrect as of the date when made or as of the Closing Date or (iii)
result in any of the conditions to Closing in Article VIII not being satisfied.
Section 6.05. Obligations of Merger Sub. Parent will take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
ARTICLE VII
COVENANTS OF Parent, MERGER SUB AND THE COMPANY
Section 7.01 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, each of the parties will use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done and to assist and cooperate with the other parties in doing, as promptly as
practicable, all things necessary, appropriate or advisable under applicable
laws and regulations or otherwise to ensure that the conditions set forth in
Article VIII are satisfied and to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Effective Time any
further action is reasonably necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party will take all such action.
Section 7.02. Registration Statement. Parent promptly will
prepare and file the Registration Statement with the SEC under the Securities
Act, and will use its reasonable best efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as practicable. Parent
promptly will take any action required to be taken under foreign or state
securities or Blue Sky laws in connection with the issuance of Parent Common
Stock in connection with the Merger.
Section 7.03 Company Shareholder Meeting.
(a)......Promptly upon the request of Parent but in no event
prior to the date the Registration Statement is declared effective, the Company
will take all action necessary in accordance with the NJBCA and its certificate
of incorporation and by-laws to call, give notice of and hold a meeting (the
<PAGE>
"Company Shareholder Meeting") of its shareholders to consider and vote upon the
approval and adoption of this Agreement and the Merger and for such other
purposes as may be necessary or desirable.
(b)......Promptly after the date hereof, Parent and the
Company will prepare a proxy statement pertaining to the Merger to be
distributed to the holders of the Company Common Stock, which will constitute
the prospectus included in the Registration Statement (the "Proxy
Statement/Prospectus"). The Company Board will recommend that the shareholders
of the Company vote to approve the Merger and adopt this Agreement and approve
any other matters to be submitted to shareholders in connection therewith, and
the Company will include such recommendation in the Proxy Statement/Prospectus.
(c)......Parent and the Company promptly will notify each
other of the receipt of comments from the SEC and of any request by the SEC for
amendments or supplements to the Registration Statement or the Proxy
Statement/Prospectus or for additional information, and promptly will supply
each other with copies of all correspondence between the parties and the SEC
with respect thereto. If, at any time prior to the Company Shareholder Meeting,
any event should occur relating to or affecting the Company, Parent or Merger
Sub, or to their respective Subsidiaries, officers or directors, which event
should be described in an amendment or supplement to the Registration Statement
or the Proxy Statement/Prospectus, the parties promptly will inform each other
and cooperate in preparing, filing and having declared effective or clearing
with the SEC and, if required by applicable state securities laws, distributing
to the Company's shareholders such amendment or supplement.
Section 7.04 Consents. Each of the parties will use its
reasonable best efforts to obtain as promptly as practicable all consents
(including from any Franchising Authority and in connection with the change in
control of the holder of the Franchises of the Company and the Company
Subsidiaries), waivers, approvals, authorizations or permits of any Governmental
Entity or any other Person required in connection with, and waivers of any
Violations that may be caused by, the consummation of the transactions
contemplated by this Agreement.
Section 7.05 Public Announcements. Neither Parent nor the
Company will issue any press release or make any other public announcement
concerning this Agreement, the Merger or the transactions contemplated hereby
without the prior consent of the other, except that either party may make such
public disclosure that it believes in good faith to be required by law (in which
event such party will notify the other party prior to making such disclosure).
Section 7.06 Notification of Certain Matters. Parent and the
Company promptly will notify the other of: (i) the occurrence or non-occurrence
of any fact or event that would be reasonably likely to cause any (x)
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (y) material covenant, condition or agreement contained in
this Agreement not to be complied with or satisfied in all material respects;
and (ii) any failure of the Company, Parent or Merger Sub to comply with or
satisfy in any material respect any covenant, condition or agreement contained
in this Agreement.
Section 7.07 Antitrust Matters.
(a)......Parent and the Company promptly will complete all
documents required to be filed with the Federal Trade Commission and the
Department of Justice in order to comply with the HSR Act and, together with the
Persons who are required to join in such filings, will file the same with the
appropriate Governmental Entities. Parent and the Company promptly will furnish
all materials thereafter required by any of the Governmental Entities having
jurisdiction over such filings and will take all reasonable actions and file and
use all reasonable efforts to have declared effective or approved all documents
<PAGE>
and notifications with any such Governmental Entities, as may be required under
the HSR Act for the consummation of the Merger.
(b)......Parent will use its best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or trade
regulatory laws, rules or regulations of any domestic or foreign Governmental
Entity ("Antitrust Laws"). If any suit is threatened or instituted challenging
the Merger as violating any Antitrust Law, Parent will take such action
(including opposing by all appropriate legal means any claim raised in any such
suit and, if necessary, agreeing to hold separate or to divest any of the
businesses, product lines or assets of Parent or any of its Affiliates
controlled by it or of any of its Subsidiaries or Affiliates) as may be required
(i) by the applicable Governmental Entity in order to resolve such objections as
such Governmental Entity may have to such transactions under such Antitrust Law
or (ii) by any domestic or foreign court or similar tribunal, in any suit
brought by a private party or governmental authority challenging the Merger as
violating any Antitrust Law, in order to avoid the entry of, or to effect the
dissolution of, any injunction, temporary restraining order or other order that
has the effect of preventing the consummation of the Merger. The entry by a
court, in any suit brought by a private party or Governmental Entity challenging
the Merger as violating any Antitrust Law, of an order or decree permitting the
Merger but requiring that any of the businesses or assets of Parent or any
Parent Subsidiary or Affiliates be divested or held separate by Parent, or that
would otherwise limit Parent's freedom of action with respect to, or its ability
to retain, the Company and the Company Subsidiaries or any portion thereof or
any of Parent's or its Subsidiaries' or Affiliates' other assets or businesses,
will not be deemed a failure to satisfy the conditions specified in Section
8.01(d).
(c)......Each party promptly will inform the other of any
material communication from the Federal Trade Commission, the Department of
Justice, the FCC or any other domestic or foreign Governmental Entity regarding
any of the transactions contemplated by this Agreement. If any party or any
Affiliate thereof receives a request for additional information or documentary
material from any such government or authority with respect to the transactions
contemplated by this Agreement, such party will endeavor in good faith to make,
as soon as reasonably practicable and after consultation with the other party,
an appropriate response to such request. Parent promptly will advise the Company
in respect of any understandings, undertakings or agreements which Parent
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice, the FCC or any other domestic or foreign Governmental Entity in
connection with the transactions contemplated by this Agreement.
Section 7.08 Access to Information. From the date hereof until
the Effective Time, Parent and the Company will, and will cause each of their
Subsidiaries to: (i) give the other party and its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of such party and
its Subsidiaries as the other party reasonably may request, and furnish the
other party with such financial and operating data and other information as the
other party reasonably may request; and (ii) instruct such parties' employees,
counsel and financial advisors to cooperate with the other party in their
investigation of the business of such party and its Subsidiaries.
<PAGE>
Section 7.09 Tax-free Reorganization. Prior to the Effective
Time, each party will use its best efforts to cause the Merger to qualify as a
reorganization within the meaning of Section 368 of the Code, and will not take
any action reasonably likely to cause the Merger not to qualify as such a
reorganization.
Section 7.10 Dissenting Shareholders. Notwithstanding anything
in this Agreement to the contrary, but only to the extent required by the NJBCA,
shares of the Company Common Stock that are issued and outstanding immediately
prior to the Effective Time and are held by holders of shares of Company Common
Stock who comply with all the provisions of the NJBCA concerning the right of
holders of shares of Company Common Stock to dissent from the Merger and require
appraisal of their shares ("Dissenting Shareholders") shall not be converted
into the right to receive the Merger Consideration but shall become the right to
receive such consideration as may be determined to be due such Dissenting
Shareholder pursuant to the laws of the State of New Jersey; provided, however,
that (i) if any Dissenting Shareholder shall subsequently withdraw his or her
demand for appraisal or fail to establish or perfect or otherwise lose his or
her appraisal rights as provided by applicable law, then such Dissenting
Shareholder or Shareholders, as the case may be, shall forfeit the right to
appraisal of such shares of Company Common Stock and such shares of Company
Common Stock shall thereupon be deemed to have been converted into the right to
receive, as of the Effective Time, the Merger Consideration, without interest.
The Company shall give Parent (A) prompt notice of any written demands for
appraisal of shares of Company Common Stock, withdrawals of demands for
appraisal and any other related instruments received by the Company, and (B) the
opportunity to direct all negotiations and proceedings with respect to any such
demands for appraisal. The Company will not, except with the prior written
consent of Parent, voluntarily make any payment with respect to any demands for
appraisal or settle, offer or otherwise negotiate to settle any demand.
Section 7.11 Registration Rights. From and after the Effective
Time, Parent agrees to grant the Class B Shareholders and their permitted
assignees and transferees registration rights pursuant to a Registration Rights
Agreement to be entered into promptly after the date hereof. Parent agrees that
the registration rights shall include two demand registration rights and
unlimited piggy-back rights subject to any existing registration rights
agreements of Parent at the expense of Parent with standard indemnification
provisions. In addition, the Registration Rights Agreement will provide for the
Class B Shareholders to be entitled to proportionate tag-along rights upon any
sale or other transfer for value of shares of Parent Common Stock by members of
the Rigas family.
Section 7.12 Board of Directors. Parent agrees that from and
after the Effective Time, for so long as the Class B Shareholders and their
permitted assignees and transferees own at least 10% of the outstanding Common
Stock of Parent, the Class B Shareholders and their permitted assignees and
transferees shall be entitled to nominate up to three members of Parent's board
of directors.
Section 7.13 Citizens Joint Venture. At the Effective Time,
Parent will purchase from Citizens Cable Company or its Affiliates the 50%
interest owned by Citizens Cable Company in Citizens-Century Cable Television
Venture for a purchase price to be mutually agreed upon by Parent, the Company
and Citizens Cable Company.
<PAGE>
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01 Conditions to the Obligations of Each Party. The
respective obligations of the parties to consummate the Merger are subject to
the satisfaction, at or prior to the Effective Time, of each of the following
conditions:
(a)......The shareholders of the Company shall have approved
and adopted this Agreement and the Merger pursuant to the requirements of the
Company's certificate of incorporation and by-laws and the NJBCA.
(b)......The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have expired or been
terminated.
(c)......The Registration Statement shall have been declared
effective in accordance with the provisions of the Securities Act and no stop
order with respect thereto shall be in effect at the Effective Time.
(d)......The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity entered
after the parties have used their reasonable best efforts to prevent such entry.
There shall not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the Merger by any Governmental Entity that prevents the
consummation of the Merger.
Section 8.02 Conditions Precedent to the Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to consummate the
Merger are subject to the satisfaction, at or prior to the Effective Time, of
each of the following further conditions:
(a)......Each of the representations and warranties of the
Company contained in this Agreement shall have been true and correct in all
respects when made and on and as of the Closing Date as if made on and as of
such date. Parent shall have received a certificate to such effect of an
executive officer of the Company.
(b)......The Company shall have performed and complied in all
material respects with all agreements and covenants required to be performed and
complied with by it under this Agreement on or prior to the Closing Date. Parent
shall have received a certificate to such effect of an executive officer of the
Company.
(c)......All consents, waivers, approvals and authorizations
required to be obtained from any Governmental Authority prior to the
consummation of the transactions contemplated hereby shall have been obtained,
except where the failure to obtain any such consent, waiver, approval or
authorization would not have a Material Adverse Effect. For purposes of this
<PAGE>
Section 8.02(c), the failure to obtain required consents, waivers, approvals or
authorizations from Franchising Authorities will not be deemed to cause a
Material Adverse Effect unless the Franchises (excluding Franchises covering the
City of Fairfield, California, Sonoma City, California and City of Rohnert Park,
California) with respect to which such consents, waivers, approvals or
authorizations are not obtained prior to the date referred to in Section 9.01(d)
cover more than 50% of the subscribers of the Company and the Company
Subsidiaries, taken as a whole (excluding Franchises covering the City of
Fairfield, California, Sonoma City, California and City of Rohnert Park,
California).
(d)......Parent shall have received an opinion of Buchanan
Ingersoll Professional Corporation, dated the Effective Time, to the effect that
(i) the Merger should be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) each of
Parent, Merger Sub and the Company should be a party to the reorganization
within the meaning of Section 368(b) of the Code. In rendering such opinion,
Buchanan Ingersoll Professional Corporation may receive and rely upon
representations contained in certificates of Parent and Merger Sub, the Company
and others, in each case in form and substance reasonably acceptable to Buchanan
Ingersoll Professional Corporation.
Section 8.03 Conditions Precedent to the Obligations of the
Company. The obligation of the Company to consummate the Merger is subject to
the satisfaction, at or prior to the Effective Time, of each of the following
further conditions:
(a)......Each of the representations and warranties of Parent
and Merger Sub contained in this Agreement shall have been true and correct in
all respects when made and on and as of the Closing Date as if made on and as of
such date. The Company shall have received a certificate to such effect of an
executive officer of Parent.
(b)......Each of Parent and Merger Sub shall have performed
and complied in all material respects with all agreements and covenants required
to be performed and complied with by it under this Agreement on or prior to the
Closing Date. The Company shall have received a certificate to such effect of an
executive officer of Parent.
(c)......The shares of Parent Common Stock to be issued
pursuant to the Merger shall have been approved for listing on the Nasdaq
National Market, subject only to official notice of issuance.
(d)......The Company shall have received an opinion of Gibson,
Dunn & Crutcher LLP, dated the Effective Time, to the effect that (i) the Merger
should be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and (ii) each of Parent, Merger Sub and
the Company should be a party to the reorganization within the meaning of
Section 368(b) of the Code. In rendering such opinion, Gibson, Dunn & Crutcher
LLP may receive and rely upon representations contained in certificates of
Parent and Merger Sub, the Company and others, in each case in form and
substance reasonably acceptable to Gibson, Dunn & Crutcher LLP.
<PAGE>
ARTICLE IX
TERMINATION
Section 9.01 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of the Company:
(a) by mutual written agreement of the Company and
Parent;
(b) by either the Company or Parent, if the Merger has not
been consummated by June 5, 2000; provided that the right to terminate
this Agreement pursuant to this Section 9.01(b) will not be available
to any party whose breach of any provision of this Agreement results in
the failure of the Merger to be consummated by such time;
(c) by either the Company or Parent, if there shall be any law
or regulation that makes consummation of the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining the parties from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable;
(d) by Parent, upon a breach of any representation, warranty,
covenant or agreement of the Company, or if any representation or
warranty of the Company shall become untrue, in either case such that
the conditions set forth in Section 8.02 would be incapable of being
satisfied by June 5, 2000; and
(e) by the Company, upon a breach of any representation,
warranty, covenant or agreement of Parent or Merger Sub, or if any
representation or warranty of Parent or Merger Sub shall become untrue,
in either case such that the conditions set forth in Section 8.03 would
be incapable of being satisfied by June 5, 2000.
The party desiring to terminate this Agreement pursuant to
this Section 9.01 (other than pursuant to Section 9.01(a)) shall give notice of
such termination to the other party.
Section 9.02 Effect of Termination. If this Agreement is
terminated pursuant to Section 9.01, this Agreement will become void and of no
effect with no liability on the part of any party hereto or its respective
directors, officers or shareholders, except that the agreements contained in
Section 9.03 will survive the termination hereof. Nothing herein shall relieve
any party from liability for any breach of this Agreement.
Section 9.03 Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Merger, this
Agreement and the transactions contemplated by this Agreement will be paid by
the party incurring such expenses. Notwithstanding anything in this Agreement to
the contrary, in the event that this Agreement is terminated for any reason
other than pursuant to Section 9.01 (a) or (e), then, (i) the Company shall
<PAGE>
reimburse Parent, within five (5) business days after such termination, for
Parent's actual costs and expenses in connection with this Agreement and the
transactions contemplated thereby, in an amount not to exceed $10,000,000 and
(ii) if (y) the Company enters into an agreement or (z) there is consummated an
Acquisition Transaction with a third party, in each case within twenty-four (24)
months after the date of such termination, the Company shall pay to Parent,
within five (5) business days after such agreement is entered into or
transaction is consummated, the amount of one hundred million dollars
($100,000,000) as compensation for the role that Parent played in creating the
opportunity for such Acquisition Transaction by entering into this Agreement.
The rights of Parent and the payments to which Parent is entitled under this
Section 9.03 are not exclusive, and are in addition to any other rights or
remedies that Parent may have at law or in equity.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be deemed to
have been duly given when delivered in person, by overnight courier or by
facsimile to the respective parties as follows:
If to Parent or Merger Sub, to:
Adelphia Communications Corporation
Main at Water Street
Coudersport, PA 16915
Telephone: 814-274-9830
Facsimile: 814-274-6586
Attention: Timothy J. Rigas, Executive Vice President
with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 21st Floor
Pittsburgh, PA 15219
Telephone: 412-562-8839
Facsimile: 412-562-1041
Attention: Bruce I. Booken
If to the Company, to:
Century Communications Corp.
50 Locust Avenue
New Canaan, CT 06840
Telephone: 203-972-2000
Facsimile: 203-972-2013
Attention: Office of the President
<PAGE>
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Attention: Steven R. Finley
or such other address or facsimile number as such party may specify for the
purpose by written notice to the other parties hereto. Each such notice, request
or other communication will be effective: (i) if delivered in person, when such
delivery is made at the address specified in this Section 10.01; (ii) if
delivered by overnight courier, the next business day after such delivery is
sent to the address specified in this Section 10.01; or (iii) if delivered by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section 10.01 and the appropriate confirmation is received.
Section 10.02 Survival of Representations, Warranties and
Agreements. The representations and warranties and agreements contained herein
and in any certificate or other writing delivered pursuant hereto will not
survive beyond the Effective Time. This Section 10.02 will not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
Section 10.03 Amendment. This Agreement may be amended by the
Company and Parent at any time before or after any approval of this Agreement by
the shareholders of the Company. After any such approval, no amendment may be
made that decreases the Merger Consideration or that adversely affects the
rights of the Company's shareholders hereunder without the approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
Section 10.04 Extension; Waiver. At any time prior to the
Effective Time, the parties may: (i) extend the time for the performance of any
of the obligations or other acts of any other party; (ii) waive any inaccuracies
in the representations and warranties contained herein by any other party or in
any document, certificate or writing delivered pursuant hereto by any other
party; or (iii) waive compliance with any of the agreements of any other party
or with any conditions to its own obligations. Any agreement on the part of any
party to any such extension or waiver will be valid only if set forth in an
instrument in writing signed on behalf of such party.
Section 10.05 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. No party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties.
Section 10.06 Governing Law. This Agreement will be construed
in accordance with and governed by the law of the State of Delaware applicable
to agreements entered into and to be performed wholly within such State.
<PAGE>
Section 10.07 Jurisdiction. Each of the parties: (i) consents
to submit itself to the personal jurisdiction of any federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or the Merger; (ii) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court; and (iii) agrees that it will not bring any action
relating to this Agreement or the Merger in any court other than a federal or
state court sitting in the State of Delaware.
Section 10.08 Counterparts; Effectiveness. This Agreement may
be 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. This Agreement will become effective when each party shall have
received counterparts hereof signed by all of the other parties.
Section 10.09 Entire Agreement; No Third-party Beneficiaries.
This Agreement and the other agreements referred to herein or executed
contemporaneously herewith constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement. No representation,
inducement, promise, understanding, condition or warranty not set forth herein
has been made or relied upon by any party. This Agreement, other than as
provided in Sections 6.01 and 6.02, is not intended to confer upon any Person
other than the parties any rights or remedies.
Section 10.10 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.11 Severability. In the event that any one or more
of the provisions contained in this Agreement shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.
Section 10.12 Definitions.
(a)......When used in this Agreement, the following terms have
the following meanings:
"Affiliate" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banks in the State of New York are authorized or
obligated to be closed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Disclosure Schedule" means the Disclosure Schedules
attached hereto provided by the Company.
"Company Subsidiary" means any Subsidiary of the Company.
<PAGE>
"Environmental Law" means any applicable federal, state or
local law, regulation, order, decree or judicial opinion or other agency
requirement having the force and effect of law and relating to noise, odor,
Hazardous Substances or the protection of public health or safety or any other
environmental matter.
"ERISA Affiliate" means a trade or business affiliated within
the meaning of Sections 414(b), (c) or (m) of the Code.
"Exchange Agent" means a bank or trust company organized under
the laws of the United States or any state thereof with capital, surplus and
undivided profits of at least $500,000,000.
"Franchise" means a franchise within the meaning of Section
602(9) of the Cable Communications Policy Act of 1984 (47 U.S.C. Section 522(9).
"Franchising Authority" has the meaning such term is given by
Section 602(10) of the Cable Communications Policy Act of 1984 (47 U.S.C.
Section 522(10).
"Hazardous Substance" means any toxic or hazardous substance
that is regulated by or under authority of any Environmental Law.
"GAAP" means generally accepted accounting principles in
effect in the United States of America as of the date of the applicable
determination.
"Governmental Entity" means any government or subdivision
thereof, or any administrative, governmental or regulatory authority, agency,
commission, tribunal or body, domestic, foreign or supranational.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset.
"Material Adverse Effect", except as otherwise provided in
Section 8.02(c), means (i) with respect to the Company, a material adverse
effect on the business, assets, operations or financial condition of the Company
and its Subsidiaries, taken as a whole, other than any such effect arising out
of or resulting from the transactions contemplated by this Agreement or general
economic, financial, competitive or market conditions or from changes in or
affecting the cable television or communications industries generally or (ii)
with respect to Parent or Merger Sub, a material adverse effect on the business,
assets, operations or financial condition of Parent, Merger Sub and their
Subsidiaries, taken as a whole, other than any such effect arising out of or
resulting from the transactions contemplated by this Agreement or general
economic, financial, competitive or market conditions or from changes in or
affecting the cable television or communications industries generally.
"Parent Common Stock" means the Class A common stock, par
value $.01 per share, of Parent.
<PAGE>
"Parent Disclosure Schedule" means the Disclosure Schedules
attached hereto provided by Parent
"Parent Subsidiary" means any Subsidiary of Parent.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
are directly or indirectly owned or controlled by such Person.
"Tax" and "Taxes" means all federal, state, local, foreign or
other taxing authority net income, franchise, sales, use, ad valorem, property,
payroll, withholding, excise, severance, transfer, employment, alternative or
add-on minimum, stamp, occupation, premium, environmental or windfall profits
taxes, and other taxes, charges, fees, levies, imposts, customs, duties,
licenses or other assessments, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority.
(b) Each of the following additional terms is defined in the
Section identified below:
<PAGE>
Acquisition Transaction 5.02(c), 26
Agreement Preamble, 4
Antitrust Laws 7.07(b), 30
Class A Merger Consideration 1.03, 5, 6
Class B Voting Agreement Recitals, 4
Class A Company Common Stock 1.02(a), 5
Class B Company Common Stock 1.02(a), 5
Class B Shareholders Recitals, 4
Closing 1.01(b), 5 Closing Date 1.01(b), 5
Communications Act 3.03, 11
Company Preamble, 4
Company Board 3.02, 10
Company Common Stock 1.02(a), 5
Company SEC Reports 3.07, 13
Company Securities 3.05(c), 12
Company Shareholder Meeting 7.03(a), 29
Company Subsidiary Securities 3.06(b), 13
Effective Time 1.01(c), 5
Employee Benefit Arrangement 5.01(e), 25
Employee Plan 3.13(a), 15
ERISA 3.13(c), 16
Exchange Act 3.03, 11
Exchange Agent 1.05, 6
FCC 3.03, 11
HSR Act 3.03, 11
Indemnified Parties 6.01(a), 26
Interested Shareholder 4.14, 23
Letter of Transmittal 1.05, 6
Merger 1.01(a), 4
Merger Sub Preamble, 4
NJBCA 1.01(a), 5
Option 1.14(a), 8
Option Plans 1.14(a), 8
Parent Preamble, 4
Parent SEC Reports 4.07, 21
Parent Securities 4.05(c), 20
Parent Shareholders Recitals, 4
Parent Subsidiary Securities 4.06(b), 21
Proxy Statement/Prospectus 7.03(b), 29
Registration Statement 4.09(a), 21
Rigas Class B Voting Agreement Recitals, 4
Securities Act 3.03, 11
Significant Subsidiary of Parent 4.04, 19
Significant Subsidiary of the Company 3.04, 11
Surviving Corporation 1.01(a), 5
Violation 3.04, 12
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed by its respective authorized officer as of the day
and year first above written.
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Timothy J. Rigas
Name: Timothy J. Rigas
Title: Executive Vice President
ADELPHIA ACQUISITION SUBSIDIARY, INC.
By: /s/ Michael J. Rigas
Name: Michael J. Rigas
Title: Vice President
CENTURY COMMUNICATIONS CORP.
By: /s/ Scott Schneider
Name: Scott Schneider
Title: Chief Financial Officer
{The Registrant agrees to furnish supplementally to the Commission upon request
a copy of the schedules to this agreement. The schedules contain customary
information for schedules to agreements of this type.}
EXHIBIT 2.02
PURCHASE AGREEMENT
DATED AS OF FEBRUARY 22, 1999
AMONG
FRONTIERVISION PARTNERS, L.P.,
AND
FVP GP, L.P., the GENERAL PARTNER, and
CERTAIN DIRECT AND INDIRECT LIMITED PARTNERS
OF FRONTIERVISION PARTNERS, L.P.,
as Sellers,
AND
ADELPHIA COMMUNICATIONS CORPORATION,
as Buyer
<PAGE>
<TABLE>
<CAPTION>
PURCHASE AGREEMENT
DATED AS OF FEBRUARY 22, 1999
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TABLE OF CONTENTS
Page
ARTICLE 1
CERTAIN DEFINITIONS
<S> <C>
1.1 Terms Defined in this Section.............................................................1
1.2 Terms Defined Elsewhere in this Agreement................................................11
1.3 Rules of Construction....................................................................13
ARTICLE 2
SALE AND PURCHASE OF PURCHASED INTERESTS; ASSUMPTION OF
LIABILITIES; ADDITIONAL PURCHASE CONSIDERATION
2.1 Agreement to Sell and Buy................................................................13
2.2 Assumption of Obligations................................................................14
2.3 Additional Purchase Consideration for Purchased Interests................................14
2.4 Escrow Deposit; Registration Rights......................................................15
2.5 Cash Consideration Adjustments...........................................................16
2.6 Payment at Closing.......................................................................20
2.7 Post-Closing Payment of Cash Consideration Adjustments...................................20
2.8 Seller Specific Liabilities..............................................................23
2.9 Additional Cash Consideration Adjustments................................................25
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FVP
3.1 Organization and Authority of FVP........................................................28
3.2 Authorization and Binding Obligation.....................................................28
3.3 Organization and Ownership of FrontierVision Companies...................................29
3.4 Absence of Conflicting Agreements; Consents..............................................30
3.5 Financial Statements.....................................................................30
3.6 Absence of Undisclosed Liabilities.......................................................31
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<PAGE>
Page
3.7 Absence of Certain Changes...............................................................31
3.8 Franchises, Licenses, Material Contracts.................................................32
3.9 Title to and Condition of Real Property and Tangible Personal Property...................32
3.10 Intangibles..............................................................................33
3.11 Information Regarding the Systems........................................................33
3.12 Taxes....................................................................................36
3.13 Employee Plans...........................................................................36
3.14 Environmental Laws.......................................................................37
3.15 Claims and Litigation....................................................................38
3.16 Compliance With Laws.....................................................................38
3.17 Transactions with Affiliates.............................................................38
3.18 Broker...................................................................................39
3.19 Securities Law Matters...................................................................39
3.20 Cure.....................................................................................40
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 Authority of Sellers; Authorization and Binding Obligation...............................40
4.2 Absence of Conflicting Agreements; Consents..............................................41
4.3 Title to Purchased Interests.............................................................41
4.4 Broker...................................................................................42
4.5 Taxes....................................................................................43
4.6 Securities Law Matters...................................................................43
4.7 Cure.....................................................................................44
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization; Authorization and Binding Obligation.......................................44
5.2 Authorization and Binding Obligation.....................................................45
5.3 Absence of Conflicting Agreements; Consents..............................................45
5.4 Capital Structure; ACC Class A Common Stock..............................................46
5.5 Claims and Litigation....................................................................46
5.6 SEC Reports..............................................................................46
5.7 Broker...................................................................................47
5.8 Investment Purpose; Investment Company...................................................47
5.9 Cure.....................................................................................48
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<PAGE>
Page
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 Operation of Business Prior to Closing...................................................48
6.2 Confidentiality; Press Release...........................................................52
6.3 Cooperation; Commercially Reasonable Efforts.............................................53
6.4 Consents.................................................................................53
6.5 HSR Act Filing...........................................................................58
6.6 Buyer's Qualifications and Financing.....................................................59
6.7 Discharge of Debt Documents..............................................................59
6.8 Retention and Access to the FrontierVision Companies' Records............................60
6.9 Employee Matters.........................................................................61
6.10 Tax Matters..............................................................................63
6.11 FrontierVision Name......................................................................64
6.12 Releases.................................................................................65
6.13 Directors and Officers Insurance.........................................................65
6.14 Rate Regulatory Matters..................................................................65
6.15 Distribution by SPCs of Interest in General Partner; Cancellation of SPC Notes...........66
6.16 Cooperation on Buyer SEC Matters.........................................................66
6.17 Stock Consideration Registration Rights Agreement........................................67
6.18 State Cable Systems......................................................................67
6.19 Lien Searches............................................................................68
6.20 Distant Signals; Copyright Matters.......................................................68
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1 Conditions to Obligations of Buyer.......................................................69
7.2 Conditions to Obligations of Sellers.....................................................72
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing..................................................................................74
8.2 Deliveries by Sellers....................................................................76
8.3 Deliveries by Buyer......................................................................77
ARTICLE 9
TERMINATION
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<PAGE>
Page
9.1 Termination by Agreement.................................................................78
9.2 Termination by FVP.......................................................................78
9.3 Termination by Buyer.....................................................................79
9.4 Effect of Termination....................................................................80
9.5 Attorneys' Fees..........................................................................81
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Survival.................................................................................81
10.2 Indemnification by Sellers...............................................................81
10.3 Post-Closing Escrow Agreement............................................................82
10.4 Indemnification by Buyer.................................................................83
10.5 Certain Limitations on Indemnification Obligations.......................................84
10.6 Procedure for Indemnification............................................................87
10.7 Treatment of Indemnification Payments....................................................88
ARTICLE 11
MISCELLANEOUS
11.1 Fees and Expenses........................................................................88
11.2 Notices..................................................................................89
11.3 Benefit and Binding Effect...............................................................90
11.4 Further Assurances ......................................................................90
11.5 GOVERNING LAW............................................................................90
11.6 Entire Agreement.........................................................................91
11.7 Amendments; Waiver of Compliance; Consents...............................................91
11.8 Consent and Agreements of Sellers........................................................91
11.9 Counterparts.............................................................................92
</TABLE>
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<TABLE>
<CAPTION>
FRONTIERVISION'S DISCLOSURE SCHEDULE
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Section Description
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<S> <C>
Section 1.1 Excluded Assets; Seasonal Subscribers; Prepayment Penalties
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Section 2.5 Capital Expenditures Budget; Carriage Adjustments
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Section 3.3 Ownership of FrontierVision Companies
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Section 3.4 FrontierVision Conflicts; Consents
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Section 3.5 Financial Statements
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Section 3.6 FrontierVision Liabilities
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Section 3.7 Certain Developments
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Section 3.8 Franchises, Licenses, Contracts
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Section 3.9 Real Property and Tangible Personal Property; Encumbrances
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Section 3.10 Intangibles
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Section 3.11 Systems Information
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Section 3.12 Tax Matters
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Section 3.13 Employee Plans
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Section 3.14 Environmental Matters
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Section 3.15 Claims and Litigation
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Section 3.16 Compliance with Laws
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Section 3.17 Transactions with Affiliates
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Section 3.18 Broker
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Section 4.2 Sellers Conflicts; Consents
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Section 4.3 Title to Purchased Interests
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Section 6.1 Post-Signing Covenants
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Section 6.4 Franchise Rebuild/Upgrade Requirements
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<PAGE>
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TABLE OF EXHIBITS
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Exhibit Description
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Exhibit A Form of Noncompetition Agreement
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Exhibit B Form of Post-Closing Escrow Agreement
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Exhibit C Form of Opinion of FVP's Counsel
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Exhibit D Form of Opinion of Buyer's Counsel
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Exhibit E Addresses of Sellers
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Exhibit F Closing Net Liabilities Example Calculation
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Exhibit G Form of Seller Release
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Exhibit H Form of Management Release
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Exhibit I Post-Closing Escrow Agreement Release Provisions
Example
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</TABLE>
<PAGE>
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of
February 22, 1999, by and among FrontierVision Partners, L.P., a Delaware
limited partnership ("FVP"), FVP GP, L.P., a Delaware limited partnership (the
"General Partner"), each party named as a "Limited Partner Seller" on the
signatures pages hereto, each party named as an "SPC Seller" on the signature
pages hereto, and Adelphia Communications Corporation, a Delaware corporation
("Buyer").
RECITALS
The General Partner owns all of the general partnership interests in
FVP and certain Subordinated Notes issued by FVP. The Limited Partner Sellers
are each limited partners of FVP and own limited partnership interests in FVP
and certain Subordinated Notes issued by FVP. Each SPC Seller owns all of the
capital stock of an SPC, which in turn is a limited partner of FVP and owns a
limited partnership interest in FVP and certain Subordinated Notes issued by
FVP. The SPC Sellers also hold certain Subordinated Notes issued by FVP.
Collectively, the Limited Partner Sellers and the SPCs own all of the limited
partnership interests in FVP, and collectively the General Partner, the Limited
Partner Sellers, the SPC Sellers and the SPCs own all of the Subordinated Notes
issued by FVP. Buyer desires to acquire from the General Partner and the Limited
Partner Sellers all of their partnership interests in FVP and Subordinated Notes
issued by FVP and desires to acquire from the SPC Sellers all of their stock in
the SPCs and Subordinated Notes issued by FVP. The General Partner, Limited
Partner Sellers and SPC Sellers (collectively, the "Sellers" and individually a
"Seller") desire to sell to Buyer all of their partnership interests in FVP or
stock in the SPCs, as described above and all of their Subordinated Notes issued
by FVP as described above, in each case for the consideration and on the terms
and conditions set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 Terms Defined in this Section.
The following terms, as used in this Agreement, have the meanings set
forth in this Section:
"ACC Class A Common Stock" means the Class A Common Stock, par value
$.01 per share, of Buyer that is authorized and designated as such in Buyer's
Certificate of Incorporation as in effect on the date of this Agreement.
<PAGE>
"Accounts Receivable" means all rights of the FrontierVision Companies
to payment for goods or services provided prior to the Adjustment Time,
including rights to payment for cable services to customers of the Systems, the
sale of advertising, the leasing of channels, and other goods and services and
rentals.
"Adjustment Time" means (A) with respect to Adjustment Assets and
Adjustment Liabilities and other items that primarily relate to the
FrontierVision Companies as a whole, 11:59 p.m., local Denver time, on the day
immediately preceding the Closing Date, and (B) with respect to Adjustment
Assets and Adjustment Liabilities and other items that primarily relate to a
particular System, 11:59 p.m. local time for that System, on the day immediately
preceding the Closing Date.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with the specified Person.
"Assets" means all of the tangible and intangible assets that are
owned, leased or held by the FrontierVision Companies and that are used in
connection with the conduct of the business or operations of the Systems other
than the Excluded Assets and less any such Assets that are sold, transferred, or
otherwise conveyed by the FrontierVision Companies to third Persons prior to the
Closing in accordance with the provisions of this Agreement, provided that with
respect to any assets that are leased by the FrontierVision Companies or
otherwise not owned by the FrontierVision Companies, "Assets" includes only the
interest, title and rights in such assets held by the FrontierVision Companies.
"Basic Subscriber" means, with respect to any System as of any date,
each residential customer or resident of a multiple dwelling unit served by such
System who subscribes to at least broadcast basic service (either alone or in
combination with any other service and including subscribers who receive
regularly offered discounts), and who has rendered payment for one month's
service at such System's regular basic monthly subscription rate without
discount (excluding regularly offered discounts) and who does not have more than
$10.00 (excluding late charges and fees and amounts subject to a bona fide
dispute) that is two months or more past due from and including the last day of
the period to which any outstanding bill relates.
"Bulk Subscriber" means, with respect to any System, any commercial
establishment (e.g., any hotel or motel) or multiple dwelling unit establishment
(e.g., any apartment, condominium or cooperative building) served by such System
that subscribes to at least broadcast basic service (either alone or in
combination with any other service), and who has rendered payment for one
month's service at such customer's regular basic monthly subscription rate and
who does not have more than $10.00 (excluding late charges and fees and amounts
subject to a bona fide dispute) that is two months or more past due from and
including the last day of the period to which any outstanding bill relates.
- 2 -
<PAGE>
"Cable Act" means Title VI of the Communications Act of 1934, as
amended, 47 U.S.C. Section 151 et seq., and all other provisions of the Cable
Communications Policy Act of 1984, the Cable Television Consumer Protection and
Competition Act of 1992, and the provisions of the Telecommunications Act of
1996 amending Title VI of the Communications Act of 1934, in each case as
amended and in effect from time to time.
"Capital Stock" means any and all shares, interests, or other
equivalent interests (however designated) in the equity of any Person, including
capital stock, partnership interests, and membership interests, and including
any rights, options or warrants with respect thereto.
"Charter Documents" means the articles or certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate
of formation, limited liability company operating agreement, and all other
organizational documents of any Person other than an individual.
"Closing" means the consummation of the purchase and sale of the
Purchased Interests pursuant to this Agreement in accordance with the provisions
of Article 8.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, as amended and in effect from time
to time.
"Consents" means the consents, permits, approvals and authorizations of
Governmental Authorities and other Persons necessary to transfer the Purchased
Interests to Buyer or otherwise to consummate the transactions contemplated by
this Agreement.
"Contracts" means all leases, easements, rights-of-way, rights of
entry, programming agreements, pole attachment and conduit agreements, customer
agreements, and other agreements, written or oral (including any amendments and
other modifications thereto) to which any FrontierVision Company is a party or
which are binding upon any FrontierVision Company and that relate to any of the
Assets or the business or operations of any of the Systems or any of the
FrontierVision Companies and (A) which are in effect on the date hereof, or (B)
which are entered into by any FrontierVision Company between the date hereof and
the Closing Date.
"Copyright Act" means the Copyright Act of 1976, as amended and in
effect from time to time.
"Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of December 19, 1997 among FrontierVision Operating Partners,
L.P., as Borrower, The Chase Manhattan Bank, as Administrative Agent, J.P.
Morgan Securities Inc., as Syndication Agent, CIBC Inc., as Documentation Agent,
and each of the other Lenders party thereto, as amended and in effect from time
to time.
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<PAGE>
"Debt Documents" means each of the loan or credit agreements, notes,
bonds, indentures and other agreements and instruments pursuant to which any
indebtedness for borrowed money or any capital lease obligation of any
FrontierVision Company (and any guarantee by a FrontierVision Company of
indebtedness for borrowed money or any capitalized lease obligation of another
Person that is not a FrontierVision Company) in an aggregate principal amount in
excess of $250,000 is outstanding or committed to.
"Deposit Escrow Agreement" means the Escrow Agreement executed
concurrently herewith by FVP, Buyer and the Escrow Agent.
"Deposit Registration Rights Agreement" means the Registration Rights
Agreement between Buyer and FVP, relating to the registration of the Escrow
Registrable Securities constituting the Deposit Escrow Property, which agreement
shall be executed on the date of this Agreement.
"Employee Plan" means any pension, retirement, profit-sharing, deferred
compensation, vacation, severance, bonus, incentive, medical, vision, dental,
disability, life insurance or any other employee benefit plan as defined in
Section 3(3) of ERISA to which any FrontierVision Company or any ERISA Affiliate
of any FrontierVision Company contributes or which any FrontierVision Company or
any such ERISA Affiliate sponsors or maintains, or by which any FrontierVision
Company or any such ERISA Affiliate is otherwise bound.
"Encumbrances" means any pledge, claim, mortgage, lien, charge,
encumbrance, or security interest of any kind or nature whatsoever.
Notwithstanding the foregoing, "Encumbrances" does not include any restriction
on transfer or assignment.
"Environmental Claim" means any written claim or notice or any
proceeding before a Governmental Authority arising under or pertaining to any
Environmental Law or Hazardous Substance.
"Environmental Law" means any Legal Requirement pertaining to land use,
air, soil, surface water, groundwater (including the protection, cleanup,
removal, remediation or damage thereof), or to the protection of public health
and safety, or any other environmental matter, including the following laws as
amended and in effect from time to time: (A) Clean Air Act (42 U.S.C. ss. 7401,
et seq.); (B) Clean Water Act (33 U.S.C. ss. 1251, et seq.); (C) Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901, et seq.); (D) Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss. 9601, et
seq.); (E) Safe Drinking Water Act (42 U.S.C. 300f, et seq.); and (F) Toxic
Substances Control Act (15 U.S.C. ss. 2601, et seq.).
"Equivalent Subscribers" means, with respect to any System as of any
date, the sum of: (A) the number of Basic Subscribers served by such System as
of such date; (B) the number of Basic Subscribers represented by the Bulk
Subscribers served by such System as of such date, which number shall be
calculated for each class of service provided by such System by dividing (1) the
monthly billings attributable to such System's Bulk Subscribers for each such
class of service provided by such
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<PAGE>
System for the calendar month immediately preceding the date on which such
calculation is made, by (2) the full, non-discounted monthly rate charged by
such System for such class of service, respectively (excluding pass-through
charges for sales taxes, line-itemized franchise fees, fees charged by the FCC
and other similar line-itemized charges); and (C) the number of equivalent Basic
Subscribers represented by the "Seasonal Subscribers" of the FrontierVision
Companies as of the date of determination, which number will be determined as
set forth in Section 1.1 of FrontierVision's Disclosure Schedule. For purposes
of the foregoing, monthly billings shall exclude billings for a la carte or
digital service tiers and for premium services, pass-through charges for sales
taxes, line- itemized franchise fees, fees charged by the FCC and other similar
line-itemized charges, and nonrecurring charges or credits which include those
relating to installation, connection, relocation and disconnection fees and
miscellaneous rental charges for equipment such as remote control devices and
converters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder, as amended and in effect from
time to time.
"ERISA Affiliate" means a trade or business affiliated within the
meaning of Sections 414(b), (c) or (m) of the Code.
"Escrow Agent" means Bank of Montreal Trust Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder, as in effect
from time to time.
"Excluded Assets" means the assets listed as "Excluded Assets" in
Section 1.1 of FrontierVision's Disclosure Schedule.
"FCC" means the Federal Communications Commission.
"FCC Regulations" means the rules, regulations and published policies
of the FCC promulgated by the FCC with respect to the Cable Act, as in effect
from time to time.
"Franchise Area" means any geographic area in which a FrontierVision
Company is authorized to provide cable television service pursuant to a
Franchise or provides cable television service in which a Franchise is not
required pursuant to applicable Legal Requirements.
"Franchise" means any cable television franchise and related
agreements, ordinances, permits or other authorizations issued or granted to a
FrontierVision Company by any Franchising Authority.
"Franchising Authorities" means all Governmental Authorities that have
issued or granted any Franchises relating to the operation of a System.
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<PAGE>
"FrontierVision Companies" means FVP and each of the other entities
listed as "FrontierVision Companies" in Section 3.3 of FrontierVision's
Disclosure Schedule, each of which may be referred to herein individually as a
"FrontierVision Company." None of Main Security Surveillance, Inc., The Maine
InternetWorks, Inc., or Landmark NetAccess, Inc. is a "FrontierVision Company"
as used in this Agreement, except that for the limited purposes of determining
"Adjustment Assets" and "Adjustment Liabilities" of the FrontierVision Companies
in accordance with Section 2.5, Main Security Surveillance, Inc. shall be
treated as a FrontierVision Company.
"FrontierVision's Disclosure Schedule" means FrontierVision's
Disclosure Schedule referred to in this Agreement and delivered to Buyer by FVP
and Sellers concurrently with the execution of this Agreement.
"FrontierVision Inc." means FrontierVision Inc., a Delaware
corporation.
"FrontierVision Liabilities" means, with respect to the FrontierVision
Companies on a consolidated basis, without duplication, all liabilities of the
FrontierVision Companies (as defined and determined in accordance with GAAP),
including, without limitation the following: (A) all obligations of the
FrontierVision Companies for borrowed money; (B) all obligations of the
FrontierVision Companies evidenced by bonds, debentures, notes, indentures,
mortgages, or similar instruments; and (C) all capital lease obligations of the
FrontierVision Companies. Notwithstanding the foregoing, "FrontierVision
Liabilities" shall not include: (A) any amounts in respect of performance bonds
issued by any of the FrontierVision Companies in the ordinary course of
business; (B) any amounts in the nature of prepayment penalties or premiums
resulting from the consummation of the transactions contemplated by this
Agreement or satisfaction of the Indentures, which prepayment penalties and
premiums with respect to the Debt Documents are set forth in Section 1.1 of
FrontierVision's Disclosure Schedule; and (C) the Subordinated Notes. No
liability that would otherwise be included within the meaning of "FrontierVision
Liability" as defined above shall be excluded from the definition solely
because: (A) the liability relates to an item or matter that constitutes a
Permitted Encumbrance; or (B) the liability relates to an item or matter that is
disclosed to Buyer in this Agreement or FrontierVision's Disclosure Schedule.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"General Partnership Interest" means the general partnership interest
in FVP held by the General Partner.
"Governmental Authority" means any federal, state, or local
governmental authority, including any court or administrative or regulatory
agency.
"Hazardous Substance" means any pollutant, contaminant, hazardous or
toxic substance, material, constituent or waste or any pollutant or any release
thereof that is labeled or regulated as such
- 6 -
<PAGE>
by any Governmental Authority pursuant to an Environmental Law, including,
without limitation, petroleum or petroleum compounds, radioactive materials,
asbestos or any asbestos-containing material, or polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the regulations promulgated by the Federal Trade Commission with
respect thereto, as amended and in effect from time to time.
"Indentures" means: (A) the Indenture dated as of October 7, 1996,
between FrontierVision Operating Partners, L.P. and FrontierVision Capital
Corporation, as Issuers, and U.S. Bank National Association, as Trustee,
relating to the 11% Senior Subordinated Notes due 2006 (the "1996 Indenture");
(B) the Indenture dated as of September 19, 1997 between FrontierVision
Holdings, L.P. and FrontierVision Holdings Capital Corporation, as Issuers, and
U.S. Bank National Association, as Trustee, relating to the 11 7/8% Senior
Discount Notes due 2007 (the "1997 Indenture"); and (C) the Indenture dated as
of December 9, 1998 between FrontierVision Holdings, L.P. and FrontierVision
Holdings Capital II Corporation, as Issuers, and U.S. Bank National Association,
as Trustee, relating to the 11 7/8% Senior Discount Notes due 2007, Series B
(the "1998 Indenture"), in each case as amended and in effect from time to time,
each of which may be referred to herein individually as an "Indenture."
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, patents, permits, proprietary information, technical
information and data, machinery and equipment warranties, and other similar
intangible property rights and interests issued to or owned by any of the
FrontierVision Companies.
"Legal Requirements" means applicable common law and any applicable
statute, ordinance, code or other law, rule, regulation, order, technical or
other standard, requirement or procedure enacted, adopted, promulgated or
applied by any Governmental Authority, including any applicable decree or
judgment of a court of competent jurisdiction, all as in effect from time to
time.
"Licenses" means all domestic satellite, business radio and other FCC
licenses, and all other licenses, authorizations and permits issued by any
Governmental Authority that is held by a FrontierVision Company in the business
and operations of the Systems, excluding the Franchises.
"Limited Partnership Interests" means the limited partnership interests
in FVP held by the Limited Partner Sellers.
"Loss" means any claim, loss, liability, damages, penalties, costs and
expenses (excluding any and all consequential, incidental and special damages).
"Management Release" means the "Agreement of Release" substantially in
the form of Exhibit H to be delivered to Buyer by the Persons designated on
Exhibit H at the Closing.
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<PAGE>
"Material Contract" means the Debt Documents, the Material Leases, and
any other Contract that requires payments by one of the FrontierVision Companies
(or entitles one of the FrontierVision Companies to payments) in the aggregate
of more than $100,000 during the current term of such Contract, but "Material
Contract" specifically excludes all subscription agreements with customers and
specifically excludes all pole attachment and conduit agreements.
"Material Lease" means all headend, tower and microwave site leases,
fiber leases, and any other lease designated as a "Material Lease" in Section
3.9 of FrontierVision's Disclosure Schedule.
"Noncompetition Agreement" means either of the Noncompetition
Agreements between Buyer and each of the two Persons designated on Exhibit A,
substantially in the form of Exhibit A with respect to such Person, which
agreements shall be executed and delivered on the Closing Date.
"Permitted Encumbrances" means each of the following: (A) liens for
current taxes and other governmental charges that are not yet delinquent; (B)
liens for taxes, assessments, governmental charges or levies, or claims the
non-payment of which is being diligently contested in good faith or liens
arising out of judgments or awards against the FrontierVision Companies with
respect to which at the time there shall be a prosecution for appeal or there
shall be a proceeding to review or the time limit has not yet run for such an
appeal or review with respect to such judgment or award; provided that with
respect to the foregoing liens in this clause (B), adequate reserves shall have
been set aside on the FrontierVision Companies' books, and no foreclosure,
distraint, sale or similar proceedings shall have been commenced with respect
thereto that remain unstayed for a period of 60 days after their commencement;
(C) liens of carriers, warehousemen, mechanics, laborers, and materialmen and
other similar statutory liens incurred in the ordinary course of business for
sums not yet due or being diligently contested in good faith, and for which
adequate reserves have been set aside on the FrontierVision Companies' books;
(D) liens incurred in the ordinary course of business in connection with
worker's compensation and unemployment insurance or similar laws; (E) statutory
landlords' liens; (F) with respect to the Real Property, leases, easements,
rights to access, rights-of-way, mineral rights or other similar reservations
and restrictions and defects of title which are either of record or set forth in
FrontierVision's Disclosure Schedule or in the deeds or leases to such Real
Property or which (except in the case of owned Real Property, and which), either
individually or in the aggregate, do not materially and adversely affect or
interfere with the ownership or use or marketability of any such Real Property
in the business and operations of the Systems as presently conducted; and (G)
any other claims or encumbrances that are described in Section 3.9 of
FrontierVision's Disclosure Schedule and that relate to Assumed Liabilities that
are not discharged in full at the Closing or that will be removed prior to or at
Closing.
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, Governmental Authority, or other entity or organization.
- 8 -
<PAGE>
"Post-Closing Escrow Agreement" means the Post-Closing Escrow Agreement
among Buyer, Sellers, and the Escrow Agent, substantially in the form of Exhibit
B but subject to Section 10.3, which agreement shall be executed and delivered
on the Closing Date.
"Purchased Interests" means the General Partnership Interest, the
Limited Partnership Interests, the SPC Stock, the Subordinated Notes held by the
General Partner, the Subordinated Notes held by the Limited Partner Sellers, and
the Subordinated Notes held by the SPC Sellers.
"Rate Regulatory Matter" shall mean, with respect to any cable
television system, any matter or any effect on such system or the business or
operations thereof, arising out of or related to the Cable Act, any FCC
Regulations heretofore adopted thereunder, or any other present or future Legal
Requirement dealing with, limiting or affecting the rates which can be charged
by cable television systems to their customers (whether for programming,
equipment, installation, service or otherwise).
"Real Property" means all of the fee and leasehold estates and, to the
extent of the interest, title, and rights of the FrontierVision Companies in the
following, buildings and other improvements thereon, easements, licenses, rights
to access, rights-of-way, and other real property interests that are owned or
held by any of the FrontierVision Companies and used or held for use in the
business or operations of the Systems, plus such additions thereto and less such
deletions therefrom arising between the date hereof and the Closing Date in
accordance with this Agreement.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder, as in effect from time
to time.
"Seller Release" means the "Agreement of Release" substantially in the
form of Exhibit G to be delivered to Buyer by each Seller at the Closing.
"SPC" means any corporation that is a limited partner of FVP, the
Capital Stock of which corporation is being sold to Buyer pursuant to this
Agreement.
"SPC Notes" means certain promissory notes issued by certain of the
SPCs to the SPC Seller which owns all of the Capital Stock of such SPC.
"SPC Stock" means the Capital Stock of the SPCs held by the SPC
Sellers.
"Stock Consideration Registration Rights Agreement" means the
Registration Rights Agreement among Buyer and Sellers, relating to the
registration of the Stock Consideration Registrable Securities constituting the
Stock Consideration, which agreement shall be executed on the date of this
Agreement.
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<PAGE>
"Subordinated Notes" means certain Subordinated Notes issued by FVP to
the General Partner, the Limited Partner Sellers, the SPC Sellers, and the SPCs
in connection with their investments in FVP.
"Subsidiary" means, with respect to any Person, any other Person of
which the outstanding voting Capital Stock sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, of which 50% or more of the Capital Stock) is owned
(beneficially or otherwise) directly or indirectly by such first Person or any
Subsidiary thereof.
"Systems" means the cable television systems owned and operated by any
FrontierVision Company or any combination of any of them, each of which may be
referred to herein individually as a "System."
"Tangible Personal Property" means all of the equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
converters, spare parts, and other tangible personal property which are owned or
leased by any of the FrontierVision Companies and used or held for use in the
conduct of the business or operations of the Systems, plus such additions
thereto and less such deletions therefrom arising between the date hereof and
the Closing Date in accordance with this Agreement.
"Tax" means any federal, state, local, or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or governmental assessment, together with any interest, additions, or
penalties with respect thereto and any interest in respect of such additions or
penalties.
"Tax Return" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing required to be
submitted to any Governmental Authority with respect to any Tax.
"Transaction Documents" means this Agreement, the Deposit Escrow
Agreement, the Post- Closing Escrow Agreement, the Noncompetition Agreements,
the Deposit Registration Rights Agreement, the Stock Consideration Registration
Rights Agreement, the Seller Releases, the Management Releases, and the other
documents, agreements, certificates and other instruments to be executed,
delivered and performed by the parties in connection with the transactions
contemplated by this Agreement.
"Upset Date" means the one year anniversary of the date of this
Agreement, as such date may be extended pursuant to the provisions of this
Agreement, including, without limitation, Sections 8.1, 9.2 and 9.3.
"Weighted Average Trading Price" means the price determined by a
fraction, the numerator of which is the sum of the results obtained by
multiplying, for each of the trading days in the period of measurement, (A) the
total number of shares of ACC Class A Common Stock or other security traded on
each of said trading days on the principal U.S. trading market (whether stock
exchange, the
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NASDAQ National Market System, or otherwise) on which such stock or other
security is traded, by (B) the closing sale price of such stock or other
security (as published in the Northeast Edition of The Wall Street Journal) for
each of said trading days, and the denominator of which is the total number of
shares of such stock or other security traded on the trading days in the period
of measurement.
1.2 Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
<TABLE>
<CAPTION>
Term Section
<S> <C>
120-Day Period Section 7.1(d)(1)(A)
Adjustment Assets Section 2.5(b)(1)
Adjustment Liabilities Section 2.5(b)(2)
Agent Section 11.8
Assumed Employees Section 6.9(a)
Assumed Liabilities Section 2.2
Audited Financial Statements Section 3.5(a)
Buyer First Paragraph
Buyer's 10-K Section 5.6(a)
Buyer's 10-Q Section 5.6(a)
Cash Consideration Section 2.3(a)(1)
Claimant Section
Closing Cash Payment Section 2.6
Closing Equivalent Subscribers Section 2.5(a)
Closing Net Liabilities Section 2.5(b)
Deposit Escrow Property Section 2.4(a)
Designated Material Consent Franchise Section 6.4(b)
Designated Non-Material Consent Section 6.4(b)
Franchise
Escrow Registrable Securities Section 2.4(b)
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Financial Statements Section
Final Closing Statement Section 2.7(b)
FVP First Paragraph
GECC Section 6.7(c)
GECC Facility Consent Section 6.7(c)
General Partner First Paragraph
Indemnifying Party Section
Limited Partner Seller First Paragraph
Material Consent Franchise Section 7.1(d)(1)
Material Renewal Franchise Section 6.4(c)
Net Closing Cash Payment Section 2.7(a)
Post-Closing Adjustments Escrow Section 2.7(a)
Post-Closing Adjustment Funds Section 2.7(a)
Post-Closing Indemnity Escrow Section 10.3
Post-Closing Indemnity Property Section 10.3
Preliminary Closing Statement Section 2.6
Purchase Consideration Section 2.3(a)
Renewal Franchises Section 6.1(a)(1)
Renewal Window Section 6.4(d)
Seller Recitals
SPC Seller First Paragraph
Stock Consideration Section 2.3(a)(2)
Stock Consideration Registrable Section 6.17
Securities
Unaudited Financial Statements Section 3.5(a)
Warn Act Section 9(a)
</TABLE>
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1.3 Rules of Construction.
Words used in this Agreement, regardless of the gender and number
specifically used, shall be deemed and construed to include any other gender and
any other number as the context requires. As used in this Agreement, the word
"including" is not limiting, and the word "or" is not exclusive. Except as
specifically otherwise provided in this Agreement in a particular instance, a
reference to a Section is a reference to a Section of this Agreement, a
reference to an Exhibit is a reference to an Exhibit to this Agreement, and the
terms "hereof," "herein," and other like terms refer to this Agreement as a
whole, including the Disclosure Schedules and the Exhibits to this Agreement,
and not solely to any particular part of this Agreement. The descriptive
headings in this Agreement are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
ARTICLE 2
SALE AND PURCHASE OF PURCHASED INTERESTS;
ASSUMPTION OF LIABILITIES; ADDITIONAL PURCHASE
CONSIDERATION
2.1 Agreement to Sell and Buy.
Subject to the terms and conditions set forth in this Agreement, each
Seller hereby agrees to sell, transfer, and deliver to Buyer at the Closing, and
Buyer hereby agrees to purchase at the Closing, the Purchased Interests held by
such Seller, free and clear of all Encumbrances.
2.2 Assumption of Obligations.
In consideration of the sale of the Purchased Interests, concurrently
with the Closing, Buyer shall assume all obligations and liabilities associated
with the Purchased Interests purchased by Buyer, whether such obligations and
liabilities arose prior to the Closing or arise after the Closing, including
(and notwithstanding any provision of applicable partnership law to the
contrary) all obligations and liabilities arising out of the ownership of the
General Partnership Interest (collectively, the "Assumed Liabilities"). After
the Closing Buyer shall cause the FrontierVision Companies to discharge all of
their obligations and liabilities, whether such obligations and liabilities
arose prior to the Closing or arise after the Closing, including all obligations
and liabilities relating to the business and operations of the Systems; provided
that Buyer shall not be deemed to have assumed directly any obligations and
liabilities of the FrontierVision Companies vis-a-vis any Person that is not a
party to this Agreement or entitled to indemnification under this Agreement. In
addition, nothing in this Section 2.2 shall impair Buyer's rights under Sections
2.5, 2.8 and 2.9 or Buyer's indemnification rights under Article 10 after the
Closing (subject in each case to the limitations provided therein).
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2.3 Additional Purchase Consideration for Purchased Interests.
(a) In addition to assuming the Assumed Liabilities,
Buyer shall pay and deliver to Sellers as consideration for the sale of the
Purchased Interests (the "Purchase Consideration"):
(1) A cash payment equal to Six Hundred Million
Dollars ($600,000,000),
subject to adjustment in accordance with this Article 2 (the "Cash
Consideration");
(2) 7,000,000 shares of ACC Class A Common
Stock, together with the kind
and amounts of securities, cash and other property that Sellers would have held
or been entitled to receive as of the Closing (whether resulting from a stock
split, subdivision, combination or reclassification of the outstanding capital
stock of Buyer, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Buyer may be a
party or otherwise) had Sellers held such shares of ACC Class A Common Stock as
of the date of this Agreement and retained such shares, and all securities, cash
and other property distributed or issued with respect to or in substitution or
exchange therefor, during the period from the date of this Agreement through
(and including) the Closing Date (collectively, the "Stock Consideration"). To
the extent Adelphia pays cash to the Sellers pursuant to Section 8.1(a)(4) in
lieu of delivering the ACC Class A Common Stock (or other securities, cash and
property described in the preceding sentence), the term "Stock Consideration"
shall include all such cash as the context requires.
(b) The Cash Consideration (and any adjustments thereto)
and the Stock Consideration shall be allocated among the Purchased Interests and
the Sellers as determined by the Sellers and delivered to Buyer in writing at
least two days prior to the Closing. Not more than 44% of the aggregate Purchase
Consideration shall be allocated to the purchase and sale of the Purchased
Interests held by the SPC Sellers.
2.4 Escrow Deposit; Registration Rights.
(a) Deposit of ACC Class A Shares. Simultaneously with
the execution of this Agreement, and as a material inducement to FVP and Sellers
to enter into this Agreement, Buyer shall cause 1,000,000 shares of ACC Class A
Common Stock to be issued in the name of FVP and delivered to the Escrow Agent
to be held in escrow pursuant to the terms of the Deposit Escrow Agreement,
which is to be executed concurrently herewith by Buyer, FVP, and the Escrow
Agent. The "Deposit Escrow Property" means, collectively, the 1,000,000 shares
of ACC Class A Common Stock deposited pursuant to this Section 2.4(a), together
with the kind and amounts of securities, cash and other property that Sellers
would have held or been entitled to receive as of the date the Deposit Escrow
Property is released in accordance with this Agreement (whether resulting from a
stock split, subdivision, combination or reclassification of the outstanding
capital stock of Buyer, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Buyer may be a
party or otherwise) had Sellers held such shares of ACC Class A Common Stock as
of the date of this Agreement and retained such shares, and all securities, cash
and other property distributed or issued
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with respect to or in substitution or exchange therefor, during the period from
the date of this Agreement through (and including) the date the Deposit Escrow
Property is released in accordance with this Agreement, and also includes, to
the extent relevant, all cash deposited with the Escrow Agent pursuant to
Section 2.4(b) and all earnings thereon.
(b) Deposit Registration Rights Agreement. Simultaneously
with the execution of this Agreement, and as a material inducement to FVP and
Sellers to enter into this Agreement, Buyer shall execute and deliver the
Deposit Registration Rights Agreement, pursuant to which Buyer will grant FVP
certain rights as provided therein in respect of the shares of ACC Class A
Common Stock or other securities constituting the Deposit Escrow Property (the
"Escrow Registrable Securities"). As soon as practicable after the execution of
this Agreement, Buyer shall file an appropriate registration statement under the
Securities Act covering the registration of all of such Escrow Registrable
Securities. Buyer shall then use commercially reasonable efforts to cause such
registration statement to be declared effective under the Securities Act as soon
as practicable thereafter and kept effective in accordance with the provisions
of the Deposit Registration Rights Agreement, and Buyer shall otherwise comply
with the provisions of the Deposit Registration Rights Agreement. If a
registration statement covering the registration of all of such Escrow
Registrable Securities has not been declared effective under the Securities Act
(and such registration statement shall not be subject to any stop order or
proceeding seeking a stop order) on the earlier of (1) the date FVP terminates
this Agreement in accordance with Section 9.2 as a result of a willful breach of
this Agreement by Buyer (including a willful breach as described in the first
sentence of Section 9.4(c)), and (2) May 31, 1999, Buyer shall deposit with the
Escrow Agent, on the next business day, cash in an amount equal to the aggregate
fair market value of the shares of ACC Class A Common Stock or other securities
constituting the Deposit Escrow Property (computed on the basis of the Weighted
Average Trading Price of such shares of ACC Class A Common Stock or other
securities for the ten day trading period beginning on the thirteenth trading
day prior to the date on which Buyer deposits such cash amount pursuant to this
sentence). Upon such payment by Buyer to the Escrow Agent, all of such shares of
ACC Class A Common Stock or other securities constituting the Deposit Escrow
Property shall be released and paid over to Buyer but all cash funds, if any,
included in the Deposit Escrow Property and previously held by the Escrow Agent
shall be retained by the Escrow Agent as part of the Deposit Escrow Property.
(c) Release of Deposit Escrow Property. At the Closing,
all of the Deposit Escrow Property shall be released from escrow and returned to
Buyer. Upon termination of this Agreement prior to the Closing in accordance
with Article 9, all of the Deposit Escrow Property shall be released from escrow
and returned to Buyer except as provided in the following sentence. If FVP
terminates this Agreement in accordance with Section 9.2 as a result of a
willful breach of this Agreement by Buyer (including a willful breach as
described in the first sentence of Section 9.4(c)), all of the Deposit Escrow
Property shall be released from escrow and paid over to FVP on the next business
day, provided that FVP shall be entitled to receive all cash if the condition
specified in the last sentence of Section 2.4(b) is applicable, and FVP shall be
entitled to enforce this Section 2.4 against Buyer notwithstanding any provision
to the contrary in Section 9.4(c). On the day of the occurrence of any of the
foregoing events, FVP and Buyer will execute and deliver to the Escrow Agent
joint written instructions containing
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appropriate disbursement instructions consistent with this Section 2.4(c) and
the Deposit Escrow Agreement.
2.5 Cash Consideration Adjustments.
(a) Closing Equivalent Subscribers. The Cash
Consideration shall be decreased by the number, if any, by which the number of
Closing Equivalent Subscribers is less than 700,000, multiplied by $2,928. For
purposes of this Agreement, "Closing Equivalent Subscribers" means the total
number of Equivalent Subscribers for all of the Systems as of the Adjustment
Time; provided, however, that if the systems exchange transactions between the
FrontierVision Companies and InterMedia Partners of Kentucky, L.P. referred to
in Section 6.1 of FrontierVision's Disclosure Schedule are consummated prior to
the Closing hereunder, none of the subscribers served by the InterMedia systems
acquired in such transactions shall be included in Closing Equivalent
Subscribers but the number of Closing Equivalent Subscribers represented by the
subscribers served by the Systems sold to InterMedia (determined as if the
effective time of the consummation of the respective InterMedia transactions
were the Adjustment Time hereunder) shall be included in Closing Equivalent
Subscribers; and provided further, however, that the provisions of Section
6.4(e) shall apply to the extent relevant.
(b) Closing Net Liabilities. The Cash Consideration
shall be decreased by the amount, if any, by which the Closing Net Liabilities
exceed $1,150,000,000 and shall be increased by the amount, if any, by which the
Closing Net Liabilities are less than $1,150,000,000. For purposes of this
Agreement, "Closing Net Liabilities" means Adjustment Liabilities as of the
Adjustment Time, decreased by Adjustment Assets as of the Adjustment Time.
(1) Subject to the other provisions of this
Section 2.5(b), "Adjustment Assets" means, as of any date, the sum of: (A) cash
and cash equivalents, (B) prepaid expenses, deposits, and other current assets
(other than inventory); (C) Accounts Receivable and other receivables; (D) tax
refunds due to any of the FrontierVision Companies for any tax period ending
prior to the Adjustment Time; (E) the amount of Reimbursable Capital
Expenditures; (F) the amount of the cash consideration paid by the
FrontierVision Companies in connection with the systems exchange transactions,
if consummated prior to the Closing hereunder, with InterMedia Partners of
Kentucky L.P. referred to in Section 6.1 of FrontierVision's Disclosure
Schedule; (G) the aggregate amount of any cash investments made by the
FrontierVision Companies in The Maine Internet Works, Inc. and Landmark Net
Access, Inc. after the date of this Agreement and prior to the Adjustment Time
(provided that any such investments shall not be included unless Buyer consented
to such investments); (H) the amount of the net asset, if applicable, referred
to in Section 6.7(e); and (I) the amount of the insurance premiums paid by the
FrontierVision Companies prior to the Adjustment Time as contemplated by Section
6.13, in each case of clauses (A) through (D) computed for the FrontierVision
Companies on a consolidated basis and without duplication in accordance with
GAAP and in each case of clauses (E) through (I) as agreed above. Exhibit F
referred to below in Section 2.5(c) identifies and describes the "other
receivables" referenced in clause (C) above that would be included in Adjustment
Assets if the Closing
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Date were the date of this Agreement. The disclosure made pursuant to the
immediately preceding sentence is for informational purposes only.
(2) Subject to the other provisions of this
Section 2.5(b), "Adjustment Liabilities" means, as of any date, the sum of: (A)
accounts payable; (B) expenses of the FrontierVision Companies relating to the
consummation of the transactions contemplated by this Agreement, including fees
and expenses of attorneys, accountants, financial advisors and broker fees, if
such fees and expenses are paid by the FrontierVision Companies after the
Closing Date, but excluding any expenses that Buyer agrees to pay or is
obligated to pay pursuant to this Agreement; (C) accrued and unpaid expenses;
(D) subscriber's prepayments and deposits; (E) Tax payments due and payable by
any of the FrontierVision Companies to any Governmental Authority for all Tax
periods ending on or prior to the Adjustment Time; (F) all other FrontierVision
Liabilities as of the Adjustment Time; (G) subject to Section 6.18, $5,500,000
(which represents the amount by which the amount of rebuild/upgrade capital
expenditures of the FrontierVision Companies budgeted for the period beginning
October 23, 1998 and ending December 31, 1998 with respect to the Systems
acquired pursuant to the State Cable Acquisition Agreement exceeded the amount
of capital expenditures actually made by the FrontierVision Companies for such
period with respect to such Systems); (H) $2,000,000 (which represents the
amount by which the amount of rebuild/upgrade capital expenditures of the
FrontierVision Companies budgeted for the period beginning July 1, 1998 and
ending December 31, 1998 with respect to the Systems other than the Systems
acquired pursuant to the State Cable Acquisition Agreement exceeded the amount
of capital expenditures actually made by the FrontierVision Companies for such
period with respect to such other Systems); (I) the cash amount required to pay
off vehicle leases held by the FrontierVision Companies, if any; (J) the amount
as illustrated in Section 2.5 of FrontierVision's Disclosure Schedule as the
"Net Carriage Adjustment" and as updated for activity through the Closing Date;
(K) the amount of cash and other monetary purchase price consideration (net of
reasonable out-of-pocket transaction costs and expenses) received by the
FrontierVision Companies in connection with the sale of systems to Helicon
Partners I, L.P. consummated on January 7, 1999, plus the amount of cash and
other monetary purchase price consideration (net of reasonable out-of-pocket
transaction costs and expenses) received by the FrontierVision Companies in
connection with the sale of other systems and assets, including without
limitation, the sale of the Rockland, Maine office site real estate parcel
referenced in Section 3.8 of FrontierVision's Disclosure Schedule, if any,
consummated after the date of this Agreement and prior to the Closing Date; (L)
the amount of cash and other monetary purchase price consideration payable by
the FrontierVision Companies under the purchase contract for the Chillicothe,
Ohio real estate parcel referenced in Section 3.8 of FrontierVision's Disclosure
Schedule, but only to the extent to which such amount has not been paid by the
FrontierVision Companies prior to the Closing Date; (M) the FrontierVision
Companies' share of any out-of-pocket costs and expenses incurred in connection
with relocating the Luckey headend site referred to in Section 3.6 (Item A.2) of
FrontierVision's Disclosure Schedule, but only to the extent to which such costs
and expenses have not been paid by the FrontierVision Companies prior to the
Closing; (N) $3,937,500.00; (O) $200,000.00 (representing the amount payable in
connection with the matter disclosed in Section 3.6 (Item A.1) of
FrontierVision's Disclosure Schedule that is not covered by clause (F) above);
(P) the aggregate amount of any cash distributions received by the
FrontierVision Companies from The Maine Internet Works,
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Inc. and Landmark Net Access, Inc. after December 31, 1998 and prior to the
Adjustment Time; (Q) the amount paid by Buyer at the Closing with respect to
FVP's Executive Deferred Compensation Plan as contemplated by Section 6.9(f);
(R) the amount, if any, required to be included as an Adjustment Liability
pursuant to Section 6.4(e); (S) the amount of the net liability, if applicable,
referred to in Section 6.7(e); (T) $10,000,000, reduced by the aggregate amount
of capital expenditures actually made by the FrontierVision Companies during the
period beginning January 1, 1999 and ending on the Closing Date with respect to
the Waterville, Ohio and Bedford, Michigan Systems upgrade and rebuild projects
listed in Section 2.5 of FrontierVision's Disclosure Schedule; and (U) the
aggregate amount of the programming costs savings to the FrontierVision
Companies as a result of the Programming Supply Agreement with Buyer, in each
case of clauses (A) through (F) computed for the FrontierVision Companies on a
consolidated basis and without duplication in accordance with GAAP and in each
case of clauses (G) through (U) as agreed above. The parties agree that to the
extent any liability qualifies as an Adjustment Liability pursuant to more than
one clause of this paragraph, it shall be included only once and without
duplication.
(3) The amount of "Reimbursable Capital
Expenditures" equals the amount by which (A) the aggregate amount of capital
expenditures actually made by the FrontierVision Companies during the period
beginning January 1, 1999 and ending on the Closing Date with respect to any of
the Systems upgrade and rebuild projects listed in Section 2.5 of
FrontierVision's Disclosure Schedule (it being understood that in no event will
any capital expenditures made to complete the New Philadelphia retrofit, Bangor,
Amesbury, and Ironton/Ashland upgrade and rebuild projects to the point of
completion described in Section 2.5(D) of FrontierVision's Disclosure Schedule
or any capital expenditures made by the FrontierVision Companies with respect to
the Waterville, Ohio and Bedford, Michigan Systems upgrade and rebuild projects
listed in Section 2.5 of FrontierVision's Disclosure Schedule be included in the
amount for this clause (A)) exceeds (B) the amount, if any, by which (1) the
amount of Budgeted Other Capital Expenditures exceeds (2) the amount of Actual
Other Capital Expenditures; provided that if the amount in clause (B)(2) exceeds
the amount in clause (B)(1), the amount for clause (B) shall be zero. As used in
this subsection (3), the following terms have the following meanings:
(A) "Budgeted Other Capital
Expenditures" means the aggregate cumulative amount of capital expenditures
budgeted for all of the capital expenditures categories included in all
categories other than "Upgrade/Rebuild" on the Capital Expenditures Budget for
the period beginning January 1, 1999 and ending on the Closing Date (the amount
budgeted for the month in which the Closing occurs to be prorated in the event
the Closing Date occurs on a day other than the first or last day of a month).
(B) "Actual Other Capital Expenditures"
means the aggregate amount of capital expenditures actually made by the
FrontierVision Companies during the period beginning January 1, 1999 and ending
on the Closing Date with respect to all of the capital expenditure categories
included in all categories other than "Upgrade/Rebuild" on the Capital
Expenditures Budget, computed on a basis consistent with the accounting
methodologies used to compute the Budgeted Other Capital
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Expenditures, which in turn was prepared on a basis consistent with the
accounting procedures used to prepare the Financial Statements.
(C) "Capital Expenditures Budget" means
the monthly capital expenditures budget for the FrontierVision Companies for
calendar year 1999 that is included in Section 2.5 of FrontierVision's
Disclosure Schedule.
(4) To the extent consistent with GAAP, revenues
and expenses shall be treated as prepaid or accrued so as to reflect the
principle that revenues and expenses attributable to the period prior to the
Adjustment Time shall be for the account of Sellers and revenues and expenses
attributable to the period after the Adjustment Time shall be for the account of
Buyer.
(5) Deferred income Taxes of any FrontierVision
Company shall not be treated as Adjustment Assets or Adjustment Liabilities.
(6) To the extent any liability that would be an
Adjustment Liability but for the fact that all or any portion of such liability
is transferred by a FrontierVision Company (including Main Security
Surveillance, Inc. for this purpose) to and assumed by The Maine Internet Works,
Inc. or Landmark Net Access, Inc. prior to the Adjustment Time, such liability
shall be treated as an Adjustment Liability (but without duplication) in any
event.
(c) Example Calculation. Attached hereto as Exhibit F is
an example calculation of Closing Net Liabilities for illustrative purposes
only, prepared on the basis of good faith estimates of Adjustment Assets and
Adjustment Liabilities made by FVP as if the Closing Date were January 31, 1999.
FVP makes no representation and warranty to any other party with respect to the
accuracy of Exhibit F.
2.6 Payment at Closing.
No later than seven business days prior to the date scheduled for the
Closing, FVP shall prepare and deliver to Buyer a written report (the
"Preliminary Closing Statement") setting forth FVP's estimates of Closing Net
Liabilities and Closing Equivalent Subscribers, determined in accordance with
Section 2.5 and this Section 2.6. The Preliminary Closing Statement shall be
prepared by FVP in good faith and shall be certified by FVP to be its good faith
estimate of the Closing Net Liabilities and Closing Equivalent Subscribers as of
the date thereof. FVP shall make available to Buyer such information as Buyer
shall reasonably request relating to the matters set forth in the Preliminary
Closing Statement. If Buyer does not agree with any estimated amount set forth
in the Preliminary Closing Statement, then on or prior to the third business day
prior to the date scheduled for the Closing, Buyer may deliver to FVP a written
report setting forth in reasonable detail its good faith estimates (supported by
substantial evidence) of any amount set forth in the Preliminary Closing
Statement with which Buyer disagrees. In the case of any such estimated amount
as to which Buyer delivers its own estimate on or before such third business
day, FVP and Buyer will endeavor in good faith to agree prior to the Closing on
the
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appropriate amount of such estimate to be used for calculating the Closing Cash
Payment (as defined below). At the Closing Buyer shall pay to Sellers the amount
of the Cash Consideration, as adjusted at Closing on the basis of the
Preliminary Closing Statement, with any changes thereto mutually agreed to
between Buyer and FVP (the "Closing Cash Payment") in accordance with the
provisions of Section 8.3(a)(2). In the case of any such estimated amount as to
which Buyer delivers its own estimate on or before such third business day and
as to which FVP and Buyer do not so agree prior to the Closing, at the Closing
the difference (if any) between the amount of the Closing Cash Payment that
would be determined using the estimates set forth in FVP's Preliminary Closing
Statement (with any changes thereto mutually agreed to between Buyer and FVP)
and the amount of the Closing Cash Payment that would be determined using the
estimates of Buyer that remain in dispute will be transferred by Buyer to the
Escrow Agent, to be held in the Post-Closing Adjustments Escrow and disbursed in
accordance with the provisions of Section 2.7.
2.7 Post-Closing Payment of Cash Consideration Adjustments.
(a) Post-Closing Adjustments Escrow. At the Closing,
Buyer, Sellers and the Escrow Agent shall execute the Post-Closing Escrow
Agreement, in accordance with which, on the Closing Date, in addition to any
deposit to be made pursuant to Section 2.6, Buyer will deposit $5,000,000 with
the Escrow Agent to hold in escrow on behalf of Sellers solely in order to
provide a fund for any payment to which Buyer may be entitled in accordance with
Section 2.7(c) (such escrow, the "Post-Closing Adjustments Escrow," and such
$5,000,000, together with any amounts deposited in the Post-Closing Adjustments
Escrow pursuant to Section 2.6, and any earnings thereon, the "Post- Closing
Adjustment Funds"). None of the Post-Closing Adjustment Funds will be available
for any purpose other than as described above and as described in Section 2.9
and shall not be available to satisfy any obligation of Sellers under Article
10. The Post-Closing Adjustments Escrow will be administered, and the
Post-Closing Adjustment Funds will be held and disbursed, in accordance with the
provisions of this Section 2.7 and the Post-Closing Escrow Agreement. The
Closing Cash Payment less the amounts deposited in the Post-Closing Adjustments
Escrow pursuant to Sections 2.6 and this 2.7(a) shall be referred to as the "Net
Closing Cash Payment."
(b) Final Closing Statement. Within one hundred twenty
days after the Closing Date, Buyer shall prepare and deliver to the General
Partner a written report (the "Final Closing Statement") setting forth Buyer's
final estimates of Closing Net Liabilities and Closing Equivalent Subscribers,
determined in accordance with Section 2.5. The Final Closing Statement shall be
prepared by Buyer in good faith and shall be certified by Buyer to be, as of the
date prepared, its good faith estimate of the Closing Net Liabilities and
Closing Equivalent Subscribers. Buyer shall allow the General Partner and its
agents access at all reasonable times after the Closing Date to copies of the
books, records and accounts of the FrontierVision Companies and make available
to the General Partner such information as the General Partner reasonably
requests to allow the General Partner to examine the accuracy of the Final
Closing Statement. Within thirty days after the date that the Final Closing
Statement is delivered by Buyer to the General Partner, the General Partner
shall complete its examination thereof and may deliver to Buyer a written report
setting forth any proposed adjustments to any amounts set forth in the
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Final Closing Statement. If the General Partner notifies Buyer of its acceptance
of the amounts set forth in the Final Closing Statement, or if the General
Partner fails to deliver its report of any proposed adjustments within the
thirty day period specified in the preceding sentence, the amounts set forth in
the Final Closing Statement shall be conclusive, final, and binding on the
parties as of the last day of such thirty day period. Buyer and the General
Partner shall use good faith efforts to resolve any dispute involving the
amounts set forth in the Final Closing Statement. If the General Partner and
Buyer fail to agree on any amount set forth in the Final Closing Statement
within fifteen days after Buyer receives the General Partner's report pursuant
to this Section 2.7, then the General Partner shall retain a national
independent accounting firm which is approved by Buyer to make the final
determination, under the terms of this Agreement, of any amounts under dispute.
Buyer hereby approves the appointment of any of the "Big Five" accounting firms
selected by the General Partner so long as such firm does not then serve as the
independent auditor of any of the FrontierVision Companies or the General
Partner or Buyer. The selected accounting firm shall endeavor to resolve the
dispute as promptly as practicable and such firm's resolution of the dispute
shall be final and binding on the parties, and a judgment may be entered thereon
in any court of competent jurisdiction. All of the costs and expenses of the
selected accounting firm and its services rendered pursuant to this Section 2.7
shall be borne by Buyer, on the one hand, and Sellers, on the other hand, as
nearly as possible in the proportion to the amount by which the determination of
all matters related to such costs and expenses varies from the positions of
Buyer and the General Partner on all such matters. Any fees to be borne by
Sellers pursuant to the preceding sentence shall be paid out of the Post-Closing
Adjustment Funds in accordance with the provisions of Section 2.7(c).
(c) Payment of Cash Consideration Adjustments.
(1) Within three business days after the General
Partner delivers to Buyer its proposed adjustments to the Final Closing
Statement, the amounts not in dispute shall be determined and the Escrow Agent
shall release and pay over to Buyer and/or Sellers, as the case may be, the
appropriate amount of the Post-Closing Adjustment Funds not in dispute;
provided, however, that out of any amounts payable to Sellers an amount equal to
the greater of $25,000 or one percent (1%) of the amount in dispute shall
continue to be held in the Post-Closing Adjustments Escrow to cover (A) the
fees, if any, payable by Sellers pursuant to the last sentence of Section 2.7(b)
with respect to the final determination of the Cash Consideration and (B) the
fees payable by Sellers to the Escrow Agent pursuant to the Post-Closing Escrow
Agreement. For example, if (i) the Closing Cash Payment was determined to be
$600,000,000; (ii) the Net Closing Cash Payment was determined to be
$594,000,000; (iii) the Cash Consideration determined on the basis of Buyer's
Final Closing Statement was $595,000,000; and (iv) the Cash Consideration
determined on the basis of Buyer's Final Closing Statement (with any adjustments
proposed by the General Partner pursuant to Section 2.7(b)) was $597,000,000;
then $3,000,000 (i.e., $600,000,000 less $597,000,000) would be paid by the
Escrow Agent to Buyer, and $1,000,000 (i.e, $595,000,000 less $594,000,000) less
the amount of the reserve for Sellers' fees would be paid to Sellers. The
balance in the Post-Closing Adjustments Escrow would be held by the Escrow Agent
until the amount of the Cash Consideration is finally determined pursuant to
Section 2.7(b)) (whether by agreement of the parties or by final resolution of
any accounting firm).
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Upon and within three business days after such final determination, the Escrow
Agent shall release and pay over to Buyer and/or Sellers, as the case may be,
the appropriate amount of the Post-Closing Adjustment Funds based upon such
final determination; provided, however, that any payments to be made to Sellers
shall be reduced by the fees and expenses to be paid by Sellers if not already
reserved. To the extent there are not sufficient monies in the Post-Closing
Adjustments Escrow to distribute the amount determined to be payable to Sellers
pursuant to this Section 2.7, Buyer will pay to Sellers in cash the amount of
such deficiency within three business days of the date of such determination. To
the extent there are not sufficient monies in the Post-Closing Adjustments
Escrow to distribute the amounts determined to be payable to Buyer pursuant to
this Section 2.7, the amount of such deficiency will be paid to Buyer from the
Post-Closing Indemnity Escrow to the extent of any Post-Closing Indemnity
Property therein within three business days of the date of such determination.
(2) If Buyer has not delivered the Final Closing
Statement to the General Partner within twenty days after the end of the 120-day
period referred to in Section 2.7(b), the Escrow Agent shall release and pay
over to Sellers all of the Post-Closing Adjustment Funds.
(3) If the General Partner has not delivered its
report of any proposed adjustments to the Final Closing Statement within the
thirty day period following its receipt of the Final Closing Statement, the
Escrow Agent shall release and pay out the Post-Closing Adjustment Funds based
upon the Final Closing Statement delivered by Buyer.
(4) Notwithstanding the above provisions, if
Buyer has provided notice of a claim to the General Partner pursuant to Section
2.9(b), a portion of the Post-Closing Adjustment Funds sufficient to reimburse
Buyer for any such claim and to pay Sellers' share of any fees and expenses
under Section 2.9(b) shall be retained in the Post-Closing Adjustments Escrow
and shall not be distributed until such claims are finally resolved in
accordance with Section 2.9(b).
(5) All earnings attributable to each portion of
the Post-Closing Adjustment Funds shall be paid to the party entitled to such
portion of the Post-Closing Adjustment Funds in accordance with this Section 2.7
or Section 2.9 to the extent applicable (except all earnings attributable to the
portion of the Post-Closing Adjustment Funds, if any, used to pay the Sellers'
share of any fees and expenses payable out of the Post-Closing Adjustment Funds
pursuant to said Sections shall be paid to Sellers).
(6) Any amount which becomes payable pursuant to
this Section 2.7 will constitute an adjustment to the Cash Consideration for all
purposes.
(7) All payments to be made to Sellers under
this Section 2.7 shall be paid by wire or accounts transfer of immediately
available funds to one or more accounts designated by Sellers by written notice
to the Escrow Agent or Buyer, as applicable.
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(8) All payments to be made to Buyer under this
Section 2.7 shall be paid by wire or accounts transfer of immediately available
funds to one or more accounts designated by Buyer by written notice to the
Escrow Agent or Sellers, as applicable.
(9) No later than the close of business on the
first business day after it is determined in accordance with this Section 2.7
and Section 2.9 that Buyer and/or Sellers are entitled to all or any portion of
the Post-Closing Adjustment Funds, the General Partner and Buyer will execute
and deliver to the Escrow Agent joint written instructions containing
appropriate disbursement instructions consistent with this Section 2.7 and
Section 2.9 and the Post-Closing Escrow Agreement.
2.8 Seller Specific Liabilities.
(a) If it is determined at the Closing (based upon a good
faith showing by Buyer supported by substantial evidence and that is agreed to
by the SPC Seller that owns the Capital Stock of the SPC in question) that any
of the SPCs has any indebtedness or liability (other than any indebtedness or
liability disclosed in Section 4.3 or in Section 4.3 of FrontierVision's
Disclosure Schedule) that will not otherwise be discharged at the Closing, then
the amount of Cash Consideration payable to such SPC Seller shall be decreased
by the dollar amount of such indebtedness or liability as agreed to by such SPC
Seller and Buyer. If it is determined at the Closing (based upon a good faith
showing by Buyer supported by substantial evidence and that is agreed to by the
Seller in question) that any of the Purchased Interests held by a Seller is
subject to an Encumbrance and that will not otherwise be discharged and released
at the Closing, then the amount of Cash Consideration payable to such Seller
shall be decreased by the dollar amount necessary to discharge and release such
Encumbrance as agreed to by such Seller and Buyer. Buyer agrees to notify the
appropriate Seller promptly upon becoming aware of any matter that could give
rise to a claim under this Section 2.8 that was not disclosed in this Agreement
or in FrontierVision's Disclosure Schedule. If such Seller and Buyer cannot
agree on the appropriate amount of the decrease in Cash Consideration payable to
such Seller by the time scheduled for the Closing, then Buyer shall deposit a
portion of the Closing Cash Payment equal to the amount of Buyer's claim
(together with an amount equal to the greater of $25,000 or one percent (1%) of
the amount of Buyer's claim to cover the fees, if any, payable by such Seller
pursuant to Section 2.8(b) with respect to an accounting firm's final
determination) with the Escrow Agent to hold in a separate escrow on behalf of
such Seller solely in order to provide a fund for any payment to which Buyer may
be entitled in accordance with this Section 2.8 (each such escrow, a
"Post-Closing Section 2.8 Escrow," and such deposit, together with any earnings
thereon, the "Post-Closing Section 2.8 Funds"), and the amount of the Closing
Cash Payment payable to such Seller shall be decreased by the amount so
deposited. None of the Post-Closing Section 2.8 Funds will be available for any
purpose other than as described above and shall not be available to satisfy any
obligation of Sellers under Article 10. The Post-Closing Section 2.8 Escrow will
be administered, and the Post-Closing Section 2.8 Funds will be held and
disbursed, in accordance with the provisions of this Section 2.8 and the
Post-Closing Escrow Agreement.
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(b) After the Closing, Buyer and such Seller shall use
good faith efforts to resolve any dispute involving the validity and amount of
any claim made by Buyer pursuant to this Section 2.8. If such Seller and Buyer
fail to agree on the validity and amount of any such claim within fifteen days
after the Closing, then such Seller shall retain a national independent
accounting firm which is approved by Buyer to make the final determination,
under the terms of this Agreement, regarding the validity and amount of any such
claim. Buyer hereby approves the appointment of any of the "Big Five" accounting
firms selected by such Seller so long as such firm does not then serve as the
independent auditor of any of the FrontierVision Companies or the General
Partner or Buyer. The selected accounting firm shall endeavor to resolve the
dispute as promptly as practicable and such firm's resolution of the dispute
shall be final and binding on the parties, and a judgment may be entered thereon
in any court of competent jurisdiction. All of the costs and expenses of the
selected accounting firm and its services rendered pursuant to this Section 2.8
shall be borne by Buyer, on the one hand, and such Seller, on the other hand, as
nearly as possible in the proportion to the amount by which the determination of
all matters related to such costs and expenses varies from the positions of
Buyer and such Seller on all such matters.
(c) Within three business days after any matter governed
by this Section 2.8 is finally resolved (whether by agreement of the parties or
by final resolution of an accounting firm), the amount of Post-Closing Section
2.8 Funds payable to Buyer and/or such Seller shall be released and paid over to
Buyer and/or such Seller in accordance with such final resolution. To the extent
there are not sufficient monies in the Post-Closing Section 2.8 Escrow to
distribute the amounts determined to be payable to Buyer pursuant to this
Section 2.8, the amount of such deficiency will be paid to Buyer from the
Post-Closing Indemnity Escrow to the extent of any Post-Closing Indemnity
Property therein within three business days of the date of such determination.
All payments to be made to such Seller or Buyer, as the case may be, under this
Section 2.8 shall be paid by wire or accounts transfer of immediately available
funds to one or more accounts designated by such Seller or Buyer, as the case
may be, by written notice to the Escrow Agent. No later than the close of
business on the first business day after it is determined in accordance with
this Section 2.8 that Buyer and/or a Seller is entitled to all or any portion of
the Post-Closing Section 2.8 Funds being held in a Post-Closing Section 2.8
Escrow for the benefit of Buyer and such Seller, such Seller and Buyer will
execute and deliver to the Escrow Agent joint written instructions containing
appropriate disbursement instructions consistent with this Section 2.8 and the
Post-Closing Escrow Agreement.
(d) All earnings attributable to each portion of the
Post-Closing Section 2.8 Funds shall be paid to the party entitled to such
portion of the Post-Closing 2.8 Funds in accordance with this Section 2.8
(except all earnings attributable to the portion of the Post-Closing Section 2.8
Funds, if any, used to pay a Seller's share of any fees and expenses payable out
of the Post-Closing Section 2.8 Funds pursuant to this Section 2.8 shall be paid
to such Seller).
(e) Any amount which becomes payable pursuant to this
Section 2.8 will constitute an adjustment to the Cash Consideration for all
purposes.
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2.9 Additional Cash Consideration Adjustments.
(a) If, at any time prior to the Closing, Buyer becomes
aware of any fact, event,
circumstance, or action, the existence or occurrence of which, if not corrected
or remedied prior to the Closing, would, in Buyer's good faith and reasonable
belief, and supported by substantial evidence, require the Sellers to indemnify
Buyer pursuant to Section 10.2(a) as a result of an untrue representation or a
breach of warranty by FVP contained in Sections 3.9 (with respect to any
rearrangements or rehabilitations of cable trunk only as specified in the
penultimate sentence of Section 3.9), 3.11(g) (with respect to payment of
copyright fees only), 3.11(k), 3.11(l) (with respect to payment of pole
attachment fees only), or 3.14 or as a result of the existence of an Encumbrance
on the Assets of the FrontierVision Companies that is not a Permitted
Encumbrance, Buyer shall immediately give notice to FVP of such fact, event,
circumstance or action. If Buyer desires to seek an adjustment to the Cash
Consideration in respect of such matter, Buyer shall so state in its notice and
specify in reasonable detail the factual basis for the claim and the amount
thereof. Buyer shall certify in such notice that the basis and amount of the
claim were determined in good faith by Buyer and such claim must be supported by
substantial evidence. Buyer agrees to make available to FVP and its authorized
representatives the information relied upon by Buyer to substantiate the claim.
If the matter is cured prior to the Closing, Buyer shall not be entitled to any
adjustment to the Cash Consideration pursuant to this Section 2.9 in respect of
such matter. If Buyer and FVP agree at or prior to the Closing to the validity
and amount of such claim, the Cash Consideration shall be reduced by such
amount. If Buyer and FVP do not agree to the validity or the amount of the claim
at or prior to the Closing, then Buyer shall deposit a portion of the Closing
Cash Payment equal to the amount of Buyer's claim with the Escrow Agent to hold
in escrow on behalf of Sellers solely in order to provide a fund for any payment
to which Buyer may be entitled in respect of a claim made under this Section
2.9(a) (such escrow, the "Post-Closing Section 2.9 Escrow," and such deposit,
together with any earnings thereon, the "Post-Closing Section 2.9 Funds"). None
of the Post-Closing Section 2.9 Funds will be available for any purpose other
than as described above and shall not be available to satisfy any obligation of
Sellers under Article 10. The Post-Closing Section 2.9 Escrow will be
administered, and the Post-Closing Section 2.9 Funds will be held and disbursed,
in accordance with the provisions of this Section 2.9 and the Post-Closing
Escrow Agreement.
(b) If, at any time after the Closing and prior to end of
the 120-day period following the Closing, Buyer becomes aware of any fact,
event, circumstance, or action that existed or occurred prior to the Closing
and, because it was not corrected or remedied prior to the Closing, requires, in
Buyer's good faith and reasonable belief, and supported by substantial evidence,
the Sellers to indemnify Buyer pursuant to Section 10.2(a) as a result of an
untrue representation or a breach of warranty by FVP contained in Sections 3.9
(with respect to any rearrangements or rehabilitations of cable trunk only as
specified in the penultimate sentence of Section 3.9), 3.11(g) (with respect to
payment of copyright fees only), 3.11(k), 3.11(l) (with respect to payment of
pole attachment fees only), or 3.14 or as a result of the existence of an
Encumbrance on the Assets of the FrontierVision Companies that is not a
Permitted Encumbrance, and Buyer desires to seek an adjustment to the Cash
Consideration in respect of such matter, Buyer shall promptly give notice to the
General Partner of such fact, event, circumstance or action and specify in
reasonable detail the factual basis for the claim and the amount thereof. Buyer
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shall certify in such notice that the basis and amount of the claim were
determined in good faith by Buyer and such claim must be supported by
substantial evidence. An amount of Post-Closing Adjustment Funds sufficient to
reimburse Buyer for any claim made in accordance with this Section 2.9(b) and to
pay Sellers' share of any fees and expenses under Section 2.9 shall be retained
in the Post- Closing Adjustments Escrow and shall not be distributed until such
claim is finally resolved in accordance with this Section 2.9. Buyer agrees to
make available to FVP and its authorized representatives the information relied
upon by Buyer to substantiate the claim. If Buyer and FVP agree to the validity
and amount of such claim, the Cash Consideration shall be reduced by such amount
and a portion of the Post-Closing Adjustment Funds equal to such amount shall be
released and paid over to Buyer.
(c) Buyer and the General Partner shall use good faith
efforts to resolve any dispute
involving the validity and amount of any claim made by Buyer pursuant to this
Section 2.9. If the General Partner and Buyer fail to agree on the validity and
amount of any such claim within fifteen days after the Closing (with respect to
a claim made pursuant to Section 2.9(a)) or the date the claim is made by Buyer
(with respect to a claim made pursuant to Section 2.9(b)), then the General
Partner shall retain a national independent accounting firm which is approved by
Buyer to make the final determination, under the terms of this Agreement,
regarding the validity and amount of any such claim. The selection of an
accounting firm, the resolution of a dispute submitted to an accounting firm,
and responsibility for the resulting costs and expenses with respect to any
claims subject to this Section 2.9 shall be governed by the provisions of
Section 2.7(b) that govern such matters.
(d) If the General Partner or Buyer believes any such
claim is not an appropriate
matter to be determined by an accounting firm, the General Partner or Buyer may
submit the matter to binding arbitration under the Commercial Arbitration Rules
of the American Arbitration Association. Such arbitration shall take place in
Washington, D.C. unless the parties select a different site by mutual agreement.
All of the costs and expenses of arbitration pursuant to this Section 2.9 shall
be borne by Buyer, on the one hand, and Sellers, on the other hand, as nearly as
possible in the proportion to the amount by which the determination of all
matters related to such costs and expenses varies from the positions of Buyer
and the General Partner on all such matters, unless the arbitrator finds that
the position asserted by either party is without merit, in which case such party
shall bear the entire expenses of arbitration, including reasonable attorney's
fees of the other party. The arbitration determination shall be final and
binding on the parties, and a judgment may be entered thereon in any court of
competent jurisdiction.
(e) Within three business days after any matter governed
by this Section 2.9 is finally
resolved (whether by agreement of the parties, by final resolution of an
accounting firm, or by final resolution by an arbitrator), the amount of
Post-Closing Section 2.9 Funds or Post-Closing Adjustment Funds, as applicable,
payable to Buyer, on the one hand, and/or Sellers, on the other hand, shall be
released and paid over to Buyer and/or Sellers in accordance with such final
resolution. To the extent there are not sufficient monies in the Post-Closing
Section 2.9 Escrow or the Post-Closing Adjustments Escrow, as applicable, to
distribute the amounts determined to be payable to Buyer pursuant to this
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Section 2.9, the amount of such deficiency will be paid to Buyer from the
Post-Closing Indemnity Escrow to the extent of any Post-Closing Indemnity
Property therein within three business days of the date of such determination.
All payments to be made to Sellers or Buyer, as the case may be, under this
Section 2.9 shall be paid by wire or accounts transfer of immediately available
funds to one or more accounts designated by Sellers or Buyer, as the case may
be, by written notice to the Escrow Agent. No later than the close of business
on the first business day after it is determined in accordance with this Section
2.9 that Buyer and/or Sellers are entitled to all or any portion of the
Post-Closing Section 2.9 Funds and/or Post-Closing Adjustment Funds, the General
Partner and Buyer will execute and deliver to the Escrow Agent joint written
instructions containing appropriate disbursement instructions consistent with
this Section 2.9 and the Post-Closing Escrow Agreement.
(f) All earnings attributable to each portion of the
Post-Closing Section 2.9 Funds
shall be paid to the party entitled to such portion of the Post-Closing Section
2.9 Funds in accordance with this Section 2.9 (except all earnings attributable
to the portion of the Post-Closing Section 2.9 Funds, if any, used to pay the
Sellers' share of any fees and expenses payable out of the Post-Closing Section
2.9 Funds pursuant to this Section 2.9 shall be paid to the Sellers).
(g) Any amount which becomes payable pursuant to this
Section 2.9 will constitute
an adjustment to the Cash Consideration for all purposes.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FVP
Subject to any provisions of this Agreement limiting, qualifying or
excluding any of the representations or warranties made herein, FVP represents
and warrants to Buyer as set forth in this Article 3.
3.1 Organization and Authority of FVP.
FVP is a limited partnership duly formed, validly existing, and in good
standing under the laws of the State of Delaware. FVP has the requisite
partnership power and authority to own, lease, and operate its properties, to
carry on its business in the places where such properties are now owned, leased,
or operated and such business is now conducted, and to execute, deliver and
perform this Agreement and the other Transaction Documents to which FVP is a
party according to their respective terms.
3.2 Authorization and Binding Obligation.
The execution, delivery, and performance by FVP of this Agreement and
the other Transaction Documents to which FVP is a party have been duly
authorized by all necessary partnership action on the part of FVP. This
Agreement and the other Transaction Documents to which FVP is a party have
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been duly executed and delivered by FVP (or, in the case of Transaction
Documents to be executed and delivered at Closing, when executed and delivered
will be duly executed and delivered) and constitute (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will constitute) the legal, valid, and binding obligation of FVP,
enforceable against FVP in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Documents may be
limited by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or by judicial discretion in the enforcement of equitable remedies,
and as rights to indemnification may be limited by federal or state securities
laws or the public policies embodied therein.
3.3 Organization and Ownership of FrontierVision Companies.
(a) Section 3.3 of FrontierVision's Disclosure Schedule
sets forth the name of each
FrontierVision Company, including the jurisdiction of incorporation or formation
of each, as the case may be. Each FrontierVision Company that is a corporation
is a corporation duly incorporated, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. Each FrontierVision Company
that is a limited partnership is a limited partnership duly formed, validly
existing, and in good standing under the laws of the jurisdiction of its
formation. Each FrontierVision Company that is a limited liability company is a
limited liability company duly formed, validly existing, and in good standing
under the laws of the jurisdiction of its formation. Each FrontierVision Company
is duly qualified and in good standing as a foreign corporation, limited
partnership, or limited liability company, as the case may be, in each
jurisdiction listed in Section 3.3 of FrontierVision's Disclosure Schedule,
which are all jurisdictions in which such qualification is required, except
where such failure to be so qualified would not have a material adverse effect
on the conduct of such FrontierVision Company's business. Except as disclosed in
Section 3.3 of FrontierVision's Disclosure Schedule, no FrontierVision Company,
directly or indirectly, owns, of record or beneficially, any outstanding
securities or other interest in any Person (each such Person, an "Investment
Person") or has the right or obligation to acquire, any outstanding securities
or other interest in any Person. The FrontierVision Company that owns the
Capital Stock of each such Investment Person owns such Capital Stock free and
clear of all Encumbrances.
(b) Section 3.3 of FrontierVision's Disclosure Schedule
sets forth the authorized,
issued and outstanding Capital Stock of FVP and each other FrontierVision
Company and the record and beneficial owner of the issued and outstanding
Capital Stock of each of them. All of such issued and outstanding Capital Stock
of the FrontierVision Companies has been duly authorized, validly issued, and
has not been issued in violation of any federal or state securities laws. Except
as set forth in Section 3.3 of FrontierVision's Disclosure Schedule, the owner
of the Capital Stock of each FrontierVision Company owns such Capital Stock free
and clear of all Encumbrances (except that no representation is made in this
Article 3 as to any partnership interests in FVP held by any Seller or any SPC
or as to any Capital Stock of any SPC held by any SPC Seller). Except as
disclosed in Section 3.3 of FrontierVision's Disclosure Schedule, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which any
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FrontierVision Company is a party or by which any of them is bound obligating
such FrontierVision Company to issue, deliver or sell, or cause to be issued,
delivered or sold, any additional Capital Stock of such FrontierVision Company
or obligating such FrontierVision Company to issue, grant, extend or enter into
any such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. FVP has delivered to Buyer complete and correct
copies of the Charter Documents of each FrontierVision Company as in effect on
the date hereof. Section 3.3 of FrontierVision's Disclosure Schedule describes
the Capital Stock or other investment interests held and beneficially owned by
the FrontierVision Companies with respect to the Investment Persons.
3.4 Absence of Conflicting Agreements; Consents.
Except for the expiration or termination of any applicable waiting
period under the HSR Act, the filing by FVP, any other FrontierVision Company,
and/or the Sellers with the SEC of any reports required to be filed in
connection with the consummation of the transactions contemplated hereby, or as
set forth in Section 3.4 of FrontierVision's Disclosure Schedule, the execution,
delivery and performance by FVP of this Agreement and the other Transaction
Documents to which FVP is a party (with or without the giving of notice, the
lapse of time, or both): (A) do not require the Consent of, notice to, or filing
with any Governmental Authority or any other Person under any Franchise, FCC
License or Material Contract; (B) will not conflict with any provision of the
Charter Documents of FVP or any other FrontierVision Company, each as currently
in effect; (C) assuming receipt of all Consents, will not conflict with, result
in a breach of, or constitute a default under any Legal Requirement to which FVP
or any of the other FrontierVision Companies is bound; (D) assuming receipt of
all Consents, will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of any Franchise, FCC
License, or Material Contract; and (E) will not result in the creation of any
Encumbrance upon the Assets. Notwithstanding the foregoing, FVP does not make
any representation or warranty regarding any of the foregoing that may result
from the specific legal or regulatory status of Buyer or as a result of any
other facts that specifically relate to the business or activities in which
Buyer is or proposes to be engaged other than the cable television business.
3.5 Financial Statements.
(a) FVP has furnished Buyer with true and complete copies
of the audited financial
statements listed in Section 3.5 of FrontierVision's Disclosure Schedule
(collectively, the "Audited Financial Statements") and of the unaudited
financial statements listed in Section 3.5 of FrontierVision's Disclosure
Schedule (collectively, the "Unaudited Financial Statements," and collectively
with the Audited Financial Statements, the "Financial Statements"), and such
Financial Statements are by this reference incorporated into and deemed a part
of FrontierVision's Disclosure Schedule.
(b) Except as disclosed in Section 3.5 of
FrontierVision's Disclosure Schedule and except, in the case of the Unaudited
Financial Statements, for the omission of footnotes and changes resulting from
customary and recurring year-end adjustments, the Financial Statements: (1) have
been
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prepared from the books and records of the FrontierVision Companies to which
they relate, with no material difference between such Financial Statements and
the financial records maintained, and the accounting methods applied, by the
FrontierVision Companies for tax purposes; (2) have been prepared in accordance
with GAAP consistently applied and maintained throughout the periods indicated
(except as indicated in the notes thereto); and (3) present fairly in all
material respects the financial condition of the FrontierVision Companies to
which they relate as at their respective dates and the results of operations for
the periods then ended.
3.6 Absence of Undisclosed Liabilities.
None of the FrontierVision Companies has any indebtedness, liability,
or obligation except for: (a) indebtedness, liabilities and obligations that are
reflected or reserved against in the latest balance sheet of such FrontierVision
Company included in the Financial Statements; (b) indebtedness, liabilities and
obligations under the Debt Documents, Contracts, Franchises, Licenses, or
Employee Plans; (c) indebtedness, liabilities and obligations that were incurred
after the date of the latest balance sheet of such FrontierVision Company
included in the Financial Statements either in the ordinary course of business
or in compliance with the covenants of FVP set forth in Section 6.1 or that (to
the extent not discharged prior to the Closing) will be included as Adjustment
Liabilities in the computation of Closing Net Liabilities (none of which
indebtedness, liabilities or obligations results from a claim or lawsuit
relating to a breach of contract, breach of warranty, tort or infringement that,
if adversely determined, would have a material adverse effect on the business,
financial condition, assets or liabilities of the FrontierVision Companies,
taken as a whole; and (d) contingent asserted and unasserted liabilities and
obligations set forth in Section 3.6 of FrontierVision's Disclosure Schedule.
3.7 Absence of Certain Changes.
(a) Since December 31, 1997, except as disclosed in the
Quarterly Reports on Form
10-Q of FrontierVision Operating Partners, L.P. for any of the quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998, or as disclosed in the
Quarterly Reports on Form 10-Q of FrontierVision Holdings, L.P. for any of the
quarters ended March 31, 1998, June 30, 1998 and September 30, 1998, or as
disclosed in any public document filed by FrontierVision Operating Partners,
L.P. or FrontierVision Holdings, L.P. with the SEC after September 30, 1998, or
as disclosed in Section 3.7 of FrontierVision's Disclosure Schedule and except
for matters occurring after the date hereof that are permitted by the provisions
of this Agreement or consented to by Buyer, no FrontierVision Company has: (1)
made any sale, assignment, lease, or other transfer of assets other than in the
ordinary course of business with suitable replacements being obtained therefor
(unless such assets were obsolete); or (2) issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money other than pursuant to the Debt Documents listed in Section 1.1
of FrontierVision's Disclosure Schedule.
(b) Since December 31, 1998, except as disclosed in
Section 3.7 of FrontierVision's Disclosure Schedule and except for matters
occurring after the date of this Agreement that are permitted
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by the provisions of this Agreement or consented to by Buyer, no FrontierVision
Company has made or promised any material increase in compensation payable or to
become payable to any of the employees (including executive officers) of any
FrontierVision Company other than in the ordinary course of business or as
contemplated under any employment arrangement currently in effect.
3.8 Franchises, Licenses, Material Contracts.
Section 3.8 of FrontierVision's Disclosure Schedule contains a list of
the Franchises (including the Franchising Authority which granted each Franchise
and the stated expiration date of each Franchise), FCC Licenses and Material
Contracts in effect on the date hereof, which list is true, correct and complete
in all material respects. Without material exception and subject to the last
sentence of this Section 3.8, the Franchises and the Licenses constitute all of
the authorizations of Governmental Authorities necessary or required for the
construction, maintenance and operations of the Systems as currently conducted.
FVP has delivered to Buyer true and complete copies of all Franchises, FCC
Licenses and Material Contracts as in effect on the date hereof. Subject to the
last sentence of this Section 3.8, the Franchises, FCC Licenses and Material
Contracts are in full force and effect (subject to expiration at the end of
their current term) and are valid, binding and enforceable upon the
FrontierVision Company that is a party thereto and, to FVP's knowledge, the
other parties thereto in accordance with their terms, except to the extent such
enforceability may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies. Except as disclosed in Section 3.8 of
FrontierVision's Disclosure Schedule, the FrontierVision Companies are in
material compliance with the terms of the Franchises, Licenses and Material
Contracts, and as of the date of this Agreement none of the FrontierVision
Companies has received any written notice (or to FVP's knowledge after due
inquiry of the regional managers of the Systems, oral notice) from a Franchising
Authority to the effect that any of the FrontierVision Companies are not
currently in material compliance with the terms of the Franchise granted by such
Franchising Authority. Except as set forth in Section 3.4 or 3.8 of
FrontierVision's Disclosure Schedule, none of the Franchises grants to any
Franchising Authority or any other Person any right of first refusal or right to
purchase the assets of any System that would be triggered by the consummation of
the purchase and sale of the Purchased Interests. Except as set forth in Section
3.8 of FrontierVision's Disclosure Schedule, a valid request for renewal has
been timely filed under Section 626(a) of the Cable Act with the proper
Franchising Authority with respect to each Franchise in respect of which the
statutory time period for making such filing has expired. Subject to the
provisions of Sections 6.1 and 6.4, FVP shall not have any obligation to renew
or extend any Franchises, Licenses or Material Contracts as a condition to
Buyer's obligations under this Agreement.
3.9 Title to and Condition of Real Property and Tangible Personal
Property.
Section 3.9 of FrontierVision's Disclosure Schedule lists all Real
Property parcels owned in fee by any of the FrontierVision Companies as of the
date of this Agreement (excluding easements, rights-of-way, and similar
authorizations) and describes the current use thereof. Except as disclosed in
Section 3.9 of FrontierVision's Disclosure Schedule, a copy of each deed
pursuant to which any of the
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FrontierVision Companies acquired a fee estate in a Real Property parcel that is
currently owned by it (including any title insurance policies issued to such
FrontierVision Company that are related to such parcels) have been delivered to
Buyer by FVP. Section 3.9 of FrontierVision's Disclosure Schedule lists the Real
Property leased by any of the FrontierVision Companies as of the date of this
Agreement and describes the current use thereof and indicates the stated
expiration date of the current term of such leases. Except as disclosed in
Section 3.9 of FrontierVision's Disclosure Schedule: (a) the FrontierVision
Company that owns a fee estate in a Real Property parcel has good and marketable
title thereto; (b) the FrontierVision Company that owns any material item of
Tangible Personal Property has good and valid title thereto; (c) the
FrontierVision Company that leases Real Property pursuant to any of the Material
Leases has a valid leasehold interest therein (subject to expiration of such
Material Lease in accordance with its terms); and (d) the FrontierVision Company
that leases any material item of Tangible Personal Property has a valid
leasehold interest therein (subject to expiration of such lease in accordance
with its terms), in each case of (a), (b), (c) and (d) above, free and clear of
all Encumbrances other than Permitted Encumbrances. The FrontierVision Companies
own, lease or otherwise have rights to use all real property (excluding
easements, rights-of-way and similar authorizations) and tangible personal
property necessary to operate the Systems as presently conducted by the
FrontierVision Companies in all material respects. Notwithstanding the express
language of this Section 3.9 or as may otherwise be provided in this Agreement,
no representation or warranty is being made as to title to the internal wiring,
house drops, and unrecorded dwelling-unit easements, rights of entry or
rights-of-way held or used by the FrontierVision Companies. Except for such
rearrangements or rehabilitations of a System's cable trunk as may be necessary
in the ordinary course of business for that System taken as a whole, the
FrontierVision Companies have no obligation to rearrange or rehabilitate any of
such cable trunk. Buyer acknowledges that, except as expressly warranted in this
Section 3.9 and Sections 3.14, 3.15 and 3.16, all Real Property, all
improvements thereon, and all other Tangible Personal Property are being sold or
assigned "as is-where is" and Buyer shall not be entitled to make any claim
against FVP or Sellers arising out of or relating to the condition thereof.
3.10 Intangibles.
Section 3.10 of FrontierVision's Disclosure Schedule contains a
description of the material Intangibles (exclusive of those required to be
listed in Section 3.8 of FrontierVision's Disclosure Schedule), that are owned
or leased by any of the FrontierVision Companies and that are necessary for the
conduct of the business or operations of the Systems. To FVP's knowledge, except
as to potential copyright liability arising from the performance, exhibition or
carriage of any music on the Systems or as disclosed in Section 3.10 of
FrontierVision's Disclosure Schedule, it is not infringing upon any trademarks,
trade names, copyrights or similar intellectual property rights of others.
3.11 Information Regarding the Systems.
(a) Subscribers. Section 3.11 of FrontierVision's
Disclosure Schedule sets forth the approximate number of Equivalent Subscribers
as of the date indicated therein (including the
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approximate number of Equivalent Subscribers served in each Franchise Area and
served by each headend, in each case as of the date indicated therein).
(b) Operating Revenue. Section 3.11 of FrontierVision's
Disclosure Schedule sets
forth the approximate "Operating Revenue" of the Systems on a consolidated basis
as of the date indicated therein, as "Operating Revenue" is defined therein.
(c) Certain Systems Information. Section 3.11 of
FrontierVision's Disclosure
Schedule sets forth the approximate number of plant miles for each System, the
approximate bandwidth capability of each System, the channel lineup for each
System, and the monthly rates charged for each class of service offered by each
System, which information is true and correct in all material respects, in each
case as of the applicable dates specified therein and subject to any
qualifications set forth therein.
(d) Franchise and FCC Matters. All material reports
required to be filed by any of
the FrontierVision Companies with any of the Franchising Authorities or the FCC
have been duly filed and were materially correct when filed. The FrontierVision
Companies are permitted under all applicable Franchises and FCC Regulations to
distribute the television broadcast signals distributed by the Systems (except
for any inadvertent failure by the Systems to comply with the FCC's
nonduplication and syndex rules) and to utilize all carrier frequencies
generated by the operations of the Systems, and are licensed in all material
respects to operate all the facilities required by Legal Requirements to be
licensed (except where the failure to be so authorized or licensed would not
materially impair the operation of the Systems as presently conducted).
(e) Request for Signal Carriage. Except for
nonduplication and blackout notices
received in the ordinary course of business, none of the FrontierVision
Companies has received any FCC order requiring any System to carry a television
broadcast signal or to terminate carriage of a television broadcast signal with
which it has not complied, and to FVP's knowledge, except as disclosed in
Section 3.11 of FrontierVision's Disclosure Schedule, the FrontierVision
Companies have complied with all written and bona fide requests or demands
received from television broadcast stations to carry or to terminate carriage of
a television broadcast signal on a System.
(f) Rate Regulatory Matters. Section 3.11 of
FrontierVision's Disclosure Schedule
sets forth a list of all Governmental Authorities that are certified to regulate
rates of the Systems pursuant to the Cable Act and FCC Regulations as of the
date of this Agreement and all Franchise Areas in which a complaint regarding
rates has been filed with the FCC as of November 12, 1998 (other than those that
have been rejected by the FCC or have been withdrawn). As of the date of this
Agreement, none of the FrontierVision Companies has received any written notice
from any Governmental Authority that it has any obligation or liability to
refund to subscribers of the Systems any portion of the revenue received by such
FrontierVision Company from subscribers of the Systems (excluding with respect
to deposits for converters, encoders, decoders and related equipment and other
prepaid items). Buyer acknowledges that, except as expressly warranted in this
Section 3.11(f), FVP is not making any
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representation or warranty regarding any Rate Regulatory Matter and, except as
expressly provided in Section 10.2(c), Buyer shall not be entitled to make any
claim against FVP or Sellers arising out of or relating to any Rate Regulatory
Matter.
(g) Copyright. To the extent necessary to operate the
Systems, the FrontierVision
Companies are entitled to hold and do hold the compulsory copyright license
described in Section 111 of the Copyright Act, which compulsory copyright
license is in full force and effect and has not been revoked, canceled,
encumbered or adversely affected in any material respect except relating to any
immaterial disputes which may arise after the date hereof with respect to
copyright fees payable with respect to the operation by the FrontierVision
Companies of the Systems. The FrontierVision Companies have paid all material
copyright fees that are due and payable with respect to the operation by the
FrontierVision Companies of the Systems (or have accrued a liability with
respect thereto which will be included as an Adjustment Liability in the
computation of Closing Net Liabilities) and have set aside an adequate reserve
on their books for the payment of all copyright fees that are required to be
accrued but are not yet due and payable.
(h) Insurance. The Systems and Assets are insured
against claims, loss or damage
in amounts generally customary in the cable television industry and consistent
with the FrontierVision Companies' past practices.
(i) Purchase and Sale Agreements. Section 3.11 of
FrontierVision's Disclosure
Schedule lists all definitive purchase and sale agreements pursuant to which the
Systems were acquired. A copy of each such agreement has been delivered to
Buyer. The FrontierVision Companies have not collected any payment as of the
date of this Agreement from any "seller" under any of such purchase and sale
agreements in respect of any indemnification claim made against any such
"seller" by the FrontierVision Companies for a breach of any representation or
warranty by any such "seller" regarding the condition of any of the Systems
acquired from any such "seller." Except as disclosed in Section 3.11 of
FrontierVision's Disclosure Schedule, no FrontierVision Company is bound by any
contractual noncompete or similar restrictive covenant. The FrontierVision
Companies have paid all amounts that are due and payable under the purchase and
sale agreements referred to above (or have accrued a liability with respect
thereto which will be included as an Adjustment Liability in the computation of
Closing Net Liabilities).
(j) Overbuilds. To FVP's knowledge, as of the date of
this Agreement, except as
disclosed in Section 3.11 of FrontierVision's Disclosure Schedule, the Systems
are the only cable television systems presently servicing the Franchise Areas
(other than any cable television system owned, operated or managed by Buyer or
any Subsidiary or Affiliate of Buyer).
(k) Franchise Fees. The FrontierVision Companies have
paid all franchise fees that
are due and payable with respect to the operation by the FrontierVision
Companies of the Systems (or have accrued a liability with respect thereto which
will be included as an Adjustment Liability in the computation of Closing Net
Liabilities).
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(1) Pole Attachments. The FrontierVision Companies have
paid all pole attachment
fees that are due and payable with respect to the operation by the
FrontierVision Companies of the Systems (or have accrued a liability with
respect thereto which will be included as an Adjustment Liability in the
computation of Closing Net Liabilities). As of the date of this Agreement,
except as disclosed in Section 3.11 of FrontierVision's Disclosure Schedule, no
pole attachment audits are pending and the FrontierVision Companies have not
received written notice of any pending pole attachment audit.
3.12 Taxes.
The FrontierVision Companies have filed or caused to be filed all
required federal Tax Returns and all other material required Tax Returns with
the appropriate Governmental Authorities in all jurisdictions in which such Tax
Returns are required to be filed by the FrontierVision Companies (except Tax
Returns for which the filing date has been extended and such extension period
has not expired), and all Taxes shown on such Tax Returns have been properly
accrued or paid to the extent such Taxes have become due and payable. FVP has
delivered to Buyer true, correct and complete copies of the Tax Returns (in the
form filed) listed in Section 3.12 of FrontierVision's Disclosure Schedule. The
Financial Statements reflect an adequate reserve for all material unpaid Taxes
payable by the FrontierVision Companies for all Tax periods and portions thereof
through the date of such Financial Statements. Any unpaid Taxes of the
FrontierVision Companies for all periods ending prior to the Closing Date and
not reflected on such Financial Statements will be included as an Adjustment
Liability in the computation of Closing Net Liabilities. Except as disclosed in
Section 3.12 of FrontierVision's Disclosure Schedule, none of the FrontierVision
Companies has executed any waiver or extensions of any statute of limitations on
the assessment or collection of any Tax or with respect to any liability arising
therefrom. Except as disclosed in Section 3.12 of FrontierVision's Disclosure
Schedule, none of the federal, state or local income Tax Returns filed by the
FrontierVision Companies has been audited by any taxing authority. Except as set
forth in Section 3.12 of FrontierVision's Disclosure Schedule, there are no Tax
audits pending and no outstanding agreements or waiver extending the statutory
period of limitations applicable to any federal, state or local Tax Return of
any of the FrontierVision Companies for any period.
3.13 Employee Plans.
(a) Employee Plans. Section 3.13 of FrontierVision's
Disclosure Schedule contains
a list of all Employee Plans (true and correct copies of which have been
delivered to Buyer). None of the FrontierVision Companies or any of their ERISA
Affiliates is or has been required to contribute to any "multiemployer plan," as
defined in ERISA Section 3(37), nor has any FrontierVision Company or any such
ERISA Affiliate (or any former ERISA Affiliate with respect to the period in
which such entity was an ERISA Affiliate) experienced a complete or partial
withdrawal, within the meaning of ERISA Section 4203 or 4205, from such a
"multiemployer plan." Except as required under Code Section 4980B or ERISA
Sections 601-609, no Employee Plan provides health or medical coverage to
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former employees of the FrontierVision Companies. As of the Adjustment Time the
FrontierVision Companies will have accrued in accordance with GAAP a liability
for all health benefit claims filed as of such time and all claims incurred but
not reported as of such time.
(b) Qualified Plans. Except as disclosed in Section 3.13
of FrontierVision's
Disclosure Schedule, with respect to each Employee Plan, and after taking into
consideration the effect of the payments to be made with respect to the Employee
Plans: (1) each such Employee Plan that is intended to be tax-qualified is the
subject of a favorable determination letter except as described in Section 3.13
of FrontierVision's Disclosure Schedule; (2) no material liability to the
Pension Benefit Guaranty Corporation is expected by FVP to be incurred by the
FrontierVision Companies or any of their ERISA Affiliates (or any former ERISA
Affiliate with respect to the period in which such entity was an ERISA
Affiliate) with respect to any Employee Plan; (3) no non-exempt prohibited
transaction, within the definition of Section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject the FrontierVision Companies or any
of their ERISA Affiliates (or any former ERISA Affiliate with respect to the
period in which such entity was an ERISA Affiliate) to any material liability;
(4) there is no accumulated funding deficiency, termination or partial
termination, or requirement to provide security with respect to any Employee
Plan; (5) the fair market value of the assets of any Employee Plan would exceed
the value of all liabilities and obligations of such Employee Plan if such plan
were to terminate on the Closing Date; and (6) the transactions contemplated by
this Agreement will not result in liability under ERISA to FVP or the
FrontierVision Companies or Buyer, or any of their respective ERISA Affiliates.
(c) Labor Unions. As of the date of this Agreement,
other than as disclosed in
Section 3.13 of FrontierVision's Disclosure Schedule, none of the FrontierVision
Companies is party to or bound by any collective bargaining agreement. As of the
date of this Agreement, other than as disclosed in Section 3.13 of
FrontierVision's Disclosure Schedule, to the knowledge of FVP, (1) none of the
employees of the FrontierVision Companies is presently a member of any
collective bargaining unit related to his or her employment and (2) no
collective bargaining unit has filed a petition for representation of any of the
employees of the FrontierVision Companies.
3.14 Environmental Laws.
Except as disclosed in Section 3.14 of FrontierVision's Disclosure
Schedule: (a) the FrontierVision Companies' operations with respect to the
Systems comply in all material respects with all applicable Environmental Laws
as in effect on the date of this Agreement; (b) none of the FrontierVision
Companies has used the Real Property for the manufacture, transportation,
treatment, storage or disposal of Hazardous Substances except for gasoline and
diesel fuel and such use of Hazardous Substances (in cleaning fluids, solvents
and other similar substances) customary in the construction, maintenance and
operation of a cable television system and in amounts or under circumstances
that would not reasonably be expected to give rise to material liability for
remediation; and (c) to FVP's knowledge, the Real Property complies and has
complied in all material respects with all applicable Environmental Laws. Except
as disclosed in Section 3.14 of FrontierVision's Disclosure
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Schedule, as of the date of this Agreement, no Environmental Claim has been
filed or issued against the FrontierVision Companies.
3.15 Claims and Litigation.
Except as disclosed in Section 3.15 of FrontierVision's Disclosure
Schedule, as of the date of this Agreement, there is no claim, legal action,
arbitration or other legal, administrative or tax proceeding, nor any order,
decree or judgment, in progress or pending, or to FVP's knowledge threatened in
writing, against or relating to the FrontierVision Companies, the Assets or the
business or operations of any of the Systems (other than FCC and other
proceedings generally affecting the cable television industry and not specific
to the FrontierVision Companies and other than rate complaints or certifications
filed by customers or Franchising Authorities) that would have a material
adverse effect on FVP's ability to perform its obligations under this Agreement
or that would have a material adverse effect on the business, financial
condition, assets or liabilities of any of the FrontierVision Companies.
3.16 Compliance With Laws.
Except as disclosed in Section 3.16 of FrontierVision's Disclosure
Schedule and except for any such noncompliance as has been remedied, each of the
FrontierVision Companies has complied in all material respects with, and the
Systems and the Assets are in compliance in all material respects with, all
applicable Legal Requirements (including, without limitation, the Code, ERISA,
the National Labor Relations Act, the Cable Act, FCC Regulations, and the
Copyright Act). Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, and without limiting the provisions of Section 6.14,
FVP does not make any representation or warranty with respect to compliance with
any Legal Requirements dealing with, limiting or affecting the rates which can
be charged by cable television systems to their customers (whether for
programming, equipment, installation, service or otherwise) or any other Rate
Regulatory Matter.
3.17 Transactions with Affiliates.
Except as disclosed in the Financial Statements or Section 3.17 of
FrontierVision's Disclosure Schedule, none of the FrontierVision Companies has
been involved in any business arrangement or business relationship with any
Affiliate of any of the FrontierVision Companies (other than another
FrontierVision Company), and no Affiliate of any of the FrontierVision Companies
(other than another FrontierVision Company) owns any property or right, tangible
or intangible, that is used in the business of the FrontierVision Companies
(other than in its capacity as a direct or indirect equity or debt holder of the
FrontierVision Companies).
3.18 Broker.
Neither FVP nor any of the other FrontierVision Companies or any Person
acting on their behalf has incurred any liability for any finders' or brokers'
fees or commissions in connection with the
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transactions contemplated by this Agreement except as described in Section 11.1
or disclosed in Section 3.18 of FrontierVision's Disclosure Schedule.
3.19 Securities Law Matters.
(a) FVP represents that it is an "accredited investor"
as that term is defined in
Regulation D under the Securities Act and that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of acquisition of the Escrow Registrable Securities and of
making an informed investment decision with respect thereto, and understands all
risks of holding the Escrow Registrable Securities for an indefinite period of
time.
(b) FVP acknowledges receipt of copies of Buyer's 10-K
and Buyer's 10-Q.
(c) FVP is aware that the Escrow Registrable Securities
are not currently registered
under the Securities Act or under any state securities laws.
(d) FVP agrees that it will not transfer the Escrow
Registrable Securities without
compliance with the registration and other provisions of all applicable
securities laws and acknowledges that each certificate representing the Escrow
Registrable Securities which it receives will be marked with an appropriate
legend to such effect (which legend will be removed in accordance with the
provisions of the Deposit Registration Rights Agreement).
(e) FVP is purchasing the Escrow Registrable Securities
solely for investment
purposes, with no present intention to sell the Escrow Registrable Securities
(other than pursuant to an effective registration statement).
(f) FVP understands that it must bear the economic risk
of the investment represented by the purchase of the Escrow Registrable
Securities for an indefinite period.
(g) FVP agrees not to offer, sell, or otherwise dispose
of the shares of the Escrow Registrable Securities at any time prior to the
second anniversary of the date FVP acquires the Escrow Registrable Securities,
unless such offer, sale, or other disposition is (1) registered under the
Securities Act, or (2) in compliance with an opinion of counsel of FVP,
delivered to Buyer and reasonably acceptable to it, to the effect that such
offer, sale, or other disposition thereof does not violate the Securities Act.
(h) FVP acknowledges that the certificate(s) representing
the Escrow Registrable Securities delivered hereunder shall bear the following
legend (which legend will be removed in accordance with the provisions of the
Deposit Registration Rights Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
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OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED
FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE
TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE FEDERAL
OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
EXEMPTION THEREFROM.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE
CORPORATION.
3.20 Cure.
For all purposes under this Agreement, the existence or occurrence of
any events or circumstances which constitute or cause a breach of a
representation or warranty of FVP (including without limitation FrontierVision's
Disclosure Schedule) on the date such representation or warranty is made shall
be deemed not to constitute a breach of such representation or warranty if such
event or circumstance is cured on or prior to the Closing Date or the earlier
termination of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to any provisions of this Agreement limiting, qualifying or
excluding any of the representations or warranties made herein, each Seller
severally represents and warrants to Buyer (with respect to such Seller and not
with respect to any other Seller) as set forth in this Article 4.
4.1 Authority of Sellers; Authorization and Binding Obligation.
Such Seller has the requisite corporate, partnership, limited liability
company or other applicable power, authority and legal capacity to execute,
deliver and perform this Agreement and the other Transaction Documents to which
such Seller is a party according to their respective terms. The execution,
delivery, and performance by such Seller of this Agreement and the other
Transaction Documents to which such Seller is a party have been duly authorized
by all necessary action on the part of such Seller. This Agreement and the other
Transaction Documents to which such Seller is a party have been duly executed
and delivered by such Seller (or, in the case of Transaction Documents to be
executed and delivered at Closing, when executed and delivered will be duly
executed and delivered) and constitute (or, in the case of Transaction Documents
to be executed and delivered at Closing, when executed and delivered will
constitute) the legal, valid, and binding obligation of such Seller, enforceable
against such Seller in accordance with their terms, except as the enforceability
of this Agreement and such other Transaction Documents may be limited by
bankruptcy, insolvency, or similar
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laws affecting creditors' rights generally or by judicial discretion in the
enforcement of equitable remedies, and as rights to indemnification may be
limited by federal or state securities laws or the public policies embodied
therein.
4.2 Absence of Conflicting Agreements; Consents.
Except for the expiration or termination of any applicable waiting
period under the HSR Act, the filing by FVP, any other FrontierVision Company
and/or the Sellers with the SEC of any reports required to be filed in
connection with the consummation of the transactions contemplated hereby, or as
set forth in Section 4.2 of FrontierVision's Disclosure Schedule, the execution,
delivery and performance by such Seller of this Agreement and the other
Transaction Documents to which such Seller is a party (with or without the
giving of notice, the lapse of time, or both): (A) do not require the Consent
of, notice to, or filing with any Governmental Authority or any other Person
that has not been obtained; (B) will not conflict with any provision of the
Charter Documents of such Seller (and, in the case of the SPC Sellers, the
Charter Documents of the SPC owned by such Seller) as currently in effect; (C)
assuming receipt of all Consents, will not conflict with, result in a breach of,
or constitute a default under any Legal Requirement to which such Seller (and,
in the case of the SPC Sellers, to which the SPC owned by such Seller) is bound;
(D) assuming receipt of all Consents, will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of any material agreement or instrument to which such Seller (and, in the case
of the SPC Sellers, to which the SPC owned by such Seller) is bound; and (E)
will not result in the creation of any Encumbrance upon the Purchased Interests
held by such Seller (and, in the case of the SPC Sellers, upon the limited
partnership interest in FVP held by the SPC owned by such Seller).
Notwithstanding the foregoing, no Seller makes any representation or warranty
regarding any of the foregoing that may result from the specific legal or
regulatory status of Buyer or as a result of any other facts that specifically
relate to the business or activities in which Buyer is or proposes to be engaged
other than the cable television business.
4.3 Title to Purchased Interests.
(a) The General Partner represents that it holds of
record and owns beneficially the
General Partnership Interest and the Subordinated Notes set forth by its name in
Section 4.3 of FrontierVision's Disclosure Schedule, free and clear of all
Encumbrances.
(b) Each Limited Partner Seller represents that it holds
of record and owns
beneficially the Limited Partnership Interest and the Subordinated Notes set
forth by its name in Section 4.3 of FrontierVision's Disclosure Schedule, free
and clear of all Encumbrances.
(c) Each SPC Seller represents that it holds of record
and owns beneficially the
Subordinated Notes listed next to its name in Section 4.3 of FrontierVision's
Disclosure Schedule and that the SPC listed next to its name in Section 4.3 of
FrontierVision's Disclosure Schedule holds of record and owns beneficially the
limited partnership interest in FVP and the Subordinated Notes set
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forth by such SPC's name in Section 4.3 of FrontierVision's Disclosure Schedule,
free and clear of all Encumbrances. Each SPC Seller represents that it holds of
record and owns beneficially 100% of the issued and outstanding Capital Stock of
the SPC listed next to such SPC Seller's name in Section 4.3 of FrontierVision's
Disclosure Schedule, free and clear of all Encumbrances. All of the issued and
outstanding Capital Stock of the SPC owned by such SPC Seller has been duly
authorized, validly issued, fully paid and nonassessable, and has not been
issued in violation of any federal or state securities laws. Each SPC Seller
represents that the SPC owned by such SPC Seller has not and does not own any
assets or other properties (other than the respective limited partnership
interests in FVP and the Subordinated Notes held by such SPC, and, in the case
of 1818 II Cable Corp. and Olympus Cable Corp., the respective limited
partnership interests in the General Partner held by such SPC, which interests
in the General Partner shall be distributed, directly or indirectly, to the SPC
Seller which owns such SPC immediately prior to the Closing) or conduct any
business or have any indebtedness, liabilities or obligations other than rights,
obligations, and liabilities arising under this Agreement and the partnership
agreement of FVP, the SPC Notes (which SPC Notes shall be canceled by the SPC
Seller that holds such SPC Note concurrently with the Closing) or as disclosed
in Section 4.3 of FrontierVision's Disclosure Schedule.
(d) Except as disclosed in Section 4.3 of
FrontierVision's Disclosure Schedule and
except for this Agreement and rights granted under the partnership agreement of
FVP, such Seller (and, in the case of the SPC Sellers, the SPC owned by such
Seller) (1) is not party to, and has not granted to any other Person, any
options, warrants, subscription rights, rights of first refusal or any other
rights providing for the acquisition or disposition of partnership interests or
other equity interests in the FVP (and, in the case of the SPC Sellers, in the
SPC owned by such Seller), and (2) is not a party to any voting agreement,
voting trust, proxy or other agreement or understanding with respect to the
voting of any of the Purchased Interests or the Capital Stock of any of the
FrontierVision Companies.
4.4 Broker.
Neither such Seller nor any Person acting on its behalf has incurred
any liability for any finders' or brokers' fees or commissions in connection
with the transactions contemplated by this Agreement except as described in
Section 11.1.
4.5 Taxes.
There are no Tax audits pending and no outstanding agreements or waiver
extending the statutory period of limitations applicable to any federal, state,
or local Tax Return of the SPC the capital stock of which is owned by such SPC
Seller for any period.
4.6 Securities Law Matters.
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(a) Each such Seller who is an "Accredited Investor"
represents that the information
provided in such Seller's "Accredited Investor Questionnaire" delivered herewith
is true, correct and complete.
(b) Such Seller, either individually or together with his
representatives and advisors,
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of acquisition of the Stock
Consideration Registrable Securities and of making an informed investment
decision with respect thereto, and understands all risks of holding the Stock
Consideration Registrable Securities for an indefinite period of time.
(c) Such Seller acknowledges receipt of copies of Buyer's
10-K and Buyer's 10-Q.
(d) Such Seller has carefully considered and has, to the
extent such Seller believes
such discussion necessary discussed with such Seller's professional legal, tax,
accounting and financial advisors the suitability of an investment in the Stock
Consideration Registrable Securities for such Seller's particular tax and
financial situation and has determined that the Stock Consideration Registrable
Securities is a suitable investment for such Seller.
(e) Such Seller agrees that it will not transfer the
Stock Consideration Registrable
Securities without compliance with the registration and other provisions of all
applicable securities laws.
(f) Such Seller is purchasing the Stock Consideration
Registrable Securities solely
for investment purposes, with no present intention to sell the Stock
Consideration Registrable Securities (other than pursuant to an effective
registration statement).
(g) Such Seller understands that it must bear the
economic risk of the investment represented by the purchase of the Stock
Consideration Registrable Securities for an indefinite period.
(h) Such Seller agrees not to offer, sell, or otherwise
dispose of the shares of the Stock Consideration Registrable Securities at any
time prior to the second anniversary of the date such Seller acquires the Stock
Consideration Registrable Securities, unless such offer, sale, or other
disposition is (1) registered under the Securities Act, or (2) in compliance
with an opinion of counsel of the Seller, delivered to Buyer and reasonably
acceptable to it, to the effect that such offer, sale, or other disposition
thereof does not violate the Securities Act.
(i) Such Seller acknowledges that the certificate(s)
representing the Stock Consideration Registrable Securities delivered hereunder
shall be issued to such Seller with the following legend (which legend will be
removed in accordance with the provisions of the Stock Consideration
Registration Rights Agreement):
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED
FOR VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE
TRANSFERRED ON THE BOOKS OF THE CORPORATION, WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER ALL APPLICABLE FEDERAL
OR STATE SECURITIES LAWS OR COMPLIANCE WITH AN APPLICABLE
EXEMPTION THEREFROM.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE
CORPORATION.
4.7 Cure.
For all purposes under this Agreement, the existence or occurrence of
any events or circumstances which constitute or cause a breach of a
representation or warranty of such Seller (including without limitation
FrontierVision's Disclosure Schedule) on the date such representation or
warranty is made shall be deemed not to constitute a breach of such
representation or warranty if such event or circumstance is cured on or prior to
the Closing Date or the earlier termination of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to FVP and each Seller as set forth in
this Article 5.
5.1 Organization; Authorization and Binding Obligation.
Buyer is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Delaware. Buyer has the requisite
corporate power and authority to own, lease, and operate its properties, to
carry on its business in the places where such properties are now owned, leased,
or operated and such business is now conducted, and to execute, deliver and
perform this Agreement and the other Transaction Documents to which Buyer is a
party according to their respective terms. Buyer is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which such
qualification is required.
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5.2 Authorization and Binding Obligation.
The execution, delivery, and performance by Buyer of this Agreement and
the other Transaction Documents to which Buyer is a party have been duly
authorized by all necessary corporate, shareholder or other action on the part
of Buyer. This Agreement and the other Transaction Documents to which Buyer is a
party have been duly executed and delivered by Buyer (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will be duly executed and delivered) and constitute (or, in the case
of Transaction Documents to be executed and delivered at Closing, when executed
and delivered will constitute) the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Documents may be
limited by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally or by judicial discretion in the enforcement of equitable remedies,
and as rights to indemnification may be limited by federal or state securities
laws or the public policies embodied therein.
5.3 Absence of Conflicting Agreements; Consents.
Except for the expiration or termination of any applicable waiting
period under the HSR Act and the filing by Buyer with the SEC of any reports
required to be filed in connection with the consummation of the transactions
contemplated hereby, the execution, delivery and performance by Buyer of this
Agreement and the other Transaction Documents to which Buyer is a party (with or
without the giving of notice, the lapse of time, or both): (a) do not require
any Consent, declaration to, or filing with any Governmental Authority or any
other Person; (b) will not conflict with any provision of the Charter Documents
of Buyer, as currently in effect; (c) will not conflict with, result in a breach
of, or constitute a default under any Legal Requirement to which Buyer is bound;
and (d) will not conflict with, constitute grounds for termination of, result in
a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of any material agreement
or instrument to which Buyer is a party or bound. Notwithstanding the foregoing,
Buyer does not make any representation or warranty regarding any of the
foregoing that may result from the specific legal or regulatory status of any
Seller or any FrontierVision Company or as a result of any other facts that
specifically relate to the business or activities in which any Seller or any
FrontierVision Company is or proposes to be engaged other than the cable
television business.
5.4 Capital Structure; ACC Class A Common Stock.
(a) All of the shares of ACC Class A Stock deposited into
escrow in accordance with
the Deposit Escrow Agreement as contemplated by Section 2.4(a): (1) have been
duly authorized and validly issued, fully paid and nonassessable, not subject
to, or issued in violation of, any preemptive rights and have not been issued in
violation of any federal or state securities laws; and (2) have the same rights
and powers as all other shares of ACC Class A Common Stock issued and
outstanding as of the date of this Agreement. If released to FVP in accordance
with this Agreement, on the date of such release, all of the securities
constituting the Deposit Escrow Property: (1) shall have been duly
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authorized and validly issued, fully paid and nonassessable, not subject to, or
issued in violation of, any preemptive rights and not issued in violation of any
federal or state securities laws; and (2) shall have the same rights and powers
as all other shares of ACC Class A Common Stock (or, if any of the securities
constituting the Deposit Escrow Property are not shares of ACC Class A Stock, as
all other securities of the same class and series) issued and outstanding as of
the date of this Agreement.
(b) On the Closing Date, all of the shares of ACC Class A
Common Stock constituting the Stock Consideration (or, if applicable, all of the
securities of any other class or series constituting the Stock Consideration):
(1) shall have been duly authorized and validly issued, fully paid and
nonassessable, not subject to, or issued in violation of, any preemptive rights
and not issued in violation of any federal or state securities laws; and (2)
shall have the same rights and powers as all other shares of ACC Class A Common
Stock (or, if any of the securities constituting the Stock Consideration are not
shares of ACC Class A Stock, as all other securities of the same class and
series) issued and outstanding as of the date of this Agreement.
5.5 Claims and Litigation.
As of the date of this Agreement, there is no claim, legal action,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
Buyer's knowledge threatened in writing, against or relating to Buyer or the
assets or business of Buyer or its Subsidiaries (other than FCC and other
proceedings generally affecting the cable television industry and not specific
to Buyer or its Subsidiaries and other than rate complaints or certifications
filed by customers or franchising authorities), that would have a material
adverse effect on Buyer's ability to perform its obligations under this
Agreement or that could reasonably be expected to have a material adverse effect
on the business, financial condition, assets or liabilities of Buyer and its
Subsidiaries, taken as a whole.
5.6 SEC Reports.
(a) Buyer's financial statements contained in its Annual
Report on Form 10-K for
the fiscal year ended March 31, 1998 ("Buyer's 10-K") present fairly the
consolidated financial operations of Buyer for the fiscal year then ended, in
conformity with GAAP. Buyer's interim financial statements contained in its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 ("Buyer's
10-Q") reflect all adjustments which are, in Buyer's management's opinion,
necessary to a fair statement of the results for the interim period presented
and necessary to present fairly Buyer's consolidated financial position as of
September 30, 1998 and its consolidated results of operations for the quarter
ended September 30, 1998 and cash flows from consolidated operations for the
quarter ended September 30, 1998.
(b) Except as set forth in Buyer's 10-Q or in any public
document filed by Buyer with
the SEC after September 30, 1998, Buyer's capitalization (including for this
purpose, all outstanding options, warrants and other rights to acquire Capital
Stock or other securities of Buyer) is as set forth
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in Buyer's 10-K to the extent required to be set forth in Buyer's 10-K. The ACC
Class A Common Stock is not subject to any preemptive right, claim or other
interest of any Person.
(c) Except as set forth in any public document filed by
Buyer or Hyperion
Telecommunications, Inc. or Olympus Communications, L.P. with the SEC after
September 30, 1998: (1) there has not been, since September 30, 1998, any
material adverse change in the financial condition, results of operations of
Buyer, or any damage, destruction or loss which materially and adversely affects
the financial condition, results of operations or future prospects of Buyer; and
(2) as of the date of this Agreement, Buyer has not entered into any commitment
or transaction material to Buyer's business.
(d) No statement made in Buyer's 10-K or Buyer's 10-Q or
any public document filed by Buyer or Hyperion Telecommunications, Inc. or
Olympus Communications, L.P. with the SEC after September 30, 1998, nor any
statement, representation or warranty made by Buyer in this Agreement or the
other Transaction Documents (including schedules and exhibits), contains any
untrue statement of any material fact or omits a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading.
5.7 Broker.
Neither Buyer nor any Person acting on behalf of Buyer has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement except as described in Section
11.1.
5.8 Investment Purpose; Investment Company.
Buyer is acquiring the Purchased Interests for investment for its own
account and not with a view to the sale or distribution of any part thereof
within the meaning of the Securities Act. Buyer is not an "investment company"
as defined in the Investment Company Act of 1940, as amended.
5.9 Cure.
For all purposes under this Agreement, the existence or occurrence of
any events or circumstances which constitute or cause a breach of a
representation or warranty of Buyer on the date such representation or warranty
is made shall be deemed not to constitute a breach of such representation or
warranty if such event or circumstance is cured on or prior to the Closing Date
or the earlier termination of this Agreement.
ARTICLE 6
SPECIAL COVENANTS AND AGREEMENTS
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The parties covenant and agree as follows, provided that, except with
respect to express agreements and covenants of a Seller contained in this
Article 6 (including Sections 6.5, 6.12 and 6.15), no Seller shall have any
obligation or liability prior to the Closing with respect to any agreement or
covenant of FVP set forth in this Article 6 (it being understood and agreed by
each Seller that nothing in this sentence shall impair or diminish the
indemnification obligations of Sellers under Article 10 after the Closing,
including with respect to any covenant of FVP set forth in this Article 6).
6.1 Operation of Business Prior to Closing.
Except as required by applicable Legal Requirements or as contemplated
in FrontierVision's Disclosure Schedule or Section 6.1(c), without the consent
of Buyer (which consent shall not be unreasonably withheld), between the date
hereof and the Closing Date, FVP will operate and cause the FrontierVision
Companies to operate the Systems in the ordinary course of business (subject to,
and except as modified by, compliance with the following negative and
affirmative covenants) and abide by the following negative and affirmative
covenants:
(a) Negative Covenants. The FrontierVision Companies
shall not do any of the following:
(1) Franchises. Fail to use commercially
reasonable efforts to renew on
substantially the same or on other commercially reasonable terms any Franchise
that has expired or will expire after the date hereof and prior to the Closing
Date in accordance with its terms; provided, however, the FrontierVision
Companies shall not agree to any material changes to the terms of any Franchise
without Buyer's prior written consent and provided further that FVP shall not be
required to take any steps necessary to obtain renewals of any Franchise earlier
than such steps are required to be taken by applicable FCC Regulations, and
obtaining renewals of any Franchise shall not be a condition precedent to
Buyer's obligations hereunder except as provided in the immediately following
sentence). The parties agree that the obligations of the FrontierVision
Companies with respect to the renewal of the Franchises referred to in Section
3.8(F) of FrontierVision's Disclosure Schedule (Renewal Letters Not Timely
Filed), exclusive of the Penobscot Indian Nation (ME) and Town of Friendsville
(MD) Franchises (the "Renewal Franchises") are governed solely by Section 6.4
and 7.1(d) and not this Section 6.1(a)(1).
(2) Contracts. Modify or amend in any material
respect, except in the
ordinary course of business, any Contract that shall survive the Closing; or
enter into any new Contracts that will be binding on the FrontierVision
Companies following the Closing except: (A) agreements for the provision of
cable television services to residential customers; (B) the renewal or extension
of any existing Contract on its existing terms, in all material respects, in the
ordinary course of business; (C) contracts or commitments entered into in the
ordinary course of business that are terminable on not more than sixty days
prior notice or that do not involve post-Closing obligations in excess of
TwentyFive Thousand Dollars ($25,000) in any one case or in excess of Five
Hundred Thousand Dollars ($500,000) in the aggregate; or (D) with respect to
utility pole attachment agreements, Contracts with
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terms as customarily required by the utility whose poles are utilized, and
except in any event, subject to their legal obligations and constraints, the
FrontierVision Companies will not enter into a new collective bargaining
agreement without providing Buyer a reasonable opportunity to review and approve
the proposed terms of such agreement, which approval shall not be unreasonably
withheld by Buyer.
(3) Disposition of Assets. Sell, assign, lease,
swap, or otherwise transfer or
dispose of any of the Assets, except as set forth in Section 6.1 of
FrontierVision's Disclosure Schedule and except for assets consumed or disposed
of in the ordinary course of business or assets (other than any System as a
whole) that are replaced by replacement property of substantially equivalent
kind and use.
(4) Encumbrances. Create, assume or permit to
exist any Encumbrance upon
the Assets, except for Permitted Encumbrances or other Encumbrances disclosed in
FrontierVision's Disclosure Schedule.
(5) Indebtedness. Permit the FrontierVision
Companies to incur any
additional indebtedness for borrowed money except pursuant to the Debt Documents
listed in Section 3.8 of FrontierVision's Disclosure Schedule and that (if not
repaid at or prior to the Closing) is included in Adjustment Liabilities in the
computation of Closing Net Liabilities.
(6) Marketing Programs. Implement any new
marketing plans that are materially different from marketing plans previously
implemented by the FrontierVision Companies.
(7) Channel Lineups; Rate Changes. Make channel
additions or channel
substitutions or change the channel lineup for any System or change the customer
rates charged by any System or enter into any new carriage agreements, except as
set forth in Section 6.1 of FrontierVision's Disclosure Schedule.
(b) Affirmative Covenants. FVP shall, and shall cause
the FrontierVision
Companies to, do the following:
(1) Access to Information. Subject to Buyer's
obligations hereunder to
maintain the confidentiality of Confidential Information, allow Buyer and its
authorized representatives reasonable access during normal business hours to the
Assets, physical plant, offices, properties and records for the purpose of
inspection, and furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the Assets or the FrontierVision
Companies that Buyer may reasonably request. Any investigation or request for
information shall be conducted in such a manner as not to interfere with the
business or operations of the Systems. Buyer hereby agrees that it shall
promptly provide written notice to FVP or such Seller if based upon information
provided to Buyer or through its investigation, Buyer determines that FVP or a
Seller is in breach in any material respect of any of its representations or
warranties set forth in this Agreement.
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(2) Insurance. Maintain the existing insurance
policies on the Systems andthe Assets (or comparable replacement policies).
(3) Books and Records. Maintain the
FrontierVision Companies' books and records in accordance with past practices.
(4) Financial Information. Furnish to Buyer
within forty-five days after the
end of each month between the date hereof and the Closing Date, an unaudited
consolidated balance sheet and statement of operations and statement of cash
flows for the FrontierVision Companies for such month, which financial
information shall be prepared from the FrontierVision Companies' books and
records maintained in the ordinary course of business in accordance with past
practices.
(5) Compliance with Laws. Comply in all
material respects with all Legal Requirements applicable to the FrontierVision
Companies and the operation of the Systems.
(6) Keep Organization Intact. Except with
respect to any voluntary departure
of any of the FrontierVision Companies' employees between the date hereof and
Closing, use its commercially reasonable efforts to preserve intact its business
and organization relating to the Systems and preserve for Buyer the goodwill of
the FrontierVision Companies' suppliers, customers and others having business
relations with it.
(7) Specified Rebuild and Upgrade Projects.
Proceed with the rebuild and upgrade projects identified in Section 2.5 of
FrontierVision's Disclosure Schedule in the ordinary course of business.
(8) Franchise Renewal Letters. File a request
for renewal under Section
626(a) of the Cable Act with the proper Franchising Authority with respect to
each Franchise in respect of which the time period for making such filing will
expire on or before the Closing Date.
(9) Year 2000 Remediation Plan. Proceed with
the Year 2000 Remediation
Plan of the FrontierVision Companies in accordance in all material respects with
the provisions of such plan, a copy of which has been provided to Buyer.
(10) Rate Changes. Implement the rate changes
set forth in Section 6.1 of
FrontierVision's Disclosure Schedule in accordance with the implementation
schedule set forth therein with respect to each such rate change.
(11) Purchase and Sale Agreement Indemnification
Claims. Pursue in the
ordinary course of business consistent with the past practice of the
FrontierVision Companies any indemnification claims regarding the condition of
any of the Systems acquired from the "sellers" under the purchase and sale
agreements referred to in Section 3.11(i) that the FrontierVision Companies may
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have against such "sellers" pursuant to the indemnification provisions thereof.
The FrontierVision Companies will apply any payments actually collected after
the date of this Agreement in respect of any such claims to remedying the matter
in respect of which the payments were collected or will include the amount of
any such payment that is not so applied as an Adjustment Liability in the
Computation of Closing Net Liabilities (but shall have no obligation pursuant to
this provision to expend more than the amount collected on remedying such
matter).
(c) Certain Permitted Actions. Notwithstanding anything
in this Agreement(including Sections 6.1(a) and (b) above) to the contrary,
Buyer consents and agrees as follows:
(1) Contractual Commitments. FVP, the General
Partner and the other
FrontierVision Companies may comply with all of their contractual commitments
under their existing Contracts and under any Contracts entered into after the
date of this Agreement in compliance with Section 6.1(a)(2) or with Buyer's
consent (in each case, as such Contracts may be in effect from time to time in
accordance with Section 6.1(a)(2) or with Buyer's consent). FVP, the General
Partner and the other FrontierVision Companies may take such actions as are
contemplated by the other Sections of this Agreement (excluding Sections 6.1(a)
and (b)) and otherwise comply with their obligations under the other Sections of
this Agreement (excluding Sections 6.1(a) and (b)).
(2) Pending Acquisitions/Swaps/Sales. The
FrontierVision Companies may consummate the transactions set forth in Section
6.1 of FrontierVision's Disclosure Schedule.
(3) Holdings Exchange Offer. FrontierVision
Holdings, L.P. and
FrontierVision Holdings Capital II Corporation may consummate the Exchange Offer
and comply with its other obligations contemplated in the Registration Rights
Agreement dated as of December 9, 1998 among FrontierVision Holdings, L.P.,
FrontierVision Holdings Capital II Corporation, J.P. Morgan Securities Inc. and
Chase Securities Inc.
(4) Excluded Assets. The FrontierVision
Companies may assign each of the
Excluded Assets to the General Partner, its designees or any other Person prior
to the Closing; provided that such assignments, either individually or in the
aggregate, do not result in any adverse Tax consequence to any of the
FrontierVision Companies which is not included in Adjustment Liabilities in the
computation of Closing Net Liabilities.
(5) Other Matters. The FrontierVision Companies
may take the other actions
set forth in Section 6.1 of FrontierVision's Disclosure Schedule.
6.2 Confidentiality; Press Release.
FVP and the Sellers may from time to time in the
course of this transaction
disclose to Buyer information and material concerning FVP and the Sellers, the
FrontierVision Companies, the Assets and the Systems, including proprietary
information, contracts, marketing
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information, technical information, product or service concepts, subscriber
information, rates, financial information ideas, concepts and research and
development (any of the foregoing and any analysis, compilations, studies or
other documents prepared by or on behalf of Buyer in respect thereof are
hereafter collectively referred to as "Confidential Information"). The term
"Confidential Information" does not include any item of information that (1) is
publicly known at the time of its disclosure, (2) is lawfully received from a
third party not bound in a confidential relationship with a party hereto, (3) is
published or otherwise made known to the public by any source other than a party
bound by the provisions hereof, or (4) was generated by Buyer independently.
Buyer agrees that Confidential Information received from FVP and the Sellers
shall be used solely in connection with the transaction contemplated by this
Agreement. Buyer agrees that it shall treat confidentially and not directly or
indirectly, divulge, reveal, report, publish, transfer or disclose, for any
purpose whatsoever (other than to its investors, financing sources and agents
for the purpose of consummating the transactions contemplated by this Agreement,
each of whom shall maintain the confidentiality of such Confidential
Information), all or any portion of the Confidential Information disclosed to it
by FVP or the Sellers. In the event of a breach of the covenants contained in
this Section 6.2, FVP and the Sellers shall be entitled to seek injunctive
relief as well as any and all other remedies at law or equity. If the Closing
does not occur, the Confidential Information, except for that portion which
consists of analysis, compilations, studies or other documents prepared by or on
behalf of Buyer, will be returned to FVP or the Sellers, as appropriate,
immediately upon FVP's or a Seller's request therefor; and that portion of the
Confidential Information which consists of analysis, compilations, studies or
other documents prepared by or on behalf of Buyer will be held by Buyer and kept
confidential and subject to the terms of this Section 6.2, or will be destroyed.
(b) No party will issue any press release or make any other
public announcements concerning this Agreement or the transaction contemplated
hereby except in consultation with the other parties, except for disclosures
required by law (including any legal obligations imposed on Buyer in connection
with its status as a publicly-held corporation and any legal obligations imposed
on any of the FrontierVision Companies in connection with their status as
reporting companies under the Exchange Act or in connection with the Holdings
Exchange Offer contemplated in Section 6.1(c)(3)). With respect to press
releases or any other public announcements required by law (including the legal
obligations referred to in the parenthetical clause of the immediately preceding
sentence), the party intending to make such release or disclosure shall provide
the other parties with an advance copy and a reasonable opportunity to review.
6.3 Cooperation; Commercially Reasonable Efforts.
The parties shall cooperate with each other and their respective
counsel and accountants in all commercially reasonable respects in connection
with any actions required to be taken as part of their respective obligations
under this Agreement, and otherwise use their commercially reasonable efforts to
consummate the transactions contemplated hereby and to fulfill their obligations
hereunder as expeditiously as practicable. Buyer shall provide to FVP and
Sellers such information relating to Buyer and its Subsidiaries and their
businesses and operations as FVP and Sellers shall reasonably request.
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FVP shall provide to Buyer such information relating to the FrontierVision
Companies and their businesses and operations as Buyer shall reasonably request.
Following the execution of this Agreement FVP and Buyer will negotiate in good
faith to agree to a mutually satisfactory Programming Supply Agreement
consistent in all material respects with the discussions to date between the
parties with respect to the subject matter thereof. .
6.4 Consents.
Subject to the other provisions of this Section 6.4 and this Agreement,
the parties agree as follows:
(a) Following the execution hereof, FVP shall use
commercially reasonable efforts,
and shall cause the FrontierVision Companies to use commercially reasonable
efforts, to obtain as expeditiously as possible all Consents (other than the
Credit Agreement Consent and the GECC Facility Consent, which shall be governed
solely by Section 6.7(a) or Section 6.7(c) as appropriate), required to be
obtained by the FrontierVision Companies, including Consents under the
Franchises, Licenses and Contracts of the FrontierVision Companies, and the
renewal of the Renewal Franchises. Buyer agrees to cooperate with FVP and the
FrontierVision Companies in all commercially reasonable respects in obtaining
the foregoing Consents and renewals. In furtherance of the foregoing, FVP and
Buyer agree to cooperate in preparing and completing an application on FCC Form
394 (or other appropriate form) and appropriate letters of transmittal for each
Franchise Consent listed in Section 3.4 of FrontierVision's Disclosure Schedule
and use their best efforts to file completed applications with the appropriate
Franchising Authorities within thirty days after the execution of this Agreement
(and in any event within forty-five days after the execution of this Agreement).
Effective upon filing of each Franchise Consent application, FVP and Buyer shall
be deemed to have agreed that such application is "facially complete." FVP and
Buyer also agree to cooperate in preparing and completing an appropriate
application and letters of transmittal for each Consent listed in Section 3.4 of
FrontierVision's Disclosure Schedule relating to Licenses and Contracts of the
FrontierVision Companies and using their best efforts to file completed
applications with the FCC or other appropriate Person within thirty days after
the execution of this Agreement (and in any event within forty-five days after
the execution of this Agreement). FVP shall also use commercially reasonable
efforts to cause all such Consents relating to Franchises and Contracts to
include a provision that permits Buyer to transfer the Purchased Interests to
any Affiliate of Buyer that agrees in writing as a condition to such transfer to
be bound by any and all obligations of Buyer in connection therewith; provided
that FVP shall have no additional obligation with respect to obtaining such a
provision if the inclusion of such a provision would cause such Consent to be
unreasonably withheld, delayed or otherwise conditioned; and provided further
that if the Franchising Authority or other Person from whom such Consent is
requested objects to the inclusion of such a provision such request will be
immediately withdrawn.
(b) In the event that after the execution of this
Agreement, FVP and Buyer mutually
agree that an application on FCC Form 394 is required to be filed in order to
request a Franchise Consent that is not listed in Section 3.4 of
FrontierVision's Disclosure Schedule, FVP and Buyer agree
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to cooperate in preparing and completing an application on FCC Form 394 (or
other appropriate form) and appropriate letters of transmittal and using their
best efforts to file a completed application with the appropriate Franchising
Authority within ten days after FVP and Buyer agree that Consent is required.
Effective upon filing of each Franchise Consent application, FVP and Buyer shall
be deemed to have agreed that such application is "facially complete."
In the event that after the execution of this Agreement, a Franchising
Authority that did not receive a Franchise Consent request on FCC Form 394 (or
other appropriate form) pursuant to Section 6.4(a) asserts that its Consent is
required in order to consummate the transactions contemplated by this Agreement,
FVP and Buyer will notify the other party and cooperate with each other in good
faith to determine whether they agree that Consent is required. If FVP and Buyer
cannot agree within five business days after both parties are notified of such
Franchising Authority's assertion, FVP and Buyer shall mutually retain a law
firm to make the final determination (which law firm shall be experienced in
cable franchising matters and shall not then serve as legal counsel to any of
the FrontierVision Companies or Buyer). The selected law firm shall endeavor to
resolve the dispute as promptly as practicable and such firm's resolution of the
dispute shall be final and binding on the parties. All of the costs and expenses
of the selected law firm and its services rendered pursuant to this paragraph
shall be borne by whichever of FVP or Buyer is the nonprevailing party.
If it is finally determined pursuant to this Section 6.4(b) (by
agreement of FVP and Buyer or by resolution of a law firm) that a Franchise
Consent is required from such Franchising Authority, and the Franchise in
question relates to a Franchise Area that serves a number of subscribers equal
to or greater than the number of subscribers served by the Franchise Area that
serves the fewest number of subscribers of all of the Franchise Areas related to
the Material Consent Franchises (based on the number of subscribers specified
for each such Franchise Area in Section 3.11(A) of FrontierVision's Disclosure
Schedule) (such a Franchise, a "Designated Material Consent Franchise"), then
FVP and Buyer agree to cooperate in preparing and completing an application on
FCC Form 394 (or other appropriate form) and appropriate letters of transmittal
and using their best efforts to file a completed application with the
appropriate Franchising Authority within ten days after the date it is
determined a Franchise Consent is required. Effective upon filing of each
Franchise Consent application, FVP and Buyer shall be deemed to have agreed that
such application is "facially complete."
If it is finally determined pursuant to this Section 6.4(b) (by
agreement of FVP and Buyer or by resolution of a law firm) that a Franchise
Consent is required from such Franchising Authority but the Franchise in
question is not a Designated Material Consent Franchise (all such Franchises
that are not a Designated Material Consent Franchise, a "Designated Non-Material
Consent Franchise"), and the Franchise Areas relating to all such Designated
Non-Material Consent Franchises serve in the aggregate at least 35,000
subscribers (based on the number of subscribers specified for each such
Franchise Area in Section 3.11(A) of FrontierVision's Disclosure Schedule), then
(except to the extent that Buyer agrees that no Franchise Application will be
filed for a particular Designated Non-Material Consent Franchise), FVP and Buyer
agree to cooperate in preparing and completing an application on FCC Form 394
(or other appropriate form) and appropriate letters of transmittal for each
Designated Non-Material Consent
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Franchise identified to such date and using their best efforts to file a
completed application with the appropriate Franchising Authority within ten days
after the date it is determined such filings are required pursuant to this
paragraph. Effective upon filing of each Franchise Consent application, FVP and
Buyer shall be deemed to have agreed that such application is "facially
complete."
(c) FVP and Buyer shall promptly furnish to any
Governmental Authority or other
Person from whom a Consent or Franchise renewal is requested such accurate and
complete information regarding the FrontierVision Companies and Buyer, including
financial information and other information relating to the cable and other
media operations of the FrontierVision Companies and Buyer, as a Governmental
Authority or other Person may reasonably require in connection with obtaining
any such Consent or renewal. Notwithstanding anything in this Agreement to the
contrary, but subject to the provisos below in this Section 6.4(c), Buyer
acknowledges and agrees that FVP will control and manage the process of
obtaining such Consents and Franchise renewals and that neither Buyer nor any of
its employees, agents, representatives or any other Person acting on behalf of
Buyer will contact any Governmental Authority or other Person who is party to a
Franchise, License or Contract of the FrontierVision Companies, including those
from whom a Consent or Franchise renewal is sought, for the purpose of seeking
any amendment, modification or changes to any Franchise, License or Contract,
for the purpose of waiving or extending the time period in which such
Governmental Authority or other Person is required to act on the request for
Consent or renewal, or for any other purpose that would have the result of
unduly hindering or delaying the receipt of any such Consent, waiver or renewal;
provided that it is understood and agreed that nothing herein shall prevent
Buyer (or its employees, agents, representatives and any other Person acting on
behalf of Buyer) from communicating (by letter, press release, or otherwise)
following consultation with FVP with any such Governmental Authority (whether or
not a Consent is being sought from it) in order to provide information relating
to Buyer and transition issues regarding Buyer and the Systems following the
Closing Date or from responding to requests initiated by Governmental
Authorities or other Persons from whom a Consent is sought so long as such
response does not relate to any of the foregoing prohibited matters and Buyer
shall use commercially reasonable efforts to apprise FVP of all such requests.
(d) If in connection with the process of obtaining any
Consent, a Governmental
Authority or other Person seeks to impose any condition or any change to a
Franchise, License or Contract to which such Consent relates that would be
applicable to Buyer or any FrontierVision Company as a requirement for granting
its Consent, FVP shall promptly notify Buyer of such fact and FVP shall not
agree to such condition or change except as agreed to by Buyer in writing;
provided that if such condition or change relates to a Consent with respect to a
Material Consent Franchise or a Designated Material Consent Franchise that is
then in the Renewal Window, Buyer hereby accepts (and agrees that FVP may accept
on behalf of Buyer and the FrontierVision Companies without the need for any
further agreement by Buyer in writing) any such conditions or changes that are
commercially reasonable taken as a whole (it being agreed by Buyer for purposes
of this Agreement, without limiting whether any other terms are commercially
reasonable, that so long as the proposed renewal term of such Franchise is at
least ten years, that a requirement to complete an upgrade/rebuild of the System
serving
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such Franchise Area up to 750 MHz by a date that is no earlier than three years
from the Closing Date and/or a requirement to pay franchise fees up to the
amount permitted by the Cable Act is commercially reasonable). For purposes of
this Agreement, the term "Renewal Window" means that the Franchise in question
is due to expire within three years from the date of determination.
If in connection with the process of obtaining a renewal of any Renewal
Franchise, a Franchising Authority seeks to renew such Franchise on terms that
differ in any materially adverse respect from the terms of the existing
Franchise, FVP shall promptly notify Buyer of such fact and FVP shall not agree
to such condition or change except as agreed to by Buyer in writing; provided
that Buyer hereby accepts (and agrees that FVP may accept on behalf of Buyer and
the FrontierVision Companies without the need for any further agreement by Buyer
in writing) the following: (1) a renewal of the City of Auborn (ME), City of
Lewiston (ME), and Town of Lisbon (ME) Franchises on substantially the same
terms as the respective terms of renewal specified in such existing Franchises;
(2) a renewal of the Town of Tremont (ME), Town of Bar Harbor (ME), City of Old
Town (ME), and Town of Orrington (ME) Franchises on substantially the same terms
as the terms of the existing City of Bangor (ME) Franchise; (3) a renewal of the
Town of Southwest Harbor (ME) Franchise on substantially the same terms as the
terms contained in the draft franchise proposal previously delivered to Buyer;
(4) a renewal of the Village of Holgate (OH) Franchise on substantially the same
terms as the terms contained in the draft franchise proposal previously
delivered to Buyer; (5) a renewal of the City of Defiance (OH) Franchise on
substantially the same terms as the terms contained in the draft franchise
proposal previously delivered to Buyer; (6) a renewal of the Village of Albany
(OH) and Town of Spring Hope (NC) Franchises on terms that are commercially
reasonable taken as a whole (it being agreed by Buyer for purposes of this
Agreement, without limiting whether any other terms are commercially reasonable,
that so long as the proposed renewal term of the Renewal Franchise is at least
ten years, that a requirement to complete an upgrade/rebuild of the System
serving such Franchise Area up to 750 MHz by a date that is no earlier than
three years from the Closing Date and/or a requirement to pay franchise fees up
to the amount permitted by the Cable Act is commercially reasonable).
Buyer agrees that all fees, costs and expenses of such conditions or
changes shall be borne by Buyer directly or indirectly as the owner of the
FrontierVision Companies. Buyer also agrees that after the Closing it will cause
the FrontierVision Companies to comply with the provisions of all of the
Franchises and will not withhold its consent to any requirement that the
FrontierVision Companies comply with the rebuild/upgrade requirements contained
in the Franchises as set forth in Section 6.4 of FrontierVision's Disclosure
Schedule (as such requirements may be modified with Buyer's consent) that is
imposed by a Franchising Authority as a condition to its approval of a request
for Consent or request for a Franchise renewal.
(e) If prior to the Closing hereunder any Franchising
Authority purchases the assets
of any System (or portion thereof) that serves the Franchise Area covered by the
Franchise granted by such Franchising Authority pursuant to any right of first
refusal in such Franchise that is triggered by the consummation of the purchase
and sale of the Purchased Interests, an amount equal to the product of (1) the
number of Closing Equivalent Subscribers represented by the subscribers served
in such
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Franchise Area (determined as if the effective time of the consummation of the
respective sale of such to the Franchising Authority were the Adjustment Time
hereunder) multiplied by (2) $2,928 shall be included as an Adjustment Liability
in the computation of Closing Net Liabilities, and the target number of 700,000
Closing Equivalent Subscribers referred to in Section 2.5(a) shall be reduced by
such number of Closing Equivalent Subscribers. FVP will not agree and will not
permit the FrontierVision Companies to agree to sell the assets of any System
(or portion thereof) pursuant to a right of first refusal in a Franchise as
described above if the closing thereof would occur after the Closing hereunder
and the purchase consideration would be less than the amount equal to the
product of (1) the number of Closing Equivalent Subscribers represented by the
subscribers served in such Franchise Area (determined as if the effective time
of the consummation of the respective sale of such to the Franchising Authority
were the Adjustment Time hereunder) multiplied by (2) $2,928.
(f) If, notwithstanding their commercially reasonable
efforts, FVP and the other
FrontierVision Companies are unable to obtain any required Consents or Franchise
renewal, none of FVP or any of the Sellers shall be liable to Buyer for any
breach of covenant and after the Closing none of FVP or any of the Sellers shall
have any further obligation with respect to obtaining any such Consents or
renewals or any liability for the failure of such Consents or renewals to be
obtained. Except as provided in this Agreement or with respect to the Credit
Agreement Consent, nothing herein shall require the expenditure or payment of
any funds (other than in respect of normal and usual attorneys fees, filing fees
or other normal costs of doing business) or the giving of any other
consideration by FVP, any Seller or any of the FrontierVision Companies in order
to obtain any Consent or renewal.
6.5 HSR Act Filing.
As soon as practicable after the execution of this
Agreement, but in any event
no later than forty-five days after such execution, FVP, as the "acquired
person," and Buyer, as the "acquiring person," will each complete and file, or
cause to be completed and filed, a premerger notification and report under the
HSR Act that is consistent with the rules and regulations of the Federal Trade
Commission (the "FTC") and that requests early termination of the waiting period
imposed by the HSR Act. FVP and Buyer shall use commercially reasonable efforts
to respond as promptly as reasonably practicable to any inquiries received from
the FTC and the Antitrust Division of the Department of Justice (the "Antitrust
Division") for additional information or documentation and to respond as
promptly as reasonably practicable to all inquiries and requests received from
any other Governmental Authority in connection with antitrust matters. FVP and
Buyer shall use commercially reasonable efforts to overcome any objections which
may be raised by the FTC, the Antitrust Division or any other Governmental
Authority having jurisdiction over antitrust matters. The fees relating to the
filings required by the HSR Act shall be shared equally by Buyer, on the one
hand, and Sellers, on the other hand.
(b) Each of the other parties to this Agreement and their
Affiliates will cooperate
with FVP and Buyer in causing such filings to be made as expeditiously as
practicable, will promptly file, after any request by the FTC or Antitrust
Division and after appropriate negotiation with the FTC
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or the Antitrust Division of the scope of such request, any information or
documents so requested, and will furnish FVP and Buyer with copies of any
correspondence from or to, and notify FVP and Buyer of any other communications
with, the FTC and Antitrust Division that relates to the transactions
contemplated by this Agreement.
(c) If the parties subsequently determine that any filing
by any of the Sellers or their
Affiliates is required in connection with the consummation of the transactions
contemplated by this Agreement, including the acquisition by any of the Sellers
of ACC Class A Common Stock, such Seller and, as necessary, Buyer, will each
complete and file, or cause to be completed and filed, a premerger notification
and report under the HSR Act that is consistent with FTC rules and regulations
and that requests early termination of the waiting period imposed by the HSR
Act. Each of the parties making such filings shall use commercially reasonable
efforts to: (1) respond as promptly as reasonably practicable to any inquiries
received from the FTC and the Antitrust Division for additional information or
documentation; (2) respond as promptly as reasonably practicable to all
inquiries and requests received from any other Governmental Authority in
connection with antitrust matters; and (3) overcome any objections which may be
raised by the FTC, the Antitrust Division or any other Governmental Authority
having jurisdiction over antitrust matters. The filing fees related to any
filing required to be made under this subsection (c) shall be shared equally
between the "acquiring person" and the "acquired person" for each such filing,
except that if any filing is required solely as a result of the purchase and
sale of the SPC Stock contemplated hereby (as opposed to direct partnership
interests in FVP), any filing fees related to such filings shall be paid solely
by the SPC Seller(s) who own(s) the SPC Stock in question.
6.6 Buyer's Qualifications and Financing.
(a) Buyer will not take any action that does, or could
reasonably be expected to,
disqualify Buyer to be the transferee of control of the FrontierVision Companies
as the holder of the Franchises and the owner and operator of the Assets and
Systems. Should Buyer become aware of any fact or circumstance that would
disqualify Buyer as the transferee of control of the FrontierVision Companies,
Buyer will promptly notify FVP and Sellers in writing thereof and will remove
any such disqualifying fact or circumstance.
(b) Buyer will not take any action that is inconsistent
with its obligations under this
Agreement or which does, or would reasonably be expected to, materially hinder
or delay the consummation of the transaction contemplated by this Agreement.
Without limiting the generality of the foregoing, at all times between the date
hereof and the Closing Date, Buyer will take all necessary or advisable actions
to ensure, and Buyer will ensure, that Buyer is able to deliver the Cash
Consideration and the Stock Consideration at Closing. From the date hereof until
Closing, Buyer will promptly notify FVP and Sellers of any event that occurs or
circumstance that arises that could prevent Buyer from being able to deliver the
Cash Consideration or Stock Consideration at Closing.
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6.7 Discharge of Debt Documents.
(a) Promptly following the execution of this Agreement,
FVP will approach the
agent banks under the Credit Agreement to seek requisite lender consent (the
"Credit Agreement Consent") to permit the outstanding loans and commitments
under the Credit Agreement to remain outstanding after the Closing, and FVP will
use its best efforts to obtain such Consent. FVP will keep Buyer reasonably
informed as to FVP's inquiries and the agent banks' responses with respect
thereto. Buyer acknowledges and agrees that FVP has no obligation (other than to
use best efforts as provided above) to obtain the Credit Agreement Consent and
that obtaining the Credit Agreement Consent is not a condition precedent to
Buyer's obligations hereunder and that this Section 6.7(a) in no way limits
Buyer's obligation under Section 6.7(b) if the indebtedness under the Credit
Agreement becomes due and payable at the Closing. FVP shall afford Buyer the
opportunity to discuss and negotiate the Credit Agreement Consent with the agent
banks and other lenders under the Credit Agreement. It is understood and agreed
that both FVP and Buyer shall have a reasonable opportunity to review and the
right to approve the Credit Agreement Consent documentation and terms thereof
prior to execution thereof.
(b) If the Credit Agreement Consent is not obtained,
Buyer shall cause all obligations
of the FrontierVision Companies under the Credit Agreement (including all
principal, accrued and unpaid interest and all other amounts) that becomes due
and payable concurrently with the consummation of the Closing to be discharged
in full at the Closing.
(c) Promptly following the execution of this Agreement,
FVP will approach General
Electric Capital Corporation ("GECC") to seek consent (the "GECC Facility
Consent") to permit the Equipment Leasing Facility to remain outstanding after
the Closing, and FVP will use its commercially reasonable efforts (which shall
in no event require the expenditure or payment of funds or the giving of any
other consideration by FVP, any Seller or any of the FrontierVision Companies in
order to obtain the GECC Facility Consent) to obtain such Consent. FVP will keep
Buyer reasonably informed as to FVP's inquiries and GECC's responses with
respect thereto. Buyer acknowledges and agrees that FVP has no obligation (other
than to use commercially reasonable efforts as provided above) to obtain the
GECC Facility Consent and that obtaining the GECC Facility Consent is not a
condition precedent to Buyer's obligations hereunder. If GECC withholds its
consent, FVP will cause all indebtedness outstanding under such Equipment
Leasing Facility to be repaid at or before the Closing.
(d) Buyer acknowledges and agrees that the Issuers under
the Indentures will be
required to make an Offer of Redemption under each of the Indentures within
thirty days of the Closing Date, in the case of the 1996 Indenture, and within
thirty-five days of the Closing Date, in the case of the 1997 Indenture and the
1998 Indenture. Buyer will cause the Issuers to discharge all of their
obligations under the Indentures in accordance with their terms.
(e) FVP will cause the FrontierVision Companies to
terminate all of its interest rate protection and similar agreements and
discharge all of their obligations thereunder at or prior to the
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Closing unless Buyer has delivered reasonable prior notice to FVP specifying
that Buyer desires the FrontierVision Companies to maintain the effectiveness of
one or more of such agreements as specified in Buyer's notice. If the
FrontierVision Companies maintain the effectiveness of one or more of such
agreements at Buyer's request, the amount of the net asset shall be included as
an Adjustment Asset in the computation of Closing Net Liabilities, if
applicable, or the amount of the net liability shall be included as an
Adjustment Liability in the computation of Closing Net Liabilities, if
applicable.
6.8 Retention and Access to the FrontierVision Companies' Records.
Except as provided in Section 6.10(c)(1), the General Partner and
Sellers shall, for a period of five years from the Closing Date, have access to,
and the right to copy, at their expense, during usual business hours upon
reasonable prior notice to Buyer, all of the books and records relating to the
FrontierVision Companies, Assets and Systems that were transferred to Buyer
pursuant to this Agreement. Buyer shall retain and preserve all such books and
records for such five year period. Subsequent to such five year period, Buyer
shall only destroy such books and records if there is no ongoing litigation,
governmental audit or other proceeding, and subsequent to thirty days' notice to
the General Partner and Sellers of their right to remove and retain such books
and records, or to copy such books and records prior to their destruction.
6.9 Employee Matters.
(a) Except as otherwise provided in this Section 6.9,
nothing herein shall require
Buyer or the FrontierVision Companies to continue the employment of any
employees of the FrontierVision Companies for any period of time following the
Closing. Within thirty days after representatives of Buyer meet with the
FrontierVision Companies' corporate-level employees to discuss employment
opportunities with Buyer following the Closing, FVP shall provide to Buyer a
list of all employees of the FrontierVision Companies and shall designate those
corporate-level employees that are not available for continued employment with
the FrontierVision Companies following the Closing. Within a reasonable period
of time following the receipt of such list and no less than sixty days prior to
the Closing Date, Buyer shall provide FVP with written notice of which of the
available employees of the FrontierVision Companies Buyer intends to retain
following the Closing (the "Assumed Employees"). FVP shall cause the
FrontierVision Companies to terminate the employment of all employees that are
not Assumed Employees on or prior to the Closing. Notwithstanding the foregoing,
Buyer agrees to provide FVP with written notice of which of the available
employees of the FrontierVision Companies Buyer intends to retain following the
Closing at least 100 days prior to the Closing in the event that Buyer intends
to terminate or to cause any FrontierVision Company to terminate 50 or more
employees (when considered together with those employees to be terminated as
designated by any FrontierVision Company) during the 90-day period prior to and
including the Closing to permit FVP to make any required notices under the
Worker Adjustment and Retraining Notification Act, as amended ("WARN Act"). In
the event that Buyer fails to provide such notice to FVP, Buyer agrees that it
will retain a sufficient number of employees employed by the FrontierVision
Companies as of the Closing to ensure that 50 or more employees do not
experience "employment loss" as that term
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is defined in the WARN Act during the 90-day period prior to and including the
Closing. Buyer shall continue to employ such employees for a period of at least
90 days after the Closing, except for such employees who voluntarily terminate
employment, retire or are discharged for cause. Buyer shall be solely
responsible for and shall indemnify and hold Sellers harmless from any liability
arising under the WARN Act after the Closing arising out of Buyer's failure to
provide adequate advanced written notice to FVP or arising out of Buyer's
failure to continue the employment of any FrontierVision Company employee as
required in this Section 6.9(a). Buyer shall have no obligation to provide
severance benefits to any employee of the FrontierVision Companies who terminate
employment on or prior to Closing.
(b) As of and immediately after the Closing each Assumed
Employee shall be
employed in the same position and on the same terms and conditions prevailing as
of the Closing, and each Assumed Employee who continues his employment after the
Closing shall receive credit for past service with any of the FrontierVision
Companies for all purposes of eligibility and vesting under Buyer's Employee
Plans and for all other purposes under Buyer's vacation, sick leave or other
benefit programs or arrangements. Buyer shall not otherwise be required to
maintain any particular level of benefits for any of the Assumed Employees
except that Buyer will not discuss any potential changes in employment terms or
benefits with the Assumed Employees prior to the Closing. Notwithstanding the
foregoing, upon Buyer's request, FVP will coordinate with Buyer to permit Buyer
to meet with any of the corporate-level Assumed Employees to discuss employment
opportunities following the Closing, including position, salary and other
employment benefits (and the requirement that such employee must continue
employment in the same position and on the same terms and conditions shall not
apply to any corporate-level Assumed Employees).
(c) Buyer shall assume full responsibility and liability
for offering and providing
"continuation coverage" to any "qualified beneficiary" who is covered by a
"group health plan" sponsored or contributed to by any FrontierVision Company or
any of their ERISA Affiliates and who has experienced a "qualifying event" or is
receiving "continuation coverage" on or prior to the Closing. "Continuation
coverage," "Qualified beneficiary," "Qualifying event" and "group health plan"
all shall have the meanings given such terms under Section 4980B of the Code and
Section 601 et seq. of ERISA. Buyer shall hold the FrontierVision Companies and
any entity required to be combined with the FrontierVision Companies (within the
meaning of Sections 414(b), (c), (m) or (o) of the Code) harmless from and fully
indemnify them against any costs, expenses, losses, damages and liabilities
incurred or suffered by them directly or indirectly, including, but not limited
to, reasonable attorneys' fees and expenses, which relate to continuation
coverage and arise as a result of any action or omission by any FrontierVision
Company or any of their ERISA Affiliates or because Buyer is deemed to be a
successor employer to any FrontierVision Company or any of their ERISA
Affiliates.
(d) If the employment of any Assumed Employee who
continues his employment
with the FrontierVision Companies after the Closing is terminated within the
one-year period immediately following the Closing, such employee shall be
entitled to receive severance benefits in accordance with the provisions of the
FrontierVision Severance Pay Plan disclosed in Section 3.13 of
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FrontierVision's Disclosure Schedule. Notwithstanding the foregoing or anything
in the FrontierVision Severance Pay Plan to the contrary, Buyer shall have no
obligation to provide any severance benefits to any such employee discharged for
cause.
(e) At or prior to the Closing, FVP and the other
FrontierVision Companies shall
enter into appropriate release agreements with James C. Vaughn and John S. Koo,
pursuant to which each party irrevocably waives, releases and forever discharges
the other party (including the agents, servants, employees, directors, officers,
affiliates, divisions, partners and representatives of FVP and the other
FrontierVision Companies) of and from any and all actions, causes of actions,
charges, complaints, claims, liabilities, and expenses (including, without
limitation, attorneys' fees and costs) of any nature whatsoever, known or
unknown, in law and equity, arising from the employment agreements by and
between FVP and each of James C. Vaughn and John S. Koo.
(f) At the Closing, Buyer shall cause all amounts due
under the FrontierVision
Partners, L.P. Executive Deferred Compensation Plan to be paid as directed by
FVP. An amount equal to the aggregate amount of such payments shall be included
as an Adjustment Liability in the computation of Closing Net Liabilities. The
participants under the Plan shall deliver appropriate releases to Buyer with
respect to its rights under the Plan contingent upon receipt of the Closing
payment due to such participant.
6.10 Tax Matters.
The following provisions shall govern the allocation of responsibility
between Buyer and Sellers for certain tax matters following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date.
The General Partner shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the FrontierVision Companies for all periods ending on or prior to the
Closing Date which are required to be filed after the Closing Date. Such Tax
Returns shall be prepared in accordance with each FrontierVision Company's past
custom and practice (subject to applicable Legal Requirements and determined on
the basis of the appropriate permanent records of such FrontierVision Company),
and allocations of items of income and gain and loss and deduction shall be made
using the closing of the books method. In the case of any FrontierVision Company
that is a partnership or limited liability company, such Tax Returns shall be
prepared in accordance with the Charter Documents of such FrontierVision Company
as in effect on the Closing Date. In preparing each FrontierVision Company's Tax
Returns, the General Partner shall consult with Buyer in good faith and shall
provide Buyer with drafts of such Tax Returns (together with the relevant
back-up information) for review at least twenty days prior to filing. After the
Closing, Buyer shall not prepare or cause to be prepared or file or cause to be
filed any Tax Return for the FrontierVision Companies for any period ending on
or prior to the Closing Date, except as any Seller adversely affected thereby
may agree in writing.
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(b) Tax Periods Beginning Before and Ending After the
Closing Date. Buyer shall
prepare or cause to be prepared and file or cause to be filed any Tax Returns of
the FrontierVision Companies for Tax periods which begin before the Closing Date
and end after the Closing Date. Such Tax Returns shall be prepared in accordance
with each FrontierVision Company's past custom and practice (subject to
applicable Legal Requirements and determined on the basis of the appropriate
permanent records of such FrontierVision Company). In preparing such Tax
Returns, Buyer shall consult with the General Partner in good faith and shall
provide the General Partner with drafts of such Tax Returns (together with the
relevant back-up information) for review at least twenty days prior to filing.
(c) Cooperation on Tax Matters.
(1) Buyer and the General Partner shall
cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section 6.10 and any audit, litigation, or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation, or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. Buyer
and the General Partner agree (A) to retain all books and records with respect
to Tax matters pertinent to the FrontierVision Companies relating to any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or the General Partner, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (B) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so requests,
Buyer or the General Partner, as the case may be, shall allow the other party to
take possession of such books and records to the extent they would otherwise be
destroyed or discarded.
(2) Buyer and the General Partner further agree,
upon request, to use
commercially reasonable efforts to obtain any certificate or other document from
any Governmental Authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including Taxes with respect
to the transactions contemplated hereby).
(d) Tax Sharing Agreements. All tax sharing agreements
or similar agreements with
respect to or involving the FrontierVision Companies shall be terminated as of
the Closing Date and, after the Closing Date, the FrontierVision Companies shall
not be bound thereby or have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other
such Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement shall be borne one-half by Buyer and one-half by
Sellers. Buyer and the General Partner will cooperate
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in all reasonable respects to prepare and file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees.
6.11 FrontierVision Name.
Buyer agrees that the General Partner shall retain the right to the
name "FrontierVision" after the Closing and agrees to change the name of each of
the FrontierVision Companies within one year after the Closing to a name that
does not include any variant of "FrontierVision" and agrees not to otherwise use
the "FrontierVision" name or any variant thereof thereafter, subject to Buyer's
indemnification obligations under Section 10.4(c).
6.12 Releases.
After the Closing neither Buyer nor its Affiliates will have any claim
against (except as expressly provided in Article 10), or be entitled to enforce
any provision of the existing partnership agreement of FVP (or either of the
Limited Partnership Interests and Note Purchase Agreements pursuant to which the
Sellers made their investments in FVP) against, any Seller or any Affiliate of
any Seller or any officer or director of any Seller or any Affiliate of any
Seller, and any and all such claims (except claims made pursuant to Article 10)
are hereby waived and released. At the Closing, subject to Section 6.13, each
Seller shall execute and deliver to Buyer a Seller Release. At the Closing,
subject to Section 6.13, each Person designated on Exhibit H shall execute and
deliver to Buyer a Management Release.
6.13 Directors and Officers Insurance.
Prior to the Closing FVP will purchase on behalf of the FrontierVision
Companies a General Partners Liability/Limited Partnership Reimbursement
insurance policy in scope and coverage substantially similar to the policy
quotation received by Buyer from American Dynasty Surplus Line Insurance Company
on February 16, 1999, covering the officers and directors of the FrontierVision
Companies and the members of FVP's Advisory Committee. The amount of any
premiums paid by the FrontierVision Companies prior to the Adjustment Time in
respect of such policy shall be included as an Adjustment Asset in the
computation of Closing Net Liabilities. Buyer agrees to cause the FrontierVision
Companies to keep such policy in effect for at least the three year period
following the Closing Date.
6.14 Rate Regulatory Matters.
The parties acknowledge and agree that notwithstanding anything in this
Agreement or any other Transaction Document to the contrary (including any
representation or warranty made by FVP in Sections 3.11(e), 3.15 or 3.16), any
matter relating to, in connection with or resulting or arising from any Rate
Regulatory Matter, or any actions taken prior to or after the date hereof by any
FrontierVision Company to comply with or in a good faith attempt to comply with
any Rate Regulatory Matter
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(including any rate reduction, refund, penalty or similar action having the
effect of reducing the rates previously or subsequently paid by subscribers,
whether instituted or implemented by or imposed on any FrontierVision Company
and changes to rate practices instituted or implemented by or imposed on any
FrontierVision Company), shall not: (a) cause or constitute, directly or
indirectly, a breach by any FrontierVision Company or any Seller of any of its
representations, warranties, covenants or agreements contained in this Agreement
or any other Transaction Document (and such representations, warranties,
covenants, and agreements shall hereby be deemed to be modified appropriately to
reflect and permit the impact and existence of such Rate Regulatory Matters and
to permit any action by any FrontierVision Company to comply with or attempt in
good faith to comply with such Rate Regulatory Matters; (b) otherwise cause or
constitute, directly or indirectly, a default or breach by any FrontierVision
Company or any Seller under this Agreement or any other Transaction Document;
(c) result in the failure of any condition precedent to the obligations of Buyer
under this Agreement or any other Transaction Document; (d) otherwise excuse
Buyer's performance of its obligations under this Agreement or any other
Transaction Document; or (e) except as expressly provided in Section 10.2(c),
give rise to any claim for indemnification or other compensation by Buyer or any
adjustment to the Stock Consideration or Cash Consideration.
6.15 Distribution by SPCs of Interest in General Partner;
Cancellation of SPC Notes.
(a) Immediately prior to the Closing, each of Brown
Brothers Harriman & Co. and
Olympus Growth Fund II, L.P., both of which are SPC Sellers, will cause the
respective SPC owned by it to distribute, directly or indirectly, to such SPC
Seller the limited partnership interest in the General Partner held by such SPC
(together with all of its rights and obligations under the partnership agreement
of the General Partner). Such partnership interests in the General Partner are
not included in the Purchased Interests and shall not be sold and transferred to
Buyer hereunder.
(b) Each SPC Seller that holds any SPC Note shall cause
all such SPC Notes to be
canceled concurrently with the Closing. Buyer shall not assume any liability
with respect to any SPC Notes, and no SPC shall have any continuing liability
after the Closing with respect to any SPC Notes.
6.16 Cooperation on Buyer SEC Matters.
(a) FVP shall cooperate with Buyer and its counsel and
accountants in connection
with any filing required to be made by Buyer with the SEC. FVP shall provide to
Buyer such information relating to the FrontierVision Companies and their
respective business and operations as Buyer may reasonably request. All costs,
expenses and fees incurred in connection with the inclusion by Buyer of such
information in any such filing shall be borne by Buyer, and Buyer shall
indemnify and hold harmless FVP and the Sellers from any Losses resulting from
the inclusion by Buyer of any such information in any such filing, except Buyer
shall not have any indemnification liability to the FrontierVision Companies to
the extent any Losses arise out of any information included by Buyer in reliance
upon and in conformity with written information furnished by the FrontierVision
Companies expressly for use in connection with such filings.
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(b) FVP hereby consents to the inclusion by Buyer of
financial statements of the
FrontierVision Companies, if requested to be so included by Buyer, in any report
required to be filed by Buyer with the SEC, the National Association of
Securities Dealers' Automated Quotations ("NASDAQ") System or any stock exchange
pursuant to applicable Legal Requirements, including the Securities Act and the
Exchange Act. All costs, expenses and fees incurred in connection with the
inclusion by Buyer of financial statements of the FrontierVision Companies in
any such report shall be borne by Buyer, and Buyer shall indemnify and hold
harmless FVP and the Sellers from any Losses resulting from the inclusion by
Buyer of financial statements of the FrontierVision Companies in any such
report. FVP agrees to obtain the consent of the independent public accountants
of the FrontierVision Companies to the inclusion of such financial statements in
any report so required to be filed by Buyer with the SEC, NASDAQ System or any
stock exchange.
6.17 Stock Consideration Registration Rights Agreement.
(a) Simultaneously with the execution of this Agreement,
and as a material
inducement to Sellers to enter into this Agreement, Buyer shall execute and
deliver the Stock Consideration Registration Rights Agreement, pursuant to which
Buyer will grant Sellers certain rights as provided therein in respect of the
shares of ACC Class A Common Stock and other securities constituting the Stock
Consideration (such shares and other securities, the "Stock Consideration
Registrable Securities"). Buyer shall perform all of its obligations under the
Stock Consideration Registration Rights Agreement in accordance with their
terms.
(b) Prior to the Closing FVP will make a written request
to the "Minor Holders"
under the Stock Consideration Registration Rights Agreement with respect to
compliance with certain "Sales Notice" procedures, and establish a "preferred
broker" to facilitate such Sales Notices, all as more fully described in
Paragraph 2(b) of the Stock Consideration Registration Rights Agreement. No
"Minor Holder" will be liable to Buyer or any other party for any damages
sustained by Buyer or any other party as a result of the failure of such Minor
Holder to make a Sales Notice as requested by FVP.
6.18 State Cable Systems.
The FrontierVision Companies acquired certain of the Systems from State
Cable TV Corporation and Better Cable TV Company on October 23, 1998 pursuant to
a purchase and sale agreement referred to in Section 3.11 of FrontierVision's
Disclosure Schedule (the "State Cable Acquisition Agreement"). The
FrontierVision Companies have filed, or intend to file after the execution of
this Agreement, an indemnification claim against the sellers thereunder based on
their breach of certain representations and warranties relating to the bandwidth
capacity of such Systems. In consideration of the inclusion as an Adjustment
Liability of item (G) in Section 2.5(b)(2), FVP and Buyer hereby agree as
follows: (1) Sellers shall be entitled to the first $5,500,000 which is
collected by or on behalf of the FrontierVision Companies, either before or
after the Closing hereunder, in respect of such claim (to the extent it relates
to the plant miles in respect of which item (G) in Section 2.5(b)(2)
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relates) and Buyer shall be entitled to any amounts collected in excess of
$5,500,000; and (2) if such claim is not finally resolved prior to the Closing
hereunder, Buyer shall offer to engage the General Partner to proceed with the
claim on behalf of and as the agent of the FrontierVision Companies, will
cooperate and cause the FrontierVision Companies to cooperate with the General
Partner in all reasonable respects in connection therewith, and if any such
amounts are collected by or on behalf of the FrontierVision Companies after the
Closing hereunder, Buyer shall cause the first $5,500,000 in the aggregate of
such monies (less any such amounts collected by the FrontierVision Companies
prior to the Closing) to be remitted promptly to the General Partner for the
benefit of Sellers; provided, however, that (A) the General Partner shall not be
required to accept such engagement or proceed with such claim and Buyer may
terminate the engagement of the General Partner at any time provided that Buyer
shall still cause the first $5,500,000 in the aggregate of such monies (less any
such amounts collected by the FrontierVision Companies prior to the Closing) to
be remitted promptly to the General Partner for the benefit of Sellers except
that out of any monies to be remitted to the General Partner pursuant to this
clause (B) there shall be deducted Buyer's reasonable out-of-pocket costs and
expenses actually incurred, if any, in connection with prosecuting such claim
after the Closing and provided further that if the amount of the monies
collected after the Closing exceeds $5,500,000, Sellers shall only bear a pro
rata portion of Buyer's out-of-pocket costs and expenses based on a fraction,
the numerator of which is equal to $5,500,000 and the denominator of which is
equal to the total amount of the monies collected; and (B) the General Partner
shall not waive or settle such claim without the prior written consent of Buyer
(which consent shall not be unreasonably withheld) if the settlement relates to
any indemnification claim other than the claim described above in subsection (1)
or otherwise impairs the rights of the FrontierVision Companies with respect to
any other indemnification claims under the State Cable Acquisition Agreement.
6.19 Lien Searches.
FVP shall deliver to Buyer, at least two weeks prior to the Closing
Date, an accurate list of the current address of each Seller's respective
principal place of business, or if such Seller has no principal place of
business, such Seller's respective residence, and upon delivery of such list FVP
shall be deemed to have represented and warranted to Buyer that each such
address is the true and correct address that it purports to be with respect to
each Seller as of such date.
6.20 Distant Signals; Copyright Matters.
Unless otherwise restricted or prohibited by any Governmental
Authority, Legal Requirement or Contract, if requested by Buyer, FVP will cause
the FrontierVision Companies to delete prior to the Closing any distant
broadcast signal the continued carriage of which will in Buyer's reasonable
judgment result in a substantial increase to Buyer's copyright liability;
provided, however, that Buyer shall give FVP reasonable advance notice to permit
the FrontierVision Companies to comply with its notice obligations in connection
with a signal deletion and FVP shall have no obligation to cause the deletion of
such signal unless Buyer agrees to reimburse the Sellers for any out-of-pocket
costs and
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expenses that may be incurred by the FrontierVision Companies in connection with
deleting any such signals (other than nominal costs and expenses).
ARTICLE 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS
7.1 Conditions to Obligations of Buyer.
All obligations of Buyer at the Closing hereunder are subject to the
fulfillment prior to or at the Closing of each of the following conditions:
(a) Representations and Warranties of FVP. As to the
representations and warranties
of FVP set forth in Article 3, (1) those representations and warranties set
forth in Article 3 which are expressly stated to be made solely as of the date
of this Agreement or another specified date shall be true and correct in all
respects as of such date, and (2) all other representations and warranties of
FVP set forth in Article 3 shall be true and correct in all respects at and as
of the time of the Closing as though made at and as of that time, except in each
case of clauses (1) and (2) to the extent that the aggregate effect of the
inaccuracies in such representations and warranties as of the applicable times
does not constitute a material adverse change in the business, financial
condition, assets or liabilities of the FrontierVision Companies, taken as a
whole, when compared with the state of facts that would exist if all such
representations and warranties were true in all respects as of the applicable
times, not giving effect to any inaccuracies resulting from any actions taken in
accordance with the provisions of this Agreement, any event that arose in the
ordinary course of business, any changes in economic conditions that are
applicable to the cable industry generally on a national, state, regional or
local basis, any changes in conditions (including Rate Regulatory Matters, and
other federal, state or local governmental actions, legislation or regulations)
that are applicable to the cable industry generally on a national, state,
regional or local basis, or any changes in competitive activities.
(b) Representations and Warranties of Sellers. As to the
representations and
warranties of Sellers set forth in Article 4, (1) those representations and
warranties set forth in Article 4 which are expressly stated to be made solely
as of the date of this Agreement or another specified date shall be true and
correct in all respects as of such date, and (2) all other representations and
warranties of Sellers set forth in Article 4 shall be true and correct in all
respects at and as of the time of the Closing as though made at and as of that
time, except in each case of clauses (1) and (2) to the extent that the
aggregate effect of the inaccuracies in such representations and warranties as
of the applicable times does not materially impair Sellers' ability to perform
their obligations under this Agreement and the other Transaction Documents to
which they are party.
(c) Covenants. FVP and the Sellers shall have performed
and complied with all
covenants and agreements required by this Agreement (other than by Sections 6.4
and 6.7, which are governed by the immediately following sentence) to be
performed or complied with by them prior to
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or at the Closing, except to the extent that the aggregate effect of the failure
to so perform or comply has not had a material adverse effect on the business,
financial condition, assets or liabilities of the FrontierVision Companies,
taken as a whole. FVP shall have performed and complied with in all material
respects all covenants and agreements required by Sections 6.4, 6.7 and 6.16 to
be performed or complied with by it prior to or at the Closing.
(d) Franchise Consents and Franchise Renewals.
(1) A Consent of the Franchising Authority shall
have been obtained for each
Franchise designated in Section 3.4 of FrontierVision's Disclosure Schedule as a
"Material Consent Franchise" and for each Designated Material Consent Franchise,
if any. Notwithstanding the preceding sentence, and for purposes of satisfaction
of the condition in this subsection (1):
(A) Consent with respect to any Material
Consent Franchise or any
Designated Material Consent Franchise shall be deemed obtained on the date the
120-Day Period expires if such Franchising Authority fails to approve or deny
the request for Consent by such date and the failure to approve the request for
Consent was not principally caused by any of the following: a nonfrivolous
dispute by the Franchising Authority as to the FrontierVision Companies' (or any
predecessor's) noncompliance with the Franchise (provided that FVP has provided
Buyer with evidence reasonably satisfactory to Buyer supporting FVP's contention
that such dispute is frivolous); a nonfrivolous dispute by the Franchising
Authority as to Buyer's qualifications to be the transferee of control of the
FrontierVision Companies as the holder of the Franchise in question (provided
that FVP has provided Buyer with evidence reasonably satisfactory to Buyer
supporting FVP's contention that such dispute is frivolous); or the withholding
of consent by FVP or Buyer to any requirements that would be imposed by the
Franchising Authority as a condition to granting such Consent (although nothing
herein shall be deemed to limit the provisions of Section 6.4(d) relating to
changes and conditions that Buyer is required to accept and that FVP may accept
on behalf of Buyer and the FrontierVision Companies). The term "120-Day Period"
means, with respect to any Franchise, the 120 day period commencing on the date
on which the Consent application on FCC Form 394 (or other appropriate form)
required to be filed with respect to such Franchise was filed with the
appropriate Franchising Authority, plus the number of days, if any, that FVP has
agreed with a Franchising Authority to extend the 120-day period provided by
Section 617 of the Cable Act.
(B) Consent with respect to any Material
Consent Franchise or
Designated Material Consent Franchise that is not in the Renewal Window shall be
deemed obtained on the sixtieth day (subject to the proviso below) after the
date the 120-Day Period expires, or if the Franchising Authority has
affirmatively denied the request for Franchise Consent, the sixtieth day after
the date of such denial, if such Franchising Authority fails to approve or fails
to reverse its denial of the request for Consent by such date and the failure to
approve or reverse its denial of the request for Consent was not principally
caused by a non-frivolous dispute by the Franchising Authority as to the
FrontierVision Companies' (or a predecessor's) noncompliance with the Franchise
(provided that FVP has provided Buyer with evidence reasonably satisfactory to
Buyer supporting FVP's contention that
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such dispute is frivolous); provided, however, that the sixty day extension
period referred to above shall be reduced by each day that the Franchise Consent
application was filed after the forty-fifth day after the execution of this
Agreement (with respect to applications filed pursuant to Section 6.4(a)) or
filed after the tenth day after the date it was determined that such application
was required to be filed (with respect to applications filed pursuant to Section
6.4(b)) if such delay in filing was principally caused by Buyer.
(2) The Renewal Franchises shall have been
renewed in accordance with the
provisions of Section 6.4. The condition in this subsection (2) shall be deemed
satisfied as to any Renewal Franchise (other than the City of Lewiston (ME),
City of Auborn (ME), and City of Defiance (OH) Franchises) if such Franchise is
extended on its existing terms to a date that permits either the FrontierVision
Companies (prior to the Closing) or Buyer (after the Closing) to file a request
for renewal under Section 626(a) of the Cable Act prior to the expiration of the
statutory time period for making such filing (determined on the basis of the new
expiration date).
(3) A Consent of the Franchising Authority under
the Town of Manchester
(ME), the Town of Winthrop (ME), the Town of Peru (ME), the Town of Fairfield
(ME), the Town of Milo (ME), and the City of Brewer (ME) Franchises shall have
been obtained (with an acknowledgment by such Franchising Authority that the
FrontierVision Companies are not in default under the Franchise) or the date by
which the FrontierVision Companies are required to complete any upgrade/rebuild
requirements set forth in such Franchises shall have been extended at least
three years such that the FrontierVision Companies are not in default under the
Franchise.
(e) FCC Consents. Consent of the FCC shall have been
obtained with respect to
each CARS License listed in Section 3.8 of FrontierVision's Disclosure Schedule.
(f) Lease Consents. Consent of the lessor under the
office leases designated as
"Material Consent Leases" in Section 3.4 of FrontierVision's Disclosure Schedule
shall have been obtained.
(g) Hart-Scott-Rodino. The requisite waiting period, if
any, under the HSR Act shall have expired or been terminated.
(h) Judgment. There shall not be in effect on the date on
which the Closing is to
occur any judgment, decree, or order of a court of competent jurisdiction or
other prohibition having the force of law that would prevent or make unlawful
the Closing, provided that Buyer shall have used commercially reasonable efforts
to prevent the entry of any such judgment, decree, order or other legal
prohibition and to appeal as expeditiously as possible any such judgment,
decree, order or other legal prohibition that may be entered and shall have
otherwise taken commercially reasonable actions to cause any such judgment,
decree, order or other legal prohibition to cease to be in effect as
expeditiously as possible.
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(i) No Material Adverse Change. No event shall have
occurred between December
31, 1998 and the date on which the Closing is to occur that has had a material
adverse effect on the business, financial condition, assets or liabilities of
the FrontierVision Companies, taken as a whole, other than events or changes
disclosed in this Agreement or FrontierVision's Disclosure Schedule, or an event
that arose in the ordinary course of business, any changes in economic
conditions that are applicable to the cable industry generally on a national,
state, regional or local basis, any changes in conditions (including Rate
Regulatory Matters, and other federal, state or local governmental actions,
legislation or regulations) that are applicable to the cable industry generally
on a national, state, regional or local basis, or any changes in competitive
activities.
(j) Lien Searches. FVP shall have delivered to Buyer, at
least two weeks prior to
the Closing Date, UCC financing statement, tax lien and judgment searches dated
not more than thirty days prior to the Closing Date (including copies of
documents listed on each search, if any) with respect to each of the Sellers
performed by a search firm reasonably satisfactory to Buyer in the jurisdiction
of each Seller's respective principal place of business, or if such Seller has
no place of business, in the jurisdiction of his or her respective residence as
set forth in the list delivered by FVP pursuant to Section 6.19 (except that
this condition shall not be deemed unsatisfied by the failure to deliver a
search at least two weeks prior to the Closing Date if such search does not
evidence any Encumbrance on the Purchased Interests or the Assets that is not a
Permitted Encumbrance or if any such Encumbrance that is not a Permitted
Encumbrance is removed at or prior to the Closing).
(k) Deliveries. Sellers shall have made or stand willing
to make all the deliveries to Buyer described in Section .
7.2 Conditions to Obligations of Sellers.
All obligations of each Seller at the Closing hereunder are subject to
the fulfillment prior to or at the Closing of each of the following conditions:
(a) Representations and Warranties. As to the
representations and warranties of
Buyer set forth in Article 5, (1) those representations and warranties set forth
in Article 5 which are expressly stated to be made solely as of the date of this
Agreement or another specified date shall be true and correct in all respects as
of such date, and (2) all other representations and warranties of Buyer set
forth in Article 5 shall be true and correct in all respects at and as of the
time of the Closing as though made at and as of that time, except in each case
of clauses (1) and (2) to the extent that the aggregate effect of the
inaccuracies in such representations and warranties as of the applicable times
does not constitute a material adverse change in the business, financial
condition, assets or liabilities of Buyer and its Subsidiaries, taken as a
whole, when compared with the state of facts that would exist if all such
representations and warranties were true in all respects as of the applicable
times, not giving effect to any inaccuracies resulting from any actions taken in
accordance with the provisions of this Agreement, any event that arose in the
ordinary course of business, any changes in economic conditions that are
applicable to the cable industry generally on a national, state, regional or
local basis, any
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changes in conditions (including Rate Regulatory Matters, and other federal,
state or local governmental actions, legislation or regulations) that are
applicable to the cable industry generally on a national, state, regional or
local basis, or any changes in competitive activities.
(b) Covenants. Buyer shall have performed and complied
with in all material
respects all covenants and agreements required by this Agreement to be performed
or complied with by it prior to or at the Closing.
(c) Hart-Scott-Rodino. The requisite waiting period, if
any, under the HSR Act shall
have expired or been terminated.
(d) Judgment. There shall not be in effect on the date on
which the Closing is to
occur any judgment, decree, or order of a court of competent jurisdiction or
other prohibition having the force of law that would prevent or make unlawful
the Closing, provided that FVP shall have used commercially reasonable efforts
to prevent the entry of any such judgment, decree, order or other legal
prohibition and to appeal as expeditiously as possible any such judgment,
decree, order or other legal prohibition that may be entered and shall have
otherwise taken commercially reasonable actions to cause any such judgment,
decree, order or other legal prohibition to cease to be in effect as
expeditiously as possible.
(e) No Material Adverse Change. No event shall have
occurred between the date
of this Agreement and the date on which the Closing is to occur that has had a
material adverse effect on the business, financial condition, assets or
liabilities of Buyer and its Subsidiaries, taken as a whole, other than an event
that arose in the ordinary course of business, any changes in economic
conditions that are applicable to the cable industry generally on a national,
state, regional or local basis, any changes in conditions (including Rate
Regulatory Matters, and other federal, state or local governmental actions,
legislation or regulations) that are applicable to the cable industry generally
on a national, state, regional or local basis, or any changes in competitive
activities.
(f) Stock Consideration. The shares of ACC Class A
Common Stock to be paid and
issued to Sellers as the Stock Consideration (or, if applicable, all of the
securities of any other class or series constituting the Stock Consideration):
(1) shall have been duly authorized and validly issued, fully paid and
nonassessable, not subject to, or issued in violation of, any preemptive rights
and not issued in violation of any federal or state securities laws; (2) shall
comply with the provisions of the Stock Consideration Registration Rights
Agreement; and (3) shall have the same rights and powers as all other shares of
ACC Class A Common Stock (or, if any of the securities constituting the Stock
Consideration are not shares of ACC Class A Stock, as all other securities of
the same class or series) issued and outstanding as of the date of this
Agreement.
(g) Stock Consideration Registration Rights Agreement.
The Stock Consideration
Registration Rights Agreement shall be in full force and effect in accordance
with its terms and Buyer shall have performed all of its obligations therein in
accordance with their terms. An appropriate
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registration statement covering the registration of all of the Stock
Consideration Registrable Securities shall have been declared effective under
the Securities Act in accordance with the provisions of the Stock Consideration
Registration Rights Agreement (and such registration statement shall not be
subject to any stop order or proceeding seeking a stop order). All of the Stock
Consideration Registrable Securities shall be listed on the NASDAQ National
Market System, New York Stock Exchange or American Stock Exchange or other major
market system or exchange reasonably acceptable to Sellers.
(h) Deliveries. Buyer shall have made or stand willing
to make all the deliveries
described in Section .
ARTICLE 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date.
(1) Subject to satisfaction or, to the extent
permitted by law, waiver, of the
closing conditions described in Article 7, and subject to Sections 8.1(a)(2),
8.1(a)(3) and 8.1(a)(4), the Closing shall take place on the tenth business day
after FVP or Buyer provides written notice to the other party after satisfaction
or waiver of the conditions set forth in Sections 7.1(d), (e), (f) and (g) and
Section 7.2(c) (provided that without Buyer's consent, the Closing Date shall
not be earlier than the earlier of the date on which all Franchise Consents are
obtained and the date that is sixty days after the date on which the 120-Day
Period has expired for each Franchise in respect of which a Franchise Consent
application was filed; provided, however, that the sixty day extension period
referred to above shall be reduced by each day that the Franchise Consent
application was filed after the forty-fifth day after the execution of this
Agreement (with respect to applications filed pursuant to Section 6.4(a)) or
filed after the tenth day after the date it was determined that such application
was required to be filed (with respect to applications filed pursuant to Section
6.4(b)) if such delay in filing was principally caused by Buyer)); and provided
further that without the consent of both FVP and Buyer the Closing Date shall
not be earlier than the tenth business day after FVP or Buyer provides written
notice to the other party that the Closing is permitted to take place in
accordance with the preceding provisions of this Section 8.1(a)(1)), or on such
earlier or later date as FVP and Buyer shall mutually agree. If such tenth
business day (or any other date for the Closing agreed to by FVP and Buyer)
would extend the date for the Closing beyond the Upset Date, the Upset Date
shall be extended to the day after such tenth business day or other date agreed
to for the Closing, as applicable.
(2) If on the date on which the Closing would
otherwise be required to take
place pursuant to Section 8.1(a)(1), (A) there shall be in effect any judgment,
decree, or order of a court of competent jurisdiction that would prevent or make
unlawful the Closing, or (B) any other circumstance beyond the reasonable
control of FVP or Sellers or Buyer (but which shall not in any
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event include any matters relating to financing of the transactions contemplated
hereby) shall exist that would prevent the Closing or the satisfaction of any of
the conditions precedent to any party set forth in Article 7, then either FVP or
Buyer may, at its option, postpone the date on which the Closing is required to
take place until the tenth business day after either party provides written
notice to the other party, as soon as practicable after such conditions are
satisfied, such judgment, decree, or order ceases to be in effect, or such other
circumstance ceases to exist; provided, however, that a party's postponement of
the date on which the Closing is required to take place shall not restrict the
exercise by FVP or Buyer of its rights under Section 9.2 or 9.3, as applicable.
(3) If on the date on which the Closing would
otherwise be required to take
place pursuant to Section 8.1(a)(1), the Credit Agreement Consent has not been
obtained, then Buyer may, at its option, postpone the date on which the Closing
is required to take place until such date, but in no event later than June 30,
1999, to be set by Buyer on at least ten business days' written notice to FVP.
(4) If on the date on which the Closing would
otherwise be required to take
place pursuant to the foregoing subsections of this Section 8.1(a), the
conditions set forth in Sections 7.2(f) or (g) have not been satisfied, then
either FVP or Buyer may, at its option (but it shall not be compelled to do so),
postpone the date on which the Closing is required to take place until such
date, but in no event later than the Upset Date, to be set by either party on at
least ten business days' written notice to the other party, as soon as
practicable after such conditions are satisfied; provided, however, that a
party's postponement of the date on which the Closing is required to take place
shall not restrict the exercise by FVP or Buyer of its rights under Section 9.2
or 9.3, as applicable; and provided, further, that if such conditions set forth
in Sections 7.2(f) and (g) have not been satisfied in any event by the Upset
Date, Buyer shall be deemed to have willfully breached this Agreement with the
attendant consequences set forth in Sections 2.4 and 9.4; provided, further,
however, that Buyer may on the Upset Date, but only on the Upset Date, satisfy
the conditions set forth in Sections 7.2(g) and (h) by being ready, able, and
willing to deliver on the Upset Date, in lieu of the Stock Consideration
Registrable Securities, additional cash consideration in an amount equal to the
aggregate fair market value of the Stock Consideration Registrable Securities
(computed on the basis of the Weighted Average Trading Price of the ACC Class A
Common Stock or other security constituting the Stock Consideration for the ten
trading day period beginning on the thirteenth trading day prior to the Upset
Date.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes &
Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C.
20036, or any other place or time as FVP and Buyer shall mutually agree.
8.2 Deliveries by Sellers.
Prior to or at the Closing, Sellers shall deliver or cause to be
delivered to Buyer the following:
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(a) Purchased Interests. An assignment agreement
providing for the assignment of
the Purchased Interests to Buyer, in a form reasonably satisfactory to Buyer,
together with any notes or certificates representing the Purchased Interests,
duly endorsed for transfer.
(b) Officer's Certificate of FVP. A certificate executed
by FVP, dated as of the
Closing Date, certifying that the closing conditions specified in Sections
7.1(a) and (c) have been satisfied as to FVP, except as disclosed in said
certificate.
(c) Secretary's Certificate. A certificate executed by
FVP, dated as of the Closing
Date, (1) certifying that the resolutions, as attached to said certificate, were
duly adopted by the Advisory Committee of FVP, authorizing and approving the
execution by FVP of this Agreement and the other Transaction Documents to which
FVP is a party and the consummation of the transactions contemplated hereby and
thereby and that such resolutions remain in full force and effect; (2)
certifying that the resolutions, as attached to said certificate, were duly
adopted by the Board of Directors of FrontierVision Inc., authorizing and
approving the execution by FVP and the General Partner of this Agreement and the
other Transaction Documents to which they are a party and the consummation of
the transactions contemplated hereby and thereby and that such resolutions
remain in full force and effect; and (3) providing, as attachments thereto,
Certificates of Good Standing for FVP and each of the other FrontierVision
Companies certified by an appropriate state official of the State of their
organization, all certified by such state officials as of a date not more than
fifteen days before the Closing Date.
(d) Consents. Copies of Consents which have been
obtained by FVP or Sellers prior to the Closing.
(e) Corporate, Financial, and Tax Records. All corporate
records (including minute
books and stock books and registers) and financial and tax records of each of
the FrontierVision Companies that are not located at one of the offices or sites
included in the Real Property.
(f) Post-Closing Escrow Agreement. The Post-Closing
Escrow Agreement, duly executed by each Seller and the Escrow Agent.
(g) Noncompetition Agreement. The Noncompetition
Agreements, duly executed by each Person designated on Exhibit A.
(h) Opinion of Counsel. An opinion of Dow, Lohnes &
Albertson, PLLC, counsel to
FVP, dated as of the Closing Date, substantially in the form of Exhibit C
hereto.
(i) Seller Releases. A Seller Release, duly executed by
each Seller.
(j) Management Releases. A Management Release, duly
executed by each Person designated on Exhibit H.
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8.3 Deliveries by Buyer.
Prior to or at the Closing, Buyer shall deliver to Sellers the
following:
(a) Purchase Consideration.
(1) An assumption agreement providing for the
assumption by Buyer of the
Assumed Liabilities, in a form reasonably satisfactory to Sellers.
(2) The Closing Cash Payment as follows: (A)
$5,000,000 will be paid to the
Escrow Agent for deposit in the Post-Closing Adjustments Escrow pursuant to
Section 2.7; (B) any amount required to be deposited in the Post-Closing
Adjustments Escrow pursuant to Section 2.6 will be paid to the Escrow Agent; (C)
any amount required to be deposited in a Post-Closing Section 2.8 Escrow
pursuant to Section 2.8 will be paid to the Escrow Agent; (D) any amount
required to be deposited in the Post-Closing Section 2.9 Escrow pursuant to
Section 2.9 will be paid to the Escrow Agent; and (E) the balance of the Closing
Cash Payment will be paid by wire or accounts transfer of immediately available
funds to one or more accounts designated by Sellers by written notice to Buyer
not less than two days prior to the Closing.
(3) The Stock Consideration as follows: (A)
stock certificates representing
1,000,000 shares of ACC Class A Common Stock in the aggregate will be issued and
registered in the name of Seller or Sellers' designees as directed by the
Sellers by written notice to Buyer not less than two days prior to the Closing
and transferred to the Escrow Agent for deposit in the Post-Closing Indemnity
Escrow pursuant to Section 10.3, and (B) stock certificates representing the
portion of the Stock Consideration which is not transferred to the Escrow Agent
will be issued and registered in the name of Seller or Sellers' designees as
directed by the Sellers by written notice to Buyer not less than two days prior
to the Closing and delivered to Sellers or Sellers' designees; or, if Buyer
delivers cash pursuant to Section 8.1(a)(4) in lieu of the Stock Consideration
Registrable Securities, (A) an amount equal to the aggregate fair market value
of 1,000,000 shares of ACC Class A Common Stock (computed on the basis of the
Weighted Average Trading Price of the ACC Class A Common Stock for the ten
trading day period beginning on the thirteenth trading day prior to the Closing
Date) will be transferred to the Escrow Agent for deposit in the Post-Closing
Indemnity Escrow pursuant to Section 10.3, and (B) the portion of the Stock
Consideration which is not transferred to the Escrow Agent will be paid by wire
or accounts transfer of immediately available funds to one or more accounts
designated by Sellers by written notice to Buyer not less than two days prior to
the Closing.
(b) Officer's Certificate. A certificate executed by
Buyer, dated as of the Closing
Date, certifying that the closing conditions specified in Sections 7.2(a) and
(b) have been satisfied, except as disclosed in said certificate.
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(c) Secretary's Certificate. A certificate executed by
Buyer, dated as of the Closing
Date, (1) certifying that the resolutions, as attached to said certificate, were
duly adopted by the Board of Directors of Buyer, authorizing and approving the
execution by Buyer of this Agreement and the other Transaction Documents to
which Buyer is a party and the consummation of the transactions contemplated
hereby and thereby and that such resolutions remain in full force and effect;
and (2) providing, as attachments thereto, a Certificate of Good Standing for
Buyer certified by an appropriate state official of the State of Delaware,
certified by such state official as of a date not more than fifteen days before
the Closing Date.
(d) Post-Closing Escrow Agreement. The Post-Closing
Escrow Agreement, duly
executed by Buyer and the Escrow Agent.
(e) Opinion of Counsel. Opinions of Buchanan Ingersoll
Professional Corporation,
counsel to Buyer, dated as of the Closing Date, substantially in the form of
Exhibit D hereto.
ARTICLE 9
TERMINATION
9.1 Termination by Agreement.
This Agreement may be terminated at any time prior to the Closing by
agreement between FVP and Buyer.
9.2 Termination by FVP.
This Agreement may be terminated at any time prior to the Closing by
FVP and the purchase and sale of the Purchased Interests abandoned, upon written
notice to Buyer, upon the occurrence of any of the following:
(a) Conditions. If on any date determined for the
Closing in accordance with Section
8.1 if each condition set forth in Section 7.1 has been satisfied (or will be
satisfied by the delivery of documents at the Closing) or waived in writing on
such date and either a condition set forth in Section 7.2 has not been satisfied
(or will not be satisfied by the delivery of documents at the Closing) or waived
in writing on such date or Buyer has nonetheless refused to consummate the
Closing. Notwithstanding the foregoing, FVP may not rely on the failure of any
condition set forth in Section 7.2 to be satisfied if such failure was
principally caused by FVP's or any Seller's failure to act in good faith or a
breach of or failure to perform any of its representations, warranties,
covenants or other obligations in accordance with the terms of this Agreement.
(b) Upset Date. If the Closing shall not have occurred
on or prior to the Upset Date,
unless the failure of the Closing to occur was principally caused by FVP's or
any Seller's failure to act
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in good faith or a breach of or failure to perform any of its representations,
warranties, covenants or other obligations in accordance with the terms of this
Agreement; provided that (1) if on the Upset Date the Closing has not occurred
solely because any notice period required by Section 8.1(a) has not lapsed, the
Upset Date shall be extended to a date that is one business day after the lapse
of such period; and (2) if FVP is required to file a Franchise Consent
application pursuant to Section 6.4(b), then FVP may extend the Upset Date from
time to time at its sole option by notice to Buyer to a date that is one
business day after the later of (A) the date that is 210 days after the last
Franchise Consent application was filed pursuant to Section 6.4(b) and (B) 90
days after the last affirmative denial by a Franchising Authority of a request
for such Franchise Consent.
9.3 Termination by Buyer.
This Agreement may be terminated at any time prior to the Closing by
Buyer and the purchase and sale of the Purchased Interests abandoned, upon
written notice to FVP, upon the occurrence of any of the following:
(a) Conditions. If on any date determined for the
Closing in accordance with Section
8.1 if each condition set forth in Section 7.2 has been satisfied (or will be
satisfied by the delivery of documents at the Closing) or waived in writing on
such date and either a condition set forth in Section 7.1 has not been satisfied
(or will not be satisfied by the delivery of documents at the Closing) or waived
in writing on such date or Sellers have nonetheless refused to consummate the
Closing. Notwithstanding the foregoing, Buyer may not rely on the failure of any
condition set forth in Section 7.1 to be satisfied if such failure was
principally caused by Buyer's failure to act in good faith or a breach of or
failure to perform any of its representations, warranties, covenants or other
obligations in accordance with the terms of this Agreement.
(b) Upset Date. If the Closing shall not have occurred
on or prior to the Upset Date,
unless the failure of the Closing to occur was principally caused by Buyer's
failure to act in good faith or a breach of or failure to perform any of its
representations, warranties, covenants or other obligations in accordance with
the terms of this Agreement or failure to satisfy the conditions set forth in
Sections 7.2(f) or (g); provided that (1) if on the Upset Date the Closing has
not occurred solely because any notice period required by Section 8.1(a) has not
lapsed, the Upset Date shall be extended to a date that is one business day
after the lapse of such period; and (2) if FVP is required to file a Franchise
Consent application pursuant to Section 6.4(b), then FVP may extend the Upset
Date from time to time at its sole option by notice to Buyer to a date that is
one business day after the later of (A) the date that is 210 days after the last
Franchise Consent application was filed pursuant to Section 6.4(b) and (B) 90
days after the last affirmative denial by a Franchising Authority of a request
for such Franchise Consent.
9.4 Effect of Termination.
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If this Agreement is terminated as provided in this Article 9, then
this Agreement will forthwith become null and void and there will be no
liability on the part of any party to any other party or any other Person in
respect thereof, provided that:
(a) Surviving Obligations. The obligations of the
parties described in Sections 6.2,
9.4 and 11.1 (and all other provisions of this Agreement relating to expenses)
will survive any such termination. In addition, if FVP is entitled to receive
the Deposit Escrow Property in accordance with Section 2.4, all of Buyer's
obligations with respect to the Deposit Escrow Property, including its
obligations under the Deposit Escrow Agreement and under the Deposit
Registration Rights Agreement will survive any such termination.
(b) Withdrawal of Applications. All filings,
applications and other submissions
relating to the transfer of the Purchased Interests shall, to the extent
practicable, be withdrawn from the Governmental Authority or other Person to
whom made.
(c) Willful Breach by Buyer. No such termination will
relieve Buyer from liability
for a willful breach of this Agreement (which shall be deemed to include without
limitation any failure by Buyer to satisfy the conditions set forth in Sections
7.2(f) or (g) by the date on which the Closing would otherwise be required to
take place pursuant to Section 8.1, subject to the provisions of Section
8.1(a)(4), or in any event by the Upset Date), and in such event the Deposit
Escrow Property shall be released from escrow and delivered to FVP. Subject to
Buyer's continuing obligations described in Section 9.4(a), the delivery of the
Deposit Escrow Property to Sellers in compliance with the provisions of Section
2.4 shall be liquidated damages and constitute full payment and the exclusive
remedy for any damages suffered by FVP and Sellers by reason of Buyer's breach
of this Agreement prior to the Closing. If the Deposit Escrow Property is not
delivered to Sellers in compliance with the provisions of Section 2.4, FVP and
Sellers shall have all rights and remedies available at law or equity to enforce
the provisions of Section 2.4.
(d) Willful Breach by FVP or Sellers. No such
termination will relieve FVP from
liability for its willful breach of this Agreement, and in such event Buyer
shall have all rights and remedies available at law or equity, including the
remedy of specific performance against FVP. No such termination will relieve any
Seller from liability for its willful breach of this Agreement, and in such
event Buyer shall have all rights and remedies available at law or equity,
including the remedy of specific performance against such breaching Seller.
(e) No Recourse. Anything in this Agreement or
applicable law to the contrary
notwithstanding, in the event this Agreement is terminated as provided in this
Article 9, Buyer will have no claim or recourse against any of FVP's, the
General Partner's, or any Seller's respective officers, directors, shareholders,
partners, employees, agents or Affiliates (excluding from "Affiliates" for this
purpose FVP, the General Partner and the other Sellers themselves) as a result
of the breach of any representation, warranty, covenant or agreement of FVP or
any Seller contained herein or otherwise arising out of or in connection with
the transactions contemplated by this Agreement or the business
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or operations of the FrontierVision Companies prior to the Closing, it being
understood that FVP shall have no liability for any breach by a Seller and no
Seller will have any liability for any breach by FVP or another Seller.
9.5 Attorneys' Fees.
Notwithstanding any provision in this Agreement that may limit or
qualify a party's remedies, in the event of a default by any party that results
in a lawsuit or other proceeding for any remedy available under this Agreement,
the prevailing party shall be entitled to reimbursement from the defaulting
party of its reasonable legal fees and expenses (whether incurred in
arbitration, at trial, or on appeal).
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Survival.
All representations, warranties and covenants set forth herein will
survive the Closing, provided that all claims made in respect of such
representations, warranties and covenants will be subject to any applicable
limitations set forth in this Article 10.
10.2 Indemnification by Sellers.
After the Closing, but subject to Section 10.5, each Seller hereby
agrees to indemnify and hold Buyer harmless against and with respect to, and
shall reimburse Buyer for:
(a) any and all Losses resulting from any untrue
representation or breach of warranty
by FVP or the nonfulfillment of any covenant to be performed by FVP prior to the
Closing contained in this Agreement or any other Transaction Document to which
FVP is a party;
(b) any and all Losses resulting from any untrue
representation or breach of warranty
by such Seller or the nonfulfillment of any covenant by such Seller contained in
this Agreement or any other Transaction Document to which such Seller is a
party; and
(c) any rate refund liability imposed on any of the
FrontierVision Companies for any
period ending prior to the Adjustment Time by a final order or decision issued
by a Governmental Authority (but only to the extent of the out-of-pocket costs
payable in respect thereof and it being understood and agreed that any claim for
indemnification in respect of any rate refund liability may be made only
pursuant to this Section 10.2(c) and not under any other provision of this
Section 10.2); provided, however, that Buyer may make a claim pursuant to this
Section 10.2(c) upon the issuance of
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an initial adverse order or decision by a Governmental Authority with respect to
one of the FrontierVision Companies for any period ending prior to the
Adjustment Time that could result in an obligation of the Sellers to indemnify
Buyer under this Section 10.2(c) in order to preserve its rights under this
Article 10 pending appeal or other final resolution of such order or decision.
(d) any and all Losses resulting from the matters
disclosed in Sections 3.14 and 3.15
of FrontierVision's Disclosure Schedule (other than matters relating to Rate
Regulatory Matters, including, without limitation, the matters disclosed in
items 1 and 2 of said Section 3.15) and the tax audits disclosed in Section 3.12
of FrontierVision's Disclosure Schedule.
(e) any and all Losses resulting from any pole attachment
fees payable with respect to the operation by the FrontierVision Companies of
the Systems for any period ending prior to the Adjustment Time.
(f) any and all Losses resulting from the matter
disclosed in Item A.4 of Section 3.6 of FrontierVision's Disclosure Schedule
relating to a dispute between the FrontierVision Companies and CSG.
(g) any and all Losses resulting from amounts that are
payable by the FrontierVision
Companies to the other parties under the purchase and sale agreements referred
to in Section 3.11(i).
10.3 Post-Closing Escrow Agreement.
FVP and Buyer have agreed on and delivered to the Escrow Agent a form
of Post-Closing Escrow Agreement in the form of Exhibit B hereto. Following the
execution of this Agreement FVP and Buyer will cooperate in good faith with the
Escrow Agent (or another Person who FVP and Buyer mutually select to serve as
the escrow agent thereunder) to agree with the Escrow Agent (or such other
Person) on the final form of the Post-Closing Escrow Agreement including such
changes to the form attached as Exhibit B as are requested or recommended by the
Escrow Agent and are mutually acceptable to FVP and Buyer (such acceptance not
to be unreasonably withheld by FVP and Buyer). FVP and Buyer agree to take such
additional actions and enter into appropriate amendments to the Transaction
Documents as may reasonably be necessary to reflect the final form of
Post-Closing Escrow Agreement. Subject to the foregoing, at the Closing, Buyer,
Sellers and the Escrow Agent shall execute the Post-Closing Escrow Agreement, in
accordance with which, on the Closing Date, in addition to the deposit
contemplated by Section 2.7 and in addition to any deposit required by Sections
2.6, 2.8 or 2.9, Buyer will deposit 1,000,000 shares of ACC Class A Common Stock
with the Escrow Agent on behalf of Sellers in order to provide a fund for, and
the exclusive source for, the payment of any indemnification to which Buyer is
entitled under this Article 10 (such escrow, the "Post-Closing Indemnity
Escrow"). The Post-Closing Indemnity Escrow will be administered, and the
Post-Closing Indemnity Property (as defined below) will be held and disbursed,
in accordance with the provisions of this Article 10 and the Post-Closing Escrow
Agreement. The "Post-Closing Indemnity Property" means, collectively, the
1,000,000 shares of ACC Class A Common Stock deposited with the Escrow
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Agent pursuant to this Section 10.3, together with the kind and amounts of
securities, cash and other property that Sellers would have held or been
entitled to receive as of the date the Post-Closing Indemnity Property is
released in accordance with this Agreement (whether resulting from a stock
split, subdivision, combination or reclassification of the outstanding capital
stock of Buyer, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Buyer may be a
party or otherwise) had Sellers held such shares of ACC Class A Common Stock as
of the Closing Date and retained such shares, and all securities, cash and other
property distributed or issued with respect to or in substitution or exchange
therefor, during the period from the Closing Date through (and including) the
date the Post-Closing Indemnity Property is released. Subject to the terms and
conditions contained in the Post-Closing Escrow Agreement and the Stock
Consideration Registration Rights Agreement, the Sellers will have the right to
cause the shares of ACC Class A Common Stock or other securities constituting
the Post-Closing Indemnity Property to be sold and converted to cash from time
to time. If Buyer delivers cash pursuant to Section 8.1(a)(4) in lieu of the
Stock Consideration Registrable Securities, Buyer will deposit cash in the
amount determined pursuant to the second part of Section 8.3(a)(3) in the
Post-Closing Indemnity Escrow and the term "Post-Closing Indemnity Property"
shall mean such deposit plus any earnings thereon.
10.4 Indemnification by Buyer.
After the Closing, but subject to Section 10.5, Buyer hereby agrees to
indemnify and hold Sellers harmless against and with respect to, and shall
reimburse Sellers for:
(a) any and all Losses resulting from any untrue
representation, breach of warranty, or nonfulfillment of any covenant by Buyer
contained in this Agreement or any other Transaction Document to which Buyer is
a party;
(b) any and all Losses resulting from any liability or
obligation of the FrontierVision Companies arising from or related to any event
occurring after the Closing Date, and any Assumed Liabilities and any liability
or obligation that was reflected as an Adjustment Liability in computing Closing
Net Liabilities under Article 2;
(c) any and all Losses arising as a result of the
occurrence of the Closing without the receipt of any Consent (including any
Consent under a Franchise, but excluding any Consent that was not either
disclosed in FrontierVision's Disclosure Schedule or determined to require
Consent pursuant to Section 6.4(b) or requested prior to the Closing), waiver of
a Franchising Authority's right of first refusal under a Franchise, or renewal
of any Franchise; and
(d) any and all Losses resulting from the use of the
"FrontierVision" name or any variant thereof by Buyer and/or its Affiliates
and/or the FrontierVision Companies from and after the Closing.
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10.5 Certain Limitations on Indemnification Obligations.
Notwithstanding anything in this Agreement to the contrary:
(a) No Seller will be required to indemnify or otherwise
be liable to Buyer for any matter described in Section 10.2 unless and until the
aggregate amount of all Losses of Buyer arising therefrom for which Sellers
would have indemnification liability to Buyer but for this Section 10.5(a),
exceeds $1,000,000, in which event Sellers will be liable for all such Losses;
provided, however, that this Section 10.5(a) shall not apply to any amount
payable to Buyer pursuant to Section 2.7 or Section 2.9 or Section 10.2(c) (but
only in respect of a claim that Buyer could have made under Section 10.2(c)
immediately after the Closing) or Section 10.2(d) or Section 10.2(e) (but only
in respect of a claim that Buyer could have made under Section 10.2(e)
immediately after the Closing) or Section 10.2(f) or Section 10.2(g), but no
amounts paid to Buyer pursuant to the sections referred to in this proviso (as
limited in this proviso) shall be treated as Losses for purposes of determining
when Buyer's Losses exceed $1,000,000.
(b) No Seller will be required to indemnify or otherwise
be liable to Buyer with respect to any Losses arising under Section 10.2 unless
Buyer gives Sellers written notice of a claim pursuant to Section 10.2 on or
prior to the date that is eighteen months after the Closing Date; provided that,
the Post-Closing Indemnity Property shall be released to Sellers as follows:
(1) On the first business day following the date
that is six months after the Closing Date (the "Initial Release Date"):
(A) if on the Initial Release Date the
Post-Closing Indemnity Property consists solely of shares of ACC Class A Common
Stock or other Stock Consideration Registrable Securities, then the number of
shares of ACC Class A Common Stock or other Stock Consideration Registrable
Securities equal to one-half of the total number of such shares deposited into
the Post- Closing Indemnity Escrow on the Closing Date, less the total number of
shares that were previously paid out to Buyer in respect of claim(s) made by
Buyer pursuant to this Article 10 or Article 2, and less the number of shares
the fair market value of which equals the aggregate dollar value of all bona
fide claims made by Buyer pursuant to this Article 10 or Article 2 that remain
outstanding on the Initial Release Date, shall be released from escrow and paid
over to Sellers (the number of shares to be appropriately adjusted to give
effect to any stock split, combination or similar event);
(B) if on the Initial Release Date the
Post-Closing Indemnity Property consists solely of cash funds, then an amount in
cash equal to one-half of the total amount of cash funds that would have been in
the Post-Closing Indemnity Escrow on the Initial Release Date if no payments had
been made to Buyer out of the Post-Closing Indemnity Escrow during such period,
less the dollar value of all payments (whether in the form of shares or cash)
that were previously paid out to Buyer in respect of claim(s) made by Buyer
pursuant to this Article 10 or Article 2, and less the aggregate dollar
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value of all bona fide claims made by Buyer pursuant to this Article 10 or
Article 2 that remain outstanding on the Initial Release Date, shall be released
from escrow and paid over to Sellers;
(C) if on the Initial Release Date the
Post-Closing Indemnity Property consists partly of shares of ACC Class A Common
Stock or other Stock Consideration Registrable Securities and partly of cash
funds, then the number of shares of ACC Class A Common Stock or other Stock
Consideration Registrable Securities equal to one-half the total number of such
shares that would have been in the Post-Closing Indemnity Escrow on the Initial
Release Date if no payments in the form of such shares had been made to Buyer
out of the Post-Closing Indemnity Escrow during such period, less the total
number of shares that were paid out to Buyer in respect of claim(s) made by
Buyer pursuant to this Article 10 or Article 2, and less the number of shares
the fair market value of which equals the aggregate dollar value of all bona
fide claims made by Buyer pursuant to this Article 10 or Article 2 that remain
outstanding on the Initial Release Date (except to the extent an amount in cash
has been reserved for any portion of such outstanding claims), shall be released
from escrow and paid over to Sellers (the number of shares to be appropriately
adjusted to give effect to any stock split, combination or similar event), and
an amount in cash equal to one-half of the total amount of cash funds that would
have been in the Post-Closing Indemnity Escrow on the Initial Release Date if no
payments in the form of cash had been made to Buyer out of the Post-Closing
Indemnity Escrow during such period, less the dollar value of all payments that
were previously paid out in the form of cash to Buyer in respect of claim(s)
made by Buyer pursuant to this Article 10 or Article 2, and less the aggregate
dollar value of all bona fide claims made by Buyer pursuant to this Article 10
or Article 2 that remain outstanding on the Initial Release Date (except to the
extent a number of shares has been reserved for any portion of such outstanding
claims), shall be released from escrow and paid over to Sellers; and
(2) on the first business day following the date
that is eighteen months after the Closing Date (the "Second Release Date") all
remaining Post-Closing Indemnity Property, less a number of shares of ACC Class
A Common Stock or other Stock Consideration Registrable Securities or an amount
in cash or a combination thereof as directed by the General Partner the
aggregate dollar value of which is equal to the aggregate dollar amount of any
bona fide claims made by Buyer that remain outstanding on the Second Release
Date, shall be released from escrow and paid over to Sellers.
Attached hereto as Exhibit I for illustrative purposes only is an example of how
the preceding provisions are intended to work. Thereafter, any remaining
Post-Closing Indemnity Property shall be released from escrow and paid over to
Sellers or Buyer in accordance with this Agreement and the Post- Closing Escrow
Agreement. To the extent any payment is made to Buyer out of the Post-Closing
Indemnity Property pursuant to Sections 2.7, 2.8 or 2.9 or this Article 10, and
the Post-Closing Indemnity Property consists of both Stock Consideration
Registrable Securities and cash, the General Partner shall designate which
portion of the payment shall be made in the form of shares (based on its fair
market value on the date of payment as computed as provided in Section 10.5(c))
or cash or combination of both. On the business day that it is determined in
accordance with this Section 10.5(b) and this Article 10 that Buyer and/or
Sellers are entitled to all or any portion of the Post-Closing Indemnity
Property, the General Partner and Buyer will execute and deliver to the Escrow
Agent joint
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<PAGE>
written instructions containing appropriate disbursement instructions consistent
with this Section 10.5(b) and this Article 10 and the Post-Closing Escrow
Agreement.
(c) All payments required to be made by Sellers or any
Seller in respect of their indemnification obligations under this Article 10
shall be made solely from the Post-Closing Indemnity Property. For purposes of
this Article 10 and the Post-Closing Escrow Agreement, the fair market value of
a share of ACC Class A Common Stock or other Stock Consideration Registrable
Security on any day shall be computed by reference to the Weighted Average
Trading Price of such stock or other security for the ten trading day period
beginning on the thirteenth trading day prior to the date of determination.
(d) Anything in this Agreement or applicable law to the
contrary notwithstanding, other than with respect to the Post-Closing Indemnity
Property as provided for and limited in this Article 10 (and other than with
respect to the Post-Closing Adjustment Funds as provided for and limited in
Section 2.7, the Post-Closing Section 2.8 Funds as provided for and limited in
Section 2.8, and the Post-Closing Section 2.9 Funds as provided for and limited
in Section 2.9) after the Closing no Seller (or any officer, director,
shareholder, partner, employee, agent or Affiliate of such Seller) shall have
any obligation or liability to Buyer under Article 10, and Buyer will have no
claim or recourse against any Seller (or any officer, director, shareholder,
partner, employee, agent or Affiliate of such Seller) as a result of the breach
of any representation, warranty, covenant or agreement of FVP or any Seller
contained herein or otherwise arising out of or in connection with the
transactions contemplated by this Agreement or the business or operations of the
FrontierVision Companies, other than claims relating to the Noncompetition
Agreements or the Deposit Registration Rights Agreement or the Stock
Consideration Registration Rights Agreement (which shall each be governed by its
respective terms); and the Post-Closing Indemnity Property, the Post-Closing
Adjustment Funds, the Post-Closing Section 2.8 Funds and the Post-Closing
Section 2.9 Funds (in each case as provided for and limited by the provisions of
this Agreement) shall be the sole and exclusive remedy for any such claim by
Buyer for any such matters, whether such claims are framed in contract, tort or
otherwise.
(e) The amount payable to the Claimant by the
Indemnifying Party in respect of a Loss shall be computed net of any insurance
coverage with respect thereto that reduces the amount of such Loss that would
otherwise be sustained, and Buyer and each Seller agree to use commercially
reasonable efforts to collect any and all insurance proceeds to which it may be
entitled in respect of any Loss.
(f) Sellers will not be liable with respect to any Loss
to the extent that the amount of such Loss was included as an Adjustment
Liability in the computation of Closing Net Liabilities in accordance with
Article 2.
(g) Notwithstanding anything in this Agreement to the
contrary, no Seller shall have any liability or obligation (for indemnification
or otherwise) arising as a result of the occurrence of the
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<PAGE>
Closing without certain Consents or Buyer's waiver of any closing condition, nor
shall any adjustment be made to the Cash Consideration in respect of the
foregoing.
(h) Buyer will not be required to indemnify or otherwise
be liable to any Seller with respect to any Losses arising under Section 10.4(a)
with respect to an untrue representation or breach of warranty set forth in
Section 5.6 unless Sellers give Buyer written notice of such a claim on or prior
to the date that is thirty days after the expiration of the statute of
limitations with respect to such claim.
(i) Buyer will not be required to indemnify or otherwise
by liable to any Seller with respect to Losses arising under Section 10.4(d) to
the extent such Losses result from the matter disclosed in Section 3.10(B) of
FrontierVision's Disclosure Schedule.
10.6 Procedure for Indemnification.
The procedure for indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim and the amount thereof (if known and quantifiable).
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in or
assume control of the defense of such claim, and the Claimant shall cooperate
fully with the Indemnifying Party, subject to reimbursement for actual
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnifying Party. If the Indemnifying Party elects to assume control of
the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the Indemnifying
Party does not elect to participate in or assume control of the defense of any
third-party claim, the Claimant will not enter into any settlement of such claim
which could result in indemnification liability unless the Claimant gives the
Indemnifying Party prior written notice of such settlement. If the Indemnifying
Party does not
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<PAGE>
thereupon elect to assume the defense of such claim within five business days
after such notice is given, then the Claimant may enter into such settlement and
such settlement will be binding upon Buyer and Sellers for purposes of
determining whether any indemnification payment is required pursuant to this
Article 10.
10.7 Treatment of Indemnification Payments.
Buyer and Sellers will treat all payments made pursuant to this Article
10 (including all payments made to Buyer out of the Post-Closing Indemnity
Property but excluding the release of any Post-Closing Indemnity Property to
Sellers) as an adjustment to the Purchase Consideration for all purposes.
ARTICLE 11
MISCELLANEOUS
11.1 Fees and Expenses.
Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents, and representatives. Buyer and Sellers agree that
the brokerage fee payable to Daniels & Associates shall be paid by Buyer in the
event the Closing occurs hereunder. Buyer and Sellers agree that the fees and
expenses incurred in connection with the lien searches described in Section
7.1(j) shall be borne one-half by Buyer and one-half by Sellers.
11.2 Notices.
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be in writing, may be sent by
telecopy (with automatic machine confirmation), delivered by personal delivery,
or sent by commercial delivery service or certified mail, return receipt
requested, shall be deemed to have been given on the date of actual receipt,
which may be conclusively evidenced by the date set forth in the records of any
commercial delivery service or on the return receipt, and shall be addressed to
the recipient at the address specified below, or with respect to any party, to
any other address that such party may from time to time designate in a writing
delivered in accordance with this Section 11.2:
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<PAGE>
If to Buyer:
Adelphia Communications Corporation
Main at Water Street
Coudersport, Pennsylvania 16915
Attention: James M. Kane,
Vice President Corporate Development
Telecopier: (814) 274-7098
with copies (which shall not
constitute notice) to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 21st Floor
Pittsburgh, Pennsylvania 15219
Attention: Bruce I. Booken, Esq.
Telecopier: (412) 562-1041
If to FVP (prior to the Closing) or the General Partner (after the
Closing):
FrontierVision Partners, L.P.
1777 South Harrison Street
Suite P-200
Denver, Colorado 80210-3925
Attention: James C. Vaughn, President
Telecopier: (303) 757-6105
with a copy (which shall not
constitute notice) to:
If to a Seller:
Dow, Lohnes & Albertson, PLLC 1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Attention: John T. Byrnes, Esq. and
J. Christopher Redding, Esq.
Telecopier: (202) 776-2222
At the address specified for such Seller
on the attached Exhibit E
11.3 Benefit and Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided
that (a) neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by FVP or a Seller without the prior written consent
of Buyer (which consent shall not be unreasonably withheld or delayed), and (b)
neither this Agreement nor any of the rights, interests or obligations hereunder
may be assigned by Buyer without the prior written consent of FVP (prior to the
Closing) or the General Partner (after the Closing) (which consent shall not be
unreasonably withheld or delayed). Notwithstanding the provisions of the
immediately preceding sentence, Buyer may assign all or any portion of its
rights (but not its obligations) under this Agreement to one or more
Subsidiaries or Affiliates of Buyer, without the prior
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<PAGE>
written consent of FVP or the General Partner; provided that (1) such assignee
executes documentation reasonably satisfactory to Sellers evidencing such
assignment, and (2) Buyer remains liable to perform the obligations in full to
be performed by Buyer hereunder, and (3) no such assignment would be reasonably
likely to hinder or delay the Closing as reasonably determined by Sellers.
Consent shall be deemed to be reasonably withheld if the consenting party
reasonably determines that the assignment would be reasonably likely to hinder
or delay the Closing. In the event of a permitted assignment by Buyer, Buyer, as
well as such assignee, shall remain liable hereunder for all purposes and the
representations, warranties and covenants made by Buyer shall apply equally to
the assignee (modified as appropriate for the organization of the assignee). In
no event may Buyer assign its obligations with respect to the Stock
Consideration or Deposit Escrow Property without FVP's consent (prior to
Closing) or the General Partner's consent (after the Closing), which may be
withheld in its sole and absolute discretion. This Agreement is not intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder, except the provisions of Section 6.9 are intended for the benefit of,
and may be relied upon by, the Assumed Employees, and the provisions of Section
6.13 are intended for the benefit of, and may be relied upon by, the officers
and directors of the FrontierVision Companies and the members of FVP's Advisory
Committee.
11.4 Further Assurances .
After the Closing the parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement upon the reasonable request of the other party,
at the expense of the requesting party.
11.5 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.6 Entire Agreement.
This Agreement, the Disclosure Schedules and the Exhibits hereto, and
the other Transaction Documents to be delivered by the parties pursuant to this
Agreement, collectively represent the entire understanding and agreement between
Buyer, FVP, and Sellers with respect to the subject matter of this Agreement and
supersedes all prior agreements, understandings and negotiations between the
parties. Buyer acknowledges that none of FVP or any other FrontierVision Company
or any Seller has made any, or makes any, promises, representations, warranties,
covenants or undertakings, express or implied, other than those expressly set
forth in this Agreement. Notwithstanding the first sentence of this Section
11.6, this Agreement does not impair or otherwise affect the validity of (1) any
consent whenever granted by any Seller with respect to the execution, delivery,
and performance of this Agreement or any other document or instrument relating
to the subject matter of this Agreement or (2) any power of attorney whenever
granted by any Seller authorizing any Person to execute and deliver
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<PAGE>
on behalf of such Seller this Agreement or any other document or instrument
relating to the subject matter of this Agreement.
11.7 Amendments; Waiver of Compliance; Consents.
This Agreement may be amended and any provision of this Agreement may
be waived; provided that any such amendment or waiver (a) will be binding upon
FVP prior to the Closing only if such amendment or waiver is set forth in a
writing executed by FVP, (b) will be binding upon a Seller prior to the Closing
only if such amendment or waiver is set forth in a writing executed by FVP and
has been approved by 75% of the voting members of FVP's Advisory Committee (with
a certificate delivered by FVP stating that such required approval has been
obtained being conclusive evidence thereof), and (c) will be binding upon a
Seller after the Closing only if such amendment or waiver is set forth in a
writing executed by the General Partner and has been approved by 75% of the
voting members of FVP's Advisory Committee (as constituted immediately prior to
the Closing) (with a certificate delivered by the General Partner stating that
such required approval has been obtained being conclusive evidence thereof), and
(d) will be binding upon Buyer only if such amendment or waiver is set forth in
a writing executed by Buyer. No waiver shall operate as a waiver of, or estoppel
with respect to, any subsequent or other matter not expressly waived.
11.8 Consent and Agreements of Sellers.
(a) Pursuant to a separate agreement each Seller has
appointed FVP and the General
Partner, each with power to act separately (for all periods prior to the
Closing) and the General Partner (for all periods from and after the Closing) as
the true and lawful attorney-in-fact and agent of each Seller (in such capacity,
FVP and the General Partner are referred to as the "Agent"), to act for each
Seller in Seller's name, place and stead with respect to this Agreement and the
other Transaction Documents and all of the transactions contemplated hereby and
thereby. Buyer shall be entitled to rely exclusively upon any communication
given by Agent and shall not be liable in any manner whatsoever for any action
taken or not taken in reliance upon Agent. Any payments made, at Agent's request
and instruction, by Buyer to Agent pursuant to the terms of this Agreement and
the other Transaction Documents shall fully discharge Buyer for any liability to
any Seller in connection with such payment, as fully and completely as if such
payment had been made directly to such Seller. Buyer hereby agrees to accept and
rely on the actions of Agent as if it were the action of a Seller or Sellers.
(b) Each Seller consents to the execution, delivery and
performance of this
Agreement by FVP, the General Partner and each other Seller and to the taking by
FVP, each FrontierVision Company, the General Partner and each other Seller of
all actions contemplated by this Agreement to be taken by such Person. Subject
to the terms and conditions of this Agreement, each Seller agrees to consummate
the transactions contemplated by this Agreement in accordance with its terms, as
it may be amended pursuant to Section 11.7.
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<PAGE>
11.9 Counterparts.
This Agreement may be signed in counterparts with the same effect as if
the signature on each counterpart were upon the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURES ON FOLLOWING PAGES]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by Buyer, FVP, the
General Partner and the other Sellers as of the date first written above.
BUYER:
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Timothy J. Rigas
Name: Timothy J. Rigas
Title: Executive Vice President
FVP:
FRONTIERVISION PARTNERS, L.P., by FVP GP, L.P., its general partner, by
FrontierVision Inc., its general partner
By: /s/ James C. Vaughn
James C. Vaughn, President
GENERAL PARTNER:
FVP GP, L.P., by FrontierVision Inc., its general
partner
By: /s/ James C. Vaughn
James C. Vaughn, President
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-1
<PAGE>
LIMITED PARTNER SELLERS:
JP Morgan Investment Corporation
60 Wall Street SBIC Fund, L.P.
First Union Capital Partners, Inc.
Tahosa Investors
Kensington Investment Associates
Pegasus Partners
Prosperity Associates
SBF Investments Ltd.
L. Phillips Runyon III
Roth Trading Company
Washington Partners
Duff Ackerman Goodrich - FrontierVision, L.P.
EOS Partners SBIC, L.P.
Richard King Mellon Foundation
Arthur Miltenberger (Mellon Family Investment Co.,
IV)
J. Cashew Corporation
Bertelson Family Trust
John C. Unkovic
Roger S. Ahlbrandt
Dr. Anne McBride Curtis
Bruce D. Evans
Frances C. Hardie
Hardie Brothers
James H. Hardie
John D. Margolis Trust
Grover Sams
Augustus O. Schroeder
Justin J. Stevenson III
John W. Weiser
Mallard Investments Limited Partnership
Olympus Executive Fund, L.P.
Leslie Abbey
Jonathan Abbey
Michael Rothbard
James C. Vaughn
John S. Koo
William P. Brovsky
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-2
<PAGE>
William J. Mahon
James W. McHose
Albert D. Fosbenner
Richard G. Halle'
Joyce L. Vermace
Robert J. Valentine
Ian R. Dennett
David M. Heyrend
Todd E. Padgett
Galan F. Fernandes
Daniel P. Callahan
R. Bruce Ellis
David C. Apel
Kristine M. Rogers
Debra L. Graham
Brian L. Seifarth
Keith A. Tyrrell
Jerry R. Wert
Brian P. Hart
Robert D. Gordon
Judith B. Pierce
Stephen R. Trippe
Keith R. Froleiks
Gary Crosby
Kathleen B. Hounsell
James B. Underwood
Jill Farschman
Craig A. Waskou
Lisa L. Powers
Debbie J. Dougherty
Robert A. Dallmer
Bonnie J. Bosekrus
By FrontierVision Partners, L.P., Agent and Attorney- in-Fact for each Limited
Partner Seller, by FVP GP, L.P., its general partner, by FrontierVision Inc.,
its general partner
By: /s/ James C. Vaughn
James C. Vaughn, President
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
S-3
<PAGE>
SPC SELLERS:
1818 Fund II, L.P.
Olympus Growth Fund II, L.P.
Carson Group Inc.
Sendal Investment Limited
Monte Coral, S.L.
AZATE S.L.
Salzburg Corporation
Clover Enterprises
Kinnari Limited
Leeward Holdings
Staniard Limited
Solar Group S.A.
Englewood Enterprises
Grove Enterprises
Walvis Bay Limited
Datronics Limited
Brinkley Holdings Limited
Salt Lake Enterprises, Inc.
Cromwell International Corp.
By FrontierVision Partners, L.P., Agent and Attorney- in-Fact for each SPC
Seller, by FVP GP, L.P., its general partner, by FrontierVision Inc., its
general partner
By: /s/ James C. Vaughn
James C. Vaughn, President
[THIS IS A SIGNATURE PAGE
TO THE PURCHASE AGREEMENT]
{The Registrant agrees to furnish supplementally to the Commission upon request
a copy of the schedules to this agreement. The schedules contain customary
information for schedules to agreements of this type.}
S-4
<PAGE>
EXHIBIT 4.01
HYPERION TELECOMMUNICATIONS, INC.
12% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
Dated as of March 2, 1999
BANK OF MONTREAL TRUST COMPANY
Trustee
.
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)............................................................. 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b)................................................................ 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)............................................................. 10.03
(b)(2)............................................................. 7.07
(c)................................................................ 7.06;11.02
(d)................................................................ 7.06
314 (a)................................................................ 4.03;11.02
(b)................................................................ 10.02
(c)(1)............................................................. 11.04
(c)(2)............................................................. 11.04
(c)(3)............................................................. N.A.
(e)................................................................ 11.05
(f)................................................................ N.A.
315 (a)................................................................ 7.01
(b)................................................................ 7.05,11.02
(c)................................................................ 7.01
(d)................................................................ 7.01
(e)................................................................ 6.11
316 (a) (last sentence)................................................ 2.09
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
(a)(2)............................................................. N.A.
(b)................................................................ 6.07
(c)................................................................ 2.12
317 (a)(1)............................................................. 6.08
(a)(2)............................................................. 6.09
(b)................................................................ 2.04
318 (a)................................................................ 11.01
(b)................................................................ N.A.
(c)................................................................ 11.01
N.A. means not applicable
----------
* This Cross Reference Table is not part of the Indenture.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
iv
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C>
Section 1.01. Definitions.........................................................................................1
Section 1.02. Other Definitions..................................................................................20
Section 1.03. Incorporation by Reference of Trust Indenture Act..................................................21
Section 1.04. Rules of Construction..............................................................................21
ARTICLE 2 THE NOTES
Section 2.01. Form and Dating....................................................................................22
Section 2.02. Execution and Authentication.......................................................................23
Section 2.03. Registrar and Paying Agent.........................................................................23
Section 2.04. Paying Agent to Hold Money in Trust................................................................24
Section 2.05. Holder Lists.......................................................................................24
Section 2.06. Transfer and Exchange..............................................................................24
Section 2.07. Replacement Notes..................................................................................36
Section 2.08. Outstanding Notes..................................................................................36
Section 2.09. Treasury Notes.....................................................................................37
Section 2.10. Temporary Notes....................................................................................37
Section 2.11. Cancellation.......................................................................................37
Section 2.12. Record Date........................................................................................37
Section 2.12. Defaulted Interest.................................................................................37
ARTICLE 3 REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.................................................................................38
Section 3.02. Selection of Notes to Be Redeemed..................................................................38
Section 3.03. Notice of Redemption...............................................................................38
Section 3.04. Effect of Notice of Redemption.....................................................................39
Section 3.05. Deposit of Redemption Price........................................................................40
Section 3.06. Notes Redeemed in Part.............................................................................40
Section 3.07. Optional Redemption................................................................................40
Section 3.08. Mandatory Redemption...............................................................................41
Section 3.09. Offer to Purchase by Application of Excess Proceeds................................................41
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes...................................................................................43
Section 4.02. Maintenance of Office or Agency....................................................................44
Section 4.03. Reports............................................................................................44
Section 4.04. Compliance Certificate.............................................................................45
Section 4.05. Taxes..............................................................................................46
Section 4.06. Stay, Extension and Usury Laws.....................................................................46
Section 4.07. Restricted Payments................................................................................46
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.....................................48
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.........................................49
Section 4.10. Asset Sales........................................................................................51
Section 4.11. Transactions with Affiliates.......................................................................53
Section 4.12. Liens..............................................................................................53
Section 4.13. Line of Business...................................................................................54
<PAGE>
Section 4.14. Corporate Existence................................................................................54
Section 4.15. Offer to Repurchase Upon Change of Control.........................................................54
Section 4.16. No Senior Subordinated Debt........................................................................55
Section 4.17. Limitation on Sale and Leaseback Transactions......................................................55
Section 4.18. Loans to Subsidiaries and Joint Ventures...........................................................56
Section 4.19. Limitation on Status as Investment Company.........................................................56
Section 4.20. Payments for Consent...............................................................................56
ARTICLE 5 SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets...........................................................56
Section 5.02. Successor Corporation Substituted..................................................................57
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default..................................................................................57
Section 6.02. Acceleration.......................................................................................59
Section 6.03. Other Remedies.....................................................................................60
Section 6.04. Waiver of Past Defaults............................................................................60
Section 6.05. Control by Majority................................................................................61
Section 6.06. Limitation on Suits................................................................................61
Section 6.07. Rights of Holders of Notes to Receive Payment......................................................61
Section 6.08. Collection Suit by Trustee.........................................................................62
Section 6.09. Trustee May File Proofs of Claim...................................................................62
Section 6.10. Priorities.........................................................................................62
Section 6.11. Undertaking for Costs..............................................................................63
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee..................................................................................63
Section 7.02. Rights of Trustee..................................................................................64
Section 7.03. Individual Rights of Trustee.......................................................................65
Section 7.04. Trustee's Disclaimer...............................................................................65
Section 7.05. Notice of Defaults.................................................................................65
Section 7.06. Reports by Trustee to Holders of the Notes.........................................................66
Section 7.07. Compensation and Indemnity.........................................................................66
Section 7.08. Replacement of Trustee.............................................................................67
Section 7.09. Successor Trustee by Merger, etc...................................................................68
Section 7.10. Eligibility; Disqualification......................................................................68
Section 7.11. Preferential Collection of Claims Against Company..................................................68
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...........................................68
Section 8.02. Legal Defeasance and Discharge.....................................................................69
Section 8.03. Covenant Defeasance................................................................................69
Section 8.04. Conditions to Legal or Covenant Defeasance.........................................................70
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions......71
Section 8.06. Repayment to Company...............................................................................72
Section 8.07. Reinstatement......................................................................................72
<PAGE>
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes................................................................72
Section 9.02. With Consent of Holders of Notes...................................................................73
Section 9.03. Compliance with Trust Indenture Act................................................................75
Section 9.04. Revocation and Effect of Consents..................................................................75
Section 9.05. Notation on or Exchange of Notes...................................................................75
Section 9.06. Trustee to Sign Amendments, etc....................................................................75
ARTICLE 10 SUBORDINATION
Section 10.01. Agreement to Subordinate..........................................................................76
Section 10.02. Liquidation; Dissolution; Bankruptcy..............................................................76
Section 10.03. Default on Designated Senior Debt.................................................................76
Section 10.04. Acceleration of Securities........................................................................77
Section 10.05. When Distribution Must Be Paid Over...............................................................77
Section 10.06. Notice by Company.................................................................................78
Section 10.07. Subrogation.......................................................................................78
Section 10.08. Relative Rights...................................................................................78
Section 10.09. Subordination May Not Be Impaired by Company......................................................78
Section 10.10. Distribution or Notice to Representative..........................................................79
Section 10.11. Rights of Trustee and Paying Agent................................................................79
Section 10.12. Authorization to Effect Subordination.............................................................79
Section 10.13. Amendments........................................................................................79
ARTICLE 11 MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls......................................................................80
Section 11.02. Notices...........................................................................................80
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.....................................81
Section 11.04. Certificate and Opinion as to Conditions Precedent................................................81
Section 11.05. Statements Required in Certificate or Opinion.....................................................82
Section 11.06. Rules by Trustee and Agents.......................................................................82
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders..........................82
Section 11.08. Governing Law.....................................................................................82
Section 11.09. No Adverse Interpretation of Other Agreements.....................................................83
Section 11.10. Successors........................................................................................83
Section 11.11. Severability......................................................................................83
Section 11.12. Counterpart Originals.............................................................................83
Section 11.13. Table of Contents, Headings, etc..................................................................83
</TABLE>
EXHIBITS
Exhibit A1 FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF INTERCOMPANY NOTE
<PAGE>
SCHEDULES
Schedule A Fiber Lease Agreements
Schedule B Local Partners
Schedule C Local Partner Agreements
Schedule D Management Agreements
Schedule E Form of Financial Information and Operation Data of the
Subsidiaries and the Joint Ventures Presented by Cluster
Schedule F Form of Financial Information and Operating Data of Hyperion
of Tennessee, Inc., Hyperion of Florida, Inc., Hyperion of
Vermont, Inc., Hyperion of Kentucky, Inc. and Hyperion of
New York, Inc.
<PAGE>
84
INDENTURE dated as of March 2, 1999 between HYPERION
TELECOMMUNICATIONS, INC., a Delaware corporation (the "Company") and BANK OF
MONTREAL TRUST COMPANY, a New York banking corporation (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the holders (the "Holders") of
the 12% Senior Subordinated Notes due 2007 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired lndebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. For purposes of this
Indenture, beneficial ownership of 10% or more of the Voting Stock of a Person
shall be deemed to be control; provided, that no Local Partner will be deemed an
affiliate of a Subsidiary or a Joint Venture solely as a result of such Local
Partner's ownership of more than 10% of the Voting Stock of such Subsidiary or
Joint Venture.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Annualized Pro Forma EBITDA" means with respect to any Person, such
Person's Pro Forma EBITDA for the fiscal quarter with respect to which a
calculation of the Company's Consolidated Leverage Ratio is being made under
this Indenture multiplied by four.
<PAGE>
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance, disposition or
other transfer of any assets (including, without limitation, by way of a Sale
and Leaseback Transaction) other than (a) sales of inventory in the ordinary
course of business consistent with past practices and (b) issuances and sales by
the Company of its Equity Interests (provided that the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole shall be governed by Section 4.15
and 5.01 of this Indenture), and (ii) the issuance or sale by the Company or any
of its Subsidiaries of Equity Interests of any of the Company's Subsidiaries or
Joint Ventures, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing: (x) a transfer of assets by the Company
to a Wholly Owned Subsidiary or by a Subsidiary to the Company or to another
Wholly Owned Subsidiary, (y) an issuance of Equity Interests by a Subsidiary to
the Company or to a Wholly Owned Subsidiary and (z) a Restricted Payment that is
permitted by Section 4.07 hereof will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such Sale and Leaseback Transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
<PAGE>
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of one year or less from the date
of acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any U.S. commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within six months after the date of
acquisition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Affiliates, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person," other than the
Principals and their Affiliates, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the voting power of the Capital Stock of the
Company, (iv) the consummation of the first transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" becomes the "beneficial owner," directly or indirectly, of more of the
voting power of the Capital Stock of the Company than is at the time
"beneficially owned" by the Principals and their Affiliates in the aggregate or
(v) the first day on which a majority of the members of the Board of Directors
of the Company are not Continuing Directors. For purposes of this definition,
any transfer of an Equity Interest of an entity that was formed for the purpose
of acquiring voting power of Capital Stock of the Company shall be deemed to be
a transfer of such portion of such voting power of Capital Stock as corresponds
to the portion of the equity of such entity that has been so transferred.
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
"Company" means Hyperion Telecommunications, Inc., and any and all
successors thereto.
"Consolidated Interest Expense" means, for any Person, for any period,
the aggregate of the following for such Person for such period determined on a
consolidated basis in accordance with GAAP: (a) the amount of interest in
<PAGE>
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
(b) the interest component of rentals in respect of any Capital Lease Obligation
paid, in each case whether accrued or scheduled to be paid or accrued by such
Person during such period to the extent such amounts were deducted in computing
Consolidated Net Income, determined on a consolidated basis in accordance with
GAAP. For purposes of this definition, interest on a Capital 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 Capital Lease Obligation in
accordance with GAAP consistently applied.
"Consolidated Leverage Ratio" means, for any Person, as of any date,
the ratio of (i) the sum of the aggregate outstanding amount of all Indebtedness
of a Person and its Subsidiaries (other than any Indebtedness of a General
Partner Subsidiary to the extent that such Indebtedness has been incurred in
connection with such General Partner Subsidiary's partnership interest in the
Restricted Joint Venture of which such General Partner Subsidiary is a general
partner) determined on a consolidated basis in accordance with GAAP to (ii)
Annualized Pro Forma EBITDA.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions actually
paid in cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii)
the Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iv) the cumulative effect of
a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments) and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
<PAGE>
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means, with respect to any Person, any agreement
entered into by and among such Person and one or more commercial banks or
financial institutions, providing for senior term or revolving credit borrowings
of a type similar to credit agreements typically entered into by commercial
banks and financial institutions, including any related notes, Guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and related agreements may be amended,
extended, refinanced, renewed, restated, replaced or refunded from time to time.
"Cumulative Interest Expense" means the aggregate amount of
Consolidated Interest Expense of the Company paid or accrued by the Company from
and after the first day of the first fiscal quarter beginning after August 21,
1997 to the end of the fiscal quarter immediately preceding a proposed
Restricted Payment, determined on a consolidated basis in accordance with GAAP.
"Cumulative Pro Forma EBITDA" means the cumulative EBITDA of the
Company from and after the first day of the first fiscal quarter beginning after
August 21, 1997 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.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A1 hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
<PAGE>
"Designated Senior Debt" means any Indebtedness outstanding under the
13% Notes, the 12 1/4% Notes and any Credit Agreement; and any other Senior Debt
permitted under this Indenture the principal amount of which is $100.0 million
or more and that has been designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, 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 the date
that is 91 days after the date on which the Notes mature; provided, however,
that any Capital Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Capital Stock upon the occurrence of a Change of
Control occurring prior to the final maturity of the Notes shall not constitute
Disqualified Stock if the change of control provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions applicable to the Notes contained in Section 4.15 hereof and such
Capital Stock specifically provides that the Company will not repurchase or
redeem any such stock pursuant to such provisions prior to the Company's
repurchase of such Notes as are required to be purchased pursuant to Section
4.15 hereof.
"EBITDA" means, for any Person, for any period, an amount equal to (A)
the sum of (i) Consolidated Net Income for such period 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 GAAP consistently applied.
"Enhanced Services Provider" means (i) !NTERPRISE, a wholly owned
subsidiary of US West, (ii) any nationally recognized Person which provides
enhanced telecommunications services, including but not limited to, frame relay,
Asynchronous Transfer Mode data transport, business video conferencing, private
line data interconnect service and LAN connection and monitoring services, or
(iii) any Person that has least 500 existing enhanced data services
installations in the United States.
"Enhanced Services Venture" means any entity in which any Qualified
Subsidiary or Permitted Joint Venture owns at least 50% of the Equity Interests,
provided that the remainder of the Equity Interests are owned by an Enhanced
Services Provider.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
<PAGE>
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means any Indebtedness of the Company or the
Company's Subsidiaries (other than Indebtedness under any Credit Agreement or
the Notes) in existence on the date of this Indenture.
"Existing Networks" means the telecommunications networks operated by
the Company, its Subsidiaries and Joint Ventures, including, but not limited to,
all networks under construction, on the date of this Indenture.
"Fiber Lease Agreements" means the agreements relating to fiber leases
as set forth on Schedule A hereto.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"General Partner Subsidiary" means a direct or indirect Wholly Owned
Subsidiary of the Company that (i) is a general partner or stockholder of a
Restricted Joint Venture and (ii) (a) is not engaged in any trade or business
other than the holding, voting, disposing of or taking any action with respect
to its Equity Interest in such Restricted Joint Venture, (b) has no material
assets other than its Equity Interest in such Restricted Joint Venture, (c) has
no material liabilities other than liabilities arising (1) as a result of the
guarantee by such General Partner Subsidiary of Indebtedness incurred by the
Restricted Joint Venture of which such General Partner Subsidiary is a general
partner or (2) by operation of law; provided that, for purposes of this
definition, Hyperion Telecommunications of Virginia, Inc. shall be deemed to be
a General Partner Subsidiary for all purposes so long as Hyperion
Telecommunications of Virginia, Inc. does not engage in any operations or
business that is materially different from the operations or business engaged in
by such companies on the date hereof.
<PAGE>
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold to Institutional Accredited
Investors.
"Indebtedness" means, with respect to any Person, (a) any liability of
any Person, whether or not contingent (i) for borrowed money, or under any
reimbursement obligation relating to a letter of credit, bankers' acceptance or
note purchase facility; or (ii) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation); or (iii) for the payment of
money relating to a lease that is required to be classified as a Capitalized
Lease Obligation in accordance with GAAP; or (iv) for Disqualified Stock; or (v)
for preferred stock of any Subsidiary (other than preferred stock held by the
Company or any of its Subsidiaries); (b) any liability of others described in
the preceding clause (a) that the Person has guaranteed, that is recourse to
such Person or that is otherwise its legal liability; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (a) and (b) above.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
<PAGE>
"Intercompany Notes" means the intercompany notes issued by
Subsidiaries and Joint Ventures of the Company in favor of the Company or its
Subsidiaries to evidence loans by the Company to such Subsidiary or Joint
Venture, in each case, in the form attached as Exhibit E hereto.
"Invested Equity Capital" means, with respect to any of the Company's
Subsidiaries or Joint Ventures as of any date, the sum of (i) the total dollar
amount contributed in cash plus the value of all property contributed (valued at
the lower of fair market value of such property at the time of contribution,
determined in good faith by the Company's Board of Directors, or the book value
of such property at the time of contribution on the books of the Person making
such contribution) to such Subsidiary or Joint Venture, as the case may be,
since the date of its formation in the form of common equity plus, without
duplication, (ii) the total dollar amount contributed in cash plus the value of
all property contributed (valued at the lower of fair market value of such
property at the time of contribution, determined in good faith by the Company's
Board of Directors, or the book value of such property at the time of
contribution on the books of the Person making such contribution) to such
Subsidiary or Joint Venture, as the case may be, since the date of its formation
by Local Partners (and their Affiliates) in consideration of the issuance of
preferred equity on a basis that is substantially proportionate to their common
equity interests plus, without duplication, (iii) the total dollar amount
contributed in cash plus the value of all property contributed (valued at the
lower of fair market value of such property at the time of contribution,
determined in good faith by the Company's Board of Directors, or the book value
of such property at the time of contribution on the books of the Person making
such contribution) to such Subsidiary or Joint Venture since the date of its
formation by the Company in consideration of the issuance of preferred equity
less (iv) the fair market value of all dividends and other distributions (in
respect of any Equity Interest and in whatever form and however designated) made
by such Subsidiary or Joint Venture, as the case may be, since the date of its
formation to the holders of its common equity (and their Affiliates); provided
that in no event shall the aggregate amount of such dividends and other
distributions made by such Subsidiary or Joint Venture, as the case may be, to
any such Person (or its Affiliates) reduce the Invested Equity Capital of such
Subsidiary or Joint Venture, as the case may be, by more than the total
contributions (per clauses (i) through (iii) above) to such Subsidiary or Joint
Venture, as the case may be, by such Person (and its Affiliates).
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), capital contributions,
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting solely of common equity securities of
the Company shall not be deemed to be an Investment. If the Company or any
Subsidiary of the Company sells or otherwise disposes of any Equity Interests of
any direct or indirect Subsidiary of the Company such that, after giving effect
to any such sale or disposition, such Person is no longer a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Subsidiary not sold or disposed of.
"Joint Venture" means a corporation, partnership or other entity
engaged in one or more Telecommunications Businesses (i) in which the Company or
its Subsidiaries owns, directly or indirectly, an Equity Interest with the
balance of the Equity Interest thereof being held by one or more Local Partners
and (ii) that is managed and operated by the Company or any of its Subsidiaries.
"Joint Venture Investment" means Investments in Joint Ventures.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. 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 on
such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 4.01 of this Indenture.
"Local Partner" means, with respect to any Joint Venture (i) the Joint
Venture partners set forth on Schedule B hereto and (ii) any other Person,
provided that such other Person (a) is a major cable company or utility that has
a substantial presence within the specific market of such Joint Venture, which
presence shall be evidenced, (1) in the case of a cable company, by such company
having a market share consisting of at least 50% of the total number of cable
subscribers in such market and (2) in the case of a utility company, by such
company having at least 75% of the total customer base of such market or (b) is
a Wholly Owned Subsidiary of a major cable company or utility that (1) meets the
criteria set forth in the immediately preceding clause (a) or (2) has all of its
initial capital contributions under the agreement governing the Joint Venture
fully and unconditionally guaranteed, until such time as all such contributions
have been made, by one or more Persons who meet the criteria set forth in the
immediately preceding clause (a).
"Local Partner Agreements" means the joint venture agreements with
Local Partners, as set forth on Schedule C hereto.
"Management Agreements" means the agreements governing the management
of the networks, as set forth on Schedule D hereto.
<PAGE>
"Net Cash Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale and principal payments on
indebtedness received in any Asset Sale, as and when received), net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (a) any Asset Sale (including, without limitation, dispositions
pursuant to Sale and Leaseback Transactions) or (b) the disposition of any
securities by such Person or any of its Subsidiaries or the extinguishment of
any Indebtedness of such Person or any of its Subsidiaries and (ii) any
extraordinary or nonrecurring gain or loss, together with any related provision
for taxes on such extraordinary or nonrecurring gain or loss.
"New Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"New Telecommunications Service Market" means a Telecommunications
Service Market in an area that is not within ten miles of any of the Company's
Existing Networks.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Subsidiaries nor any of its Permitted Joint Ventures (a)
provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness), (b) is directly or indirectly
liable (as a guarantor, co-obligor or otherwise) or (c) constitutes the lender;
and (ii) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against a Restricted Joint Venture)
would permit (upon notice, lapse of time, the occurrence, or failure to occur,
of any other condition or event or any combination thereof) any holder of any
other Indebtedness of the Company, any of its Subsidiaries or any of its
Permitted Joint Ventures to declare a default on such other Indebtedness or
cause or permit the payment thereof to be accelerated prior to its stated
maturity; and (iii) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Company, any of
its Subsidiaries or any of its Permitted Joint Ventures; provided that the
recourse (if any) of a holder of such Indebtedness to the General Partner
Subsidiary of a Restricted Joint Venture in which such General Partner
Subsidiary is a general partner as a result of being a general partner of such
Restricted Joint Venture will not be considered credit support or direct or
indirect liability of such General Partner Subsidiary for purposes of clauses
(i)(a), (ii)(b) and (iii) above.
"Non-U.S. Person" means a Person who is not a U.S. Person.
<PAGE>
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Investments" means (a) any Investment in a Wholly Owned
Subsidiary of the Company that is engaged, either directly or indirectly through
a Qualified Subsidiary or Joint Venture, in the Telecommunications Business; (b)
any Investment in a Qualified Subsidiary of the Company that is directly engaged
in the Telecommunications Business; (c) any Investment in Cash Equivalents; (d)
any Investment in a Person that is not a Subsidiary of the Company, if as a
result of such Investment (i)(A) such Person becomes a Qualified Subsidiary or
Wholly Owned Subsidiary of the Company or (B) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Qualified
Subsidiary and (ii)(A) such Wholly Owned Subsidiary, either directly or
indirectly through a Qualified Subsidiary or a Joint Venture, is engaged in the
Telecommunications Business or (B) such Qualified Subsidiary is directly engaged
in the Telecommunications Business; (e) any Permitted Joint Venture Investment;
(f) any Investment made as a result of the receipt of non-cash consideration
(whether or not such non-cash consideration is deemed to be cash for the
purposes of Section 4.10 hereof) from an Asset Sale that was made pursuant to
and in compliance with Section 4.10; or (g) any Investment in an Enhanced
Services Venture.
"Permitted Junior Securities" means (a) Equity Interests in the Company
or (b) debt securities that are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt that are subordinated to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt under this Indenture.
<PAGE>
"Permitted Joint Venture" means any Joint Venture in which the Company
has, directly or indirectly, a 45% or greater Equity Interest.
"Permitted Joint Venture Investment" means any Joint Venture Investment
by the Company or a Wholly Owned Subsidiary of the Company if, after such Joint
Venture Investment such Joint Venture is a Permitted Joint Venture.
"Permitted Liens" means (i) Liens on the property of the Company, any
Subsidiary or any Permitted Joint Venture securing Obligations under Senior Debt
that may be incurred pursuant to clause (i) of Section 4.09 hereof; (ii) Liens
on the property of the Company, any Subsidiary or any Permitted Joint Venture
securing Senior Debt under the 12 1/4% Notes; (iii) Liens in favor of the
Company; (iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company, any Subsidiary or any Permitted
Joint Venture; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company; (v)
Liens on property existing at the time of acquisition thereof by the Company,
any Subsidiary or any Permitted Joint Venture, provided that such Liens were in
existence prior to the contemplation of such acquisition; (vi) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vii) Liens existing on the date of this Indenture; (viii) Liens on
property of Subsidiaries and Permitted Joint Ventures securing Obligations under
Indebtedness incurred pursuant to the proviso in clause (viii) of Section 4.09
hereof, but only to the extent that (a) in the case of Subsidiaries and
Permitted Joint Ventures that are incurring Indebtedness other than Related
Network Debt, such Liens secure only such Indebtedness incurred by such
Subsidiary or such Joint Venture; and (b) in the case of Subsidiaries and Joint
Ventures that are incurring Related Network Debt, such Liens secure only such
Related Network Debt; (ix) Liens securing Obligations under the Notes and this
Indenture; (x) Liens securing Obligations under Vendor Debt pursuant to clause
(ii) of Section 4.09 hereof, provided that the principal amount of such Vendor
Debt secured by such Lien does not exceed 100% of the purchase price or cost of
acquisition, construction or improvement of the Telecommunications Related
Assets subject to such Liens; (xi) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (xii) Liens
incurred in the ordinary course of business of the Company, any Subsidiary or
any Permitted Joint Venture with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company, such Subsidiary or such
Permitted Joint Venture; and (xiii) Liens securing Refinancing Indebtedness, but
only if, and to the extent, that such Liens that are incurred in connection with
such Refinancing Indebtedness do not encumber any assets or properties (or
interests therein) other than those assets or properties (or interests therein)
subject to Liens pursuant to the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
<PAGE>
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Preferred Stock" for any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
"Principals" means 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 Company's Capital Stock
beneficially owned by any of the foregoing have been transferred.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"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 for 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, Pro Forma EBITDA shall be computed so as to give pro forma effect
to such Asset Sale or the acquisition of such Person or business, as the case
maybe, as if such acquisition had been completed as of the beginning of such
period, and (iii) if, during or after such period, such Person or any of its
Subsidiaries incurs any Indebtedness (including without limitation, any Acquired
Indebtedness) or issues any Disqualified Stock, Pro Forma EBITDA shall be
computed so as to give pro forma effect (including pro forma application of the
proceeds therefrom) thereto as if such Indebtedness or Disqualified Stock had
been incurred as of the beginning of such period.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Subsidiary" means any Subsidiary in which a Local Partner or
Local Partners own at least 5% but less than 50% of the Equity Interests of such
Subsidiary; provided that such Subsidiary remains a Subsidiary of the Company at
all times for purposes under this Indenture.
"Refinancing Indebtedness" means any Indebtedness of the Company, any
of its Subsidiaries or any of its Permitted Joint Ventures issued in exchange
for, or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Company, any of its Subsidiaries or
<PAGE>
any of its Permitted Joint Ventures; provided that: (i) the principal amount (or
accreted value, if applicable) of such Refinancing Indebtedness does not exceed
the principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Refinancing Indebtedness has
a final maturity date later than the final maturity date of the Notes, and is
subordinated in right of payment to the Notes on terms at least as favorable to
the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iv) to the extent that the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded was secured by Liens, any Liens being
incurred in connection with such Refinancing Indebtedness are at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (v) such Indebtedness is incurred either by the
Company, the Subsidiary or the Permitted Joint Venture who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 2, 1999, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and the Global Note Legend and deposited with or on behalf of
and registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Related Networks" means any group of Qualified Subsidiaries or
Permitted Joint Ventures in which the same Local Partner owns, or the same group
of Local Partners own, all the Equity Interests of each such Qualified
Subsidiary or Permitted Joint Venture that comprise such Related Network that
are not owned by the Company.
"Related Network Debt" means any Credit Agreement entered into by and
among the Qualified Subsidiaries and/or Permitted Joint Ventures that comprise a
Related Network.
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
<PAGE>
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Notes" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Joint Venture" means any Joint Venture that is not a
Permitted Joint Venture, but only if such Joint Venture: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not a party to any agreement, contract,
arrangement or understanding with the Company, any of its Subsidiaries or any of
its Permitted Joint Ventures unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company, such
Subsidiary or such Permitted Joint Venture than those that might be obtained at
the time from Persons who are not Affiliates of the Company; and (c) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company, any of its Subsidiaries or any of its Permitted
Joint Ventures. If, at any time, a Restricted Joint Venture fails to meet the
requirements of a Restricted Joint Venture by becoming a Permitted Joint Venture
or otherwise, it shall thereafter cease to be a Restricted Joint Venture for
purposes of this Indenture and (i) all of the then outstanding Indebtedness of
such entity shall be deemed to be incurred as of the date on which such entity
becomes a Permitted Joint Venture or otherwise ceases to be a Restricted Joint
Venture for purposes of Section 4.09 hereof subject to the provisions of Section
6.01(d) hereof (and if such Indebtedness is not permitted to be incurred as of
such date under such covenant, the Company shall be in default of such covenant)
and (ii) all of the then outstanding Investments made by such entity since the
date of this Indenture shall be deemed to have been made as of the date that
such Restricted Joint Venture becomes a Permitted Joint Venture or otherwise
ceases to be a Restricted Joint Venture for purposes of Section 4.07 hereof (and
if such Investments are not permitted to be made as of such date under Section
4.07 hereof, the Company shall be in default of such covenant); provided that if
a Restricted Joint Venture ceases to be a Restricted Joint Venture as a result
of (i) the loss of its Local Partner or (ii) the loss of management control of
such Restricted Joint Venture, then the provisions of Section 4.07 shall not be
applied to such entity.
"Restricted Joint Venture Investment" means any Joint Venture
Investment by a General Partner Subsidiary if, after such Joint Venture
Investment, such Joint Venture is a Restricted Joint Venture.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
<PAGE>
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Sale and Leaseback Transaction" of any Person means an arrangement
with any lender or investor or to which such lender or investor is a party
providing for the leasing by such Person of any property or asset of such Person
which has been or is being sold or transferred by such Person more than 365 days
after the acquisition thereof or the completion of construction or commencement
of operation thereof to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor on the security of
such property or asset. The stated maturity of such arrangement shall be the
date of the last payment of rent or any other amount due under such arrangement
prior to the first date on which such arrangement may be terminated by the
lessee without payment of a penalty.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (a) all Indebtedness of the Company outstanding
under the 13% Notes and the 12 1/4% Notes; (b) any other Indebtedness of the
Company permitted to be incurred under the terms of this Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is on a parity with or subordinated in right of payment to the Notes; and (c)
all Obligations with respect to the items listed in the preceding clauses (a)
and (b). Notwithstanding anything to the contrary in the preceding, Senior Debt
will not include (i) any liability for federal, state, local or other taxes owed
or owing by the Company; (ii) any Indebtedness of the Company to any of its
Subsidiaries, Joint Ventures or other Affiliates; (iii) any trade payables; or
(iv) the portion of any Indebtedness that is incurred in violation of this
Indenture.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"Stated Maturity" means with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable.
"Strategic Investor" means a corporation, partnership or other entity
engaged in one or more Telecommunications Businesses that has 80% or more of the
voting power of its Capital Stock owned by a Person that has, an equity market
capitalization, at the time (i) of its initial Investment in the Company or (ii)
<PAGE>
it purchases an Equity Interest in a Subsidiary or Joint Venture of the Company,
as the case may be, in excess of $2.0 billion.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership of which more
than 50% of the partnership's capital accounts, distribution rights or general
or limited partnership interests are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Telecommunications Business" means the business of (i) transmitting,
or providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing or
marketing communications related network equipment, software and other devices
for use in a telecommunications business or (iii) evaluating, participating or
pursuing any other activity or opportunity that is primarily related to those
identified in (i) or (ii) above; provided that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors of the Company.
"Telecommunications Related Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
or intended for use in connection with a Telecommunications Business.
"Telecommunications Service Market" means a network built by the
Company to service a market.
"13% Notes" means the Company's 13% Senior Discount Notes due 2003
issued pursuant to the 13% Notes Indenture.
"13% Notes Indenture" means the Indenture, dated as of April 15, 1996,
between the Company and Bank of Montreal Trust Company, as amended.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
SS 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transfer Restricted Notes" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Securities Act, (b) the date on
which such Note has been disposed of in accordance with a Shelf Registration
Statement, (c) the date on which such Note is disposed of by a Broker-Dealer
<PAGE>
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the prospectus contained therein)
or (d) the date on which such Note is distributed to the public pursuant to Rule
144 under the Act.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"12 1/4% Notes" means the Company's 12 1/4% Senior Secured Notes due
2004 issued pursuant to the 12 1/4% Notes Indenture.
"12 1/4% Notes Indenture" means the Indenture, dated as of August 27,
1997, between the Company and Bank of Montreal Trust Company.
"Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Vendor Debt" means any purchase money Indebtedness of the Company, any
Subsidiary (other than a General Partner Subsidiary) or any Permitted Joint
Venture incurred in connection with the acquisition of Telecommunications
Related Assets.
"Voting Stock" of any person means Capital Stock of such person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such person, whether at all times or only so long as no
senior class of securities has voting power by reason of any contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or a
combination thereof.
<PAGE>
<TABLE>
<CAPTION>
Section 1.02. Other Definitions.
Term Defined in
Section
<S> <C>
"Affiliate Transaction"............................................................ 4.11
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"Asset Sale"....................................................................... 4.10
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"Asset Sale Offer"................................................................. 3.09
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"Authentication Order"............................................................. 2.02
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"Bankruptcy Law"................................................................... 4.01
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"Change of Control Offer".......................................................... 4.15
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"Change of Control Payment"........................................................ 4.15
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"Change of Control Payment Date"................................................... 4.15
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"Covenant Defeasance".............................................................. 8.03
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"Effectiveness Target Date" ....................................................... 4.01
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"Equity Issuances" ................................................................ 4.07
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"Event of Default"................................................................. 6.01
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"Excess Proceeds".................................................................. 4.10
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"incur"............................................................................ 4.09
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"Legal Defeasance"................................................................. 8.02
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"Offer Amount"..................................................................... 3.09
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"Offer Period"..................................................................... 3.09
--------------------------------------------------------------------------------------
"Qualified Equity Offering" ....................................................... 3.07
--------------------------------------------------------------------------------------
"Paying Agent"..................................................................... 2.03
--------------------------------------------------------------------------------------
"Purchase Date".................................................................... 3.09
--------------------------------------------------------------------------------------
"Registrar"........................................................................ 2.03
--------------------------------------------------------------------------------------
"Registration Default" ............................................................ 4.01
--------------------------------------------------------------------------------------
"Restricted Payments".............................................................. 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
<PAGE>
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof (subject to a
minimum initial purchase requirement of $250,000 for Notes sold to Accredited
Investors other than in reliance on Rule 144A or Regulation S).
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
<PAGE>
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be 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 a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
<PAGE>
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
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") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder 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
all Holders and shall otherwise comply with TIA S 312(a). If the Trustee is not
the Registrar, the Company shall furnish to the Trustee at least seven Business
Days before each interest payment date 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 the Holders of Notes and
the Company shall otherwise comply with TIA S 312(a).
<PAGE>
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; provided, however,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Regulation S Global Note may not be made to a
U.S. Person or for the account or benefit of a U.S. Person (other than an
Initial Purchaser). Beneficial interests in any Unrestricted Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Registrar
either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
<PAGE>
given in accordance with the Applicable Procedures containing information
regarding the Participant account to be credited with such increase or (B)
(1) a written order from a Participant or an Indirect Participant given to
the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to
the beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall
be registered to effect the transfer or exchange referred to in (1) above.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii)Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by
item (3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the New Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
<PAGE>
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Restricted Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (1) thereof;
<PAGE>
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
New Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
<PAGE>
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii)Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend. A beneficial
interest in an Unrestricted Global Note cannot be exchanged for a
Restricted Definitive Note or transferred to a Person who takes delivery
thereof in the form of a Restricted Definitive Note.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person
<PAGE>
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (2)(b)
thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof; or
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 under
the Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities Act
other than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications, certificates and Opinion of Counsel required by
item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (C) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
<PAGE>
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the New Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant
to the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act and such Definitive
Notes are being exchanges or transferred in compliance with any
applicable blue sky securities laws of any State of the United
States.
Upon satisfaction of the conditions of any of the subparagraphs
in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes
and increase or cause to be increased the aggregate principal amount of
the Unrestricted Global Note.
(iii)Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted Definitive
Note and increase or cause to be increased the aggregate principal amount
of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
<PAGE>
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of Exhibit
B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the New Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
<PAGE>
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii)Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof. Unrestricted Definitive Notes
cannot be exchanged for or transferred to Persons who take delivery
thereof in the form of a Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the New
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following:
<PAGE>
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER:
1. REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A) (1), (2), (3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT (AN
"IAI"),
2. AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SENIOR SUBORDINATED NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND
3. AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
1
<PAGE>
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05
hereof).
<PAGE>
(iii)The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such registration of transfer
or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close of business
on the day of selection, (B) to register the transfer of or to exchange
any Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part or (C) to register
the transfer of or to exchange a Note between a record date and the next
succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(vii)The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, then, in the absence of notice to the Company that the Note
has been acquired by a protected purchaser, the Company shall issue and the
Trustee shall authenticate a replacement Note. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced.
The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
<PAGE>
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Affiliate of the Company, shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of definitive Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes in accordance with its record retention policies at the time
(subject to the record retention requirement of the Exchange Act). The Company
may not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.
<PAGE>
Section 2.12. Record Date.
The record date for purposes of determining the identity of Holders of
the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided in
TIA Section 316(c).
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
<PAGE>
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, 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 its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
<PAGE>
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to November 1, 2003. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on November 1 of the years indicated below:
<PAGE>
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003................................................. 106.000%
2004................................................. 103.000%
2005 and thereafter.................................. 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to May 1, 2002, the Company may redeem up to a maximum of 25%
of the aggregate principal amount of the Notes then outstanding at a redemption
price of 112.000% of the principal amount thereof, with the net proceeds from
either (i) an underwritten public offering of the common stock of the Company or
(ii) a sale of the Capital Stock (other than Disqualified Stock) of the Company
to a Strategic Investor (excluding Affiliates of the Company) in a single
transaction or a series of related transactions for at least $25.0 million
(clauses (i) and (ii) together, collectively referred to herein as "Qualified
Equity Offerings"); provided that, in either case, at least 75% in aggregate
principal amount of the Notes remain outstanding immediately after the
occurrence of such redemption; and provided, further, that such redemption shall
occur within 90 days of the date of the closing of such Qualified Equity
Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
<PAGE>
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
<PAGE>
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company or the Paying Agent shall
promptly (but in any case not later than five days after the Purchase Date) mail
or deliver to each tendering Holder an amount equal to the purchase price of the
Notes tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Note, and the Trustee, upon written request
from the Company shall authenticate and mail or deliver such new Note to such
Holder, in a principal amount equal to any unpurchased portion of the Note
surrendered. Any Note not so accepted shall be promptly mailed or delivered by
the Company to the Holder thereof. The Company shall publicly announce the
results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
(a) The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due.
(b) If (i) any Registration Statement required by the Registration
Rights Agreement is not filed with the SEC on or prior to the date specified for
such filing in the Registration Rights Agreement, (ii) any such Registration
Statement has not been declared effective by the SEC on or prior to the date
specified for such effectiveness in the Registration Rights Agreement (the
"Effectiveness Target Date"), (iii) the Exchange Offer has not been consummated
within 30 Business Days of the Effectiveness Target Date with respect to the
Exchange Offer Registration Statement or (iv) any Registration Statement
required by this Agreement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable for its intended purpose without
being succeeded immediately by a post-effective amendment to such Registration
Statement that cures such failure and that is itself declared effective
immediately (each such event referred to in clauses (i) through (iv), a
"Registration Default"), then the Company shall pay Liquidated Damages, in cash,
to each Holder of Transfer Restricted Notes with respect to the first 90-day
<PAGE>
period immediately following the occurrence of such Registration Default, at a
rate of 0.5% per annum, determined daily, on the principal amount of the Notes
as of the immediately preceding Interest Payment Date. Such interest rate will
increase by an additional 0.25% per annum at the beginning of each subsequent
90-day period up to a maximum aggregate increase of 2.0% per annum until all
Registration Defaults have been cured, at which time the interest rate borne by
the Notes will be reduced to the original interest rate. Notwithstanding
anything to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of clause (i) above, (2) upon the effectiveness of the
Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement) in the case of clause (ii) above, (3) upon consummation
of the Exchange Offer in the case of clause (iii) above, or (4) upon the filing
of a post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of clause (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Notes as a result of
such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
(c) The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
<PAGE>
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's independent
public accountants, (ii) all current reports that would be required to be filed
with the SEC on Form 8-K if the Company were required to file such reports, in
each case, within the time periods specified in the SEC's rules and regulations
and (iii) on a quarterly basis, certain financial information and operating data
with respect to each Subsidiary and Joint Venture engaged in a
Telecommunications Business, in the form specified by Schedule E or Schedule F
hereto, as applicable. In addition, following consummation of the Exchange
Offer, whether or not required by the rules and regulations of the SEC, the
Company shall file a copy of all such information and reports with the SEC for
public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA S 314(a).
(b) For so long as any Notes remain outstanding, the Company shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
<PAGE>
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
The Company (i) shall not, and shall not permit any of its Subsidiaries
or Joint Ventures to, directly or indirectly: (a) declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or dividends or distributions
payable to the Company or any Wholly Owned Subsidiary); (b) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or any
direct or indirect parent of the Company (other than Equity Interests owned by
the Company or any Wholly Owned Subsidiary of the Company); or (c) purchase,
redeem or otherwise acquire or retire for value, prior to a scheduled mandatory
sinking fund payment date or maturity date, any Indebtedness of the Company
which ranks subordinate in right to payment to the Notes and (ii) the Company
shall not, and shall not permit any of its Subsidiaries or Permitted Joint
Ventures to, make any Investment other than a Permitted Investment (all such
payments and other actions set forth in clauses (i) and (ii) above being
collectively referred to as "Restricted Payments") unless, at the time of and
after giving effect to such Restricted Payment:
(x) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
<PAGE>
(y) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments (including, without limitation, all
Restricted Payments referred to in clauses (a), (b)(1) and (e) below but
excluding those made under clauses (b)(2), (c) and (d) below) made by the
Company and its Subsidiaries after August 21, 1997 is less than the sum of:
(1) the excess of (A) Cumulative Pro Forma EBITDA over (B) 1.5 times
Cumulative Interest Expense plus (2) the aggregate net cash proceeds
received by the Company after August 21, 1997 (other than from a Subsidiary
or Joint Venture) (A) as capital contributions to the Company, (B) from the
issuance and sale of Equity Interests (other than Disqualified Stock) and
(C) from the issuance and sale of Indebtedness that is convertible into
Capital Stock (other than Disqualified Stock), to the extent such
Indebtedness is actually converted into such Capital Stock (clauses (A),
(B) and (C) collectively referred to as "Equity Issuances"), other than any
such net cash proceeds from Equity Issuances that were used as set forth in
clauses (b) and (c) below; and
(z) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Consolidated Leverage Ratio test set forth in the first paragraph of
Section 4.09 hereof.
The foregoing provisions will not prohibit the following Restricted
Payments:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(b) so long as no Default or Event of Default shall have occurred
and be continuing, Investments in Telecommunications Businesses, which at
the time any such Investment was made, did not cause the aggregate amount
of all Investments then outstanding under this clause (b) to exceed (1)
$20.0 million plus (2) the net cash proceeds from Equity Issuances not used
as set forth in clause (y) of the preceding paragraph and clause (c) below;
(c) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or of any
Equity Interests of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Company) of, Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (b)(2) above
and clause (y) of the preceding paragraph;
(d) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company with the net cash proceeds from an
incurrence of Refinancing Indebtedness; or
(e) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company or any Subsidiary or
Permitted Joint Venture of the Company held by any member of the Company's
(or any of its Subsidiaries' or Permitted Joint Ventures') management
pursuant to any management equity subscription agreement or stock option
agreement in effect as of the date of this Indenture; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $1,000,000 in any twelve-month
period.
<PAGE>
For purposes of this Section 4.07, in the event that a Restricted Joint
Venture becomes a Permitted Joint Venture or otherwise ceases to be a Restricted
Joint Venture, all of the then outstanding Investments made by such entity since
the date of this Indenture shall be deemed to have been made as of the date that
such Restricted Joint Venture becomes a Permitted Joint Venture or otherwise
ceases to be a Restricted Joint Venture; provided that if a Restricted Joint
Venture ceases to be a Restricted Joint Venture as a result of (i) the loss of
its Local Partner or (ii) the loss of management control of such Restricted
Joint Venture, then the provisions of this paragraph shall not be applied to
such entity.
The amount of all Restricted Payments, other than cash, shall be the
fair market value (evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Trustee) on the date of such
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Subsidiary, as the case may be, pursuant to such Restricted Payment. Not
later than the date of making any Restricted Payment, the Company shall deliver
to the Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, which calculations may be
based upon the Company's latest available financial statements.
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to:
(i) (a) pay dividends or make any other distributions to the Company
or any of its Subsidiaries (1) on its Capital Stock or (2) with respect to
any other interest or participation in, or measured by, its profits, or (b)
pay any Indebtedness owed to the Company or any of its Subsidiaries.
(ii) make loans or advances to the Company or any of its
Subsidiaries,
(iii) grant liens or grant security interests on its assets in favor
of the Holders of the Notes or guarantee the payment of the Notes; or
(iv) transfer any of its properties or assets to the Company or any
of its Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the date of this Indenture;
(b) any Credit Agreement creating or evidencing Indebtedness
permitted by this Indenture and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof;
(c) this Indenture and the Notes;
(d) applicable law;
<PAGE>
(e) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices;
(f) purchase money obligations or Vendor Debt for property acquired
in the ordinary course of business that impose restrictions of the nature
described in clause (iv) above on the property so acquired;
(g) Indebtedness incurred pursuant to clause (viii) of Section 4.09
hereof, provided that such encumbrance or restriction only relates to the
Subsidiary or Permitted Joint Venture incurring such Indebtedness; and
(h) Refinancing Indebtedness, provided that such encumbrances or
restrictions are no more restrictive than those contained in the
documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries or
Joint Ventures to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including,
without limitation, Acquired Indebtedness), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Subsidiaries or Joint
Ventures to issue any shares of Preferred Stock; provided that the Company may
incur Indebtedness (including, without limitation, Acquired Indebtedness) or
issue shares of Disqualified Stock if the Company's Consolidated Leverage Ratio
as of the last day of the Company's most recently ended fiscal quarter for which
internal financial statements are available immediately preceding the date on
which such Indebtedness is incurred, or such Disqualified Stock is issued, as
the case may be, would have been (a) greater than zero and less than 5.5 to 1.0,
if such incurrence or issuance is on or prior to March 31, 2002, and (b) greater
than zero and less than 5.0 to 1.0, if such incurrence or issuance is after
March 31, 2002, determined on a pro forma basis (including pro forma application
of the net proceeds therefrom) as if such Indebtedness had been incurred, or
such Disqualified Stock had been issued, as the case may be, at the beginning of
such fiscal quarter.
The foregoing provisions shall not apply to:
(i) the incurrence of Indebtedness by the Company, any Subsidiary
(other than a General Partner Subsidiary) or any Permitted Joint Venture
pursuant to Credit Agreement(s), provided that the aggregate principal
amount of such Credit Agreement(s) at any one time outstanding under this
clause (i) does not exceed $100.0 million for the Company, all of its
Subsidiaries (other than a General Partner Subsidiary) and all of its
Permitted Joint Ventures combined;
(ii) the incurrence of Vendor Debt by the Company, any Subsidiary
(other than a General Partner Subsidiary) or any Permitted Joint Venture,
provided that the aggregate principal amount of such Vendor Debt does not
exceed 100% of the total cost of the Telecommunications Related Assets
financed therewith;
(iii) Refinancing Indebtedness;
<PAGE>
(iv) the incurrence of Indebtedness by the Company not to exceed, at
any one time outstanding, (a) 2.0 times (1) the net cash proceeds received
by the Company after August 21, 1997 from the issuance and sale of its
Capital Stock (other than Disqualified Stock) to the extent that such net
cash proceeds have not been used to make Restricted Payments pursuant to
clauses (b) or (c) of the second paragraph of Section 4.07 hereof plus (2)
the fair market value at the time of issuance of Equity Interests (other
than Disqualified Stock) issued after August 21, 1997 in connection with
any acquisition of a Telecommunications Related Business, in each case to a
Person other than a Subsidiary or a Joint Venture of the Company minus (b)
the aggregate principal amount of the Notes then outstanding; provided that
such Indebtedness does not mature prior to the Stated Maturity of the Notes
and has a Weighted Average Life to Maturity longer than the Notes;
(v) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding not to exceed $10.0 million;
(vi) the incurrence by any Restricted Joint Venture of Non-Recourse
Debt, provided that if any Non-Recourse Debt of a Restricted Joint Venture
ceases to be Non-Recourse Debt, such event shall be deemed to constitute an
incurrence of Indebtedness as of the date such Indebtedness ceases to be
Non-Recourse Debt;
(vii) the guarantee of Indebtedness by a General Partner Subsidiary
in connection with the incurrence of Indebtedness by the Restricted Joint
Venture of which such General Partner Subsidiary is a general partner;
(viii) the incurrence by any Subsidiary (other than a General
Partner Subsidiary) or any Permitted Joint Venture of Indebtedness
(including, without limitation, Acquired Debt) so long as all of the net
proceeds of such incurrence are used by such Subsidiary or Permitted Joint
Venture, as the case may be, directly in connection with the design,
construction, development or acquisition of a Telecommunications Service
Market, provided that, as of the last day of the Company's most recent
fiscal quarter for which internal financial statements are available
immediately preceding the date on which such Indebtedness is incurred,
either: (a) the aggregate principal amount of all Indebtedness of such
Subsidiary or such Permitted Joint Venture does not exceed 1.75 times the
Invested Equity Capital of such Subsidiary or such Permitted Joint Venture;
or (b) the Consolidated Leverage Ratio of such Subsidiary or such Permitted
Joint Venture would not have been greater than 3.5 to 1.0, in each case
determined on a pro forma basis (including pro forma application of the net
proceeds therefrom) as if such Indebtedness had been incurred at the
beginning of such fiscal quarter, and provided, further that (1) any
Indebtedness incurred by any such Subsidiary (other than Related Networks)
pursuant to this paragraph shall be non-recourse with respect to the
Company and (2) any such Indebtedness incurred by any such Permitted Joint
Venture (other than Related Networks) shall be non-recourse with respect to
the Company or any Subsidiary or any other Joint Venture; and
(ix) the incurrence by the Company and its Subsidiaries of Existing
Indebtedness.
For purposes of this Section 4.09, in the event that the Company
proposes to incur Indebtedness pursuant to clause (iv) above, the Company shall,
simultaneously with the incurrence of such Indebtedness, deliver to the Trustee
a resolution of the Board of Directors set forth in an Officers' Certificate
stating that the sale or sales of Capital Stock forming the basis for the
incurrence of such Indebtedness (i) constitutes a long term investment in the
Company and (ii) has not been made for the purpose of circumventing this
<PAGE>
covenant. In the event that the Company rescinds, reverses or unwinds such sale
of Capital Stock or otherwise returns or refunds all or any portion of the net
cash proceeds of such sale of Capital Stock (whether by dividend, distribution
or otherwise) within 270 days of the date of the incurrence of such
Indebtedness, such Indebtedness will be deemed to be incurred on the date of,
and immediately after giving effect to, such rescission, reversal, unwinding,
return or refund.
For purposes of this Section 4.09, in the event that a Restricted Joint
Venture becomes a Permitted Joint Venture or otherwise ceases to be a Restricted
Joint Venture, all of the then outstanding Indebtedness of such entity shall be
deemed to have been incurred as of the date that such Restricted Joint Venture
becomes a Permitted Joint Venture or otherwise ceases to be a Restricted Joint
Venture.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any Subsidiary to, directly
or indirectly, whether in a single transaction or a series of related
transactions occurring within any twelve-month period, make any Asset Sale,
unless:
(i) the Company or the Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair
market value (as determined in good faith by the Board of Directors) for
the shares or assets sold or otherwise disposed of; and
(ii) at least 85% of such consideration consists of cash, provided
that
(A) an amount equal to the fair market value (as determined in
good faith by the Board of Directors) of:
(1) Telecommunications Related Assets received by the
Company or any Subsidiary from the transferee that will be used
by the Company or such Subsidiary in the operation of a
Telecommunications Business;
(2) the Voting Stock of any Person engaged in a
Telecommunications Business received by the Company or any
Subsidiary; provided that on the date such Voting Stock is
received, such Investment in Voting Stock constitutes a Permitted
Joint Venture Investment; and
(3) the publicly tradeable Voting Stock of any person
engaged in the Telecommunications Business received by the
Company or any Subsidiary as consideration for a sale of an
Equity Interest in any Restricted Joint Venture, will, for the
purposes of this covenant, be deemed to be cash which was applied
in accordance with the first sentence of the penultimate
paragraph of this covenant; and
(B) in the event that any of Hyperion Telecommunications of
Pennsylvania, Inc., Hyperion Telecommunications of Tennessee, Inc. or
Hyperion Telecommunications of New York, Inc. sell their respective
partnership interests in the partnerships to which each is a partner
to the respective partnerships in the manner specified by the
applicable Local Partner Agreement, (1) the principal amount of any
<PAGE>
seller note issued to the Company or any of its Wholly Owned
Subsidiaries in connection with the sale of such partnership interest
shall be deemed to be cash for purposes of this covenant and (2) the
payments of principal pursuant to such seller note shall be deemed to
be Net Cash Proceeds (for purposes of the penultimate paragraph of
this covenant) as and when such payments are received.
For purposes of this Section 4.10, the first $1.0 million of Net Cash
Proceeds received from Asset Sales in any fiscal year shall not be subject to
the restrictions contained in this Section 4.10.
In determining the fair market value with respect to any Asset Sale or
series of related Asset Sales involving aggregate consideration in excess of
$25.0 million, the Board of Directors of the Company must obtain an opinion as
to the fairness to the Holders of the Notes of such Asset Sales from a financial
point of view issued by a nationally recognized investment banking firm with
total assets in excess of $1.0 billion; provided that no such opinion shall be
required if such Asset Sale is in accordance with the terms of any Local Partner
Agreement to which the Company or any of its Subsidiaries is a party on the date
of this Indenture.
The Company may apply the Net Cash Proceeds from such Asset Sale (a) to
the permanent repurchase, redemption or other repayment of Senior Debt of the
Company (with a corresponding reduction to any commitments relating thereto) or
(b) to an investment in Telecommunications Related Assets in a
Telecommunications Service Market within 180 days after any Asset Sale; provided
that if the Company determines to make such investment in a New
Telecommunications Service Market, the Company will be deemed to have complied
with the first clause of this sentence if, the Company (y) within 180 days of
such Asset Sale, delivers to the Trustee a resolution adopted by a majority of
the Board of Directors set forth in an Officer's Certificate certifying that the
Company intends to utilize the Net Cash Proceeds of such Asset Sale to invest in
a specific New Telecommunications Service Market and (z) completes such
investment within 360 days of such Asset Sale. The Company shall be deemed to
have completed its investment for purposes of the preceding clause (z), so long
as the Company has (i) a business plan that sets forth the Company's investment
plans for the applicable Telecommunications Service Market and (ii) issued all
material purchase orders to the appropriate parties that are necessary to
complete such business plan. Any Net Cash Proceeds from an Asset Sale that are
not applied or invested as provided in the preceding sentence shall constitute
Excess Proceeds. When the aggregate amount of Excess Proceeds exceeds $2.5
million, the Company shall commence an offer (an "Asset Sale Offer") to the
Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes containing provisions similar to those set forth in this Indenture
with respect to offers to purchase or redeem with the proceeds of sales of
assets to purchase the maximum principal amount of Notes and such other pari
passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer
price in cash equal to 100% of aggregate principal amount thereof, plus accrued
and unpaid interest to the date of repurchase in accordance with the procedures
set forth in Section 3.09 hereof. To the extent that the aggregate principal
amount of Notes and such other pari passu Indebtedness, plus accrued and unpaid
interest to the date of repurchase tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Company may use such remaining Excess
Proceeds for any purpose not prohibited by this Indenture. If the aggregate
principal amount thereof, plus accrued and unpaid interest to the date of
repurchase of the Notes and such other pari passu Indebtedness surrendered by
holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes and such other pari passu Indebtedness to be purchased on a pro rata
basis based on the principal amount of the Notes and such other pari passu
Indebtedness tendered. Upon completion of such offer, the amount of Excess
<PAGE>
Proceeds shall be reset at zero. The Company shall comply with the requirements
of Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the Notes as a result of an Asset Sale.
Notwithstanding the foregoing, the Company shall not, and shall not
permit any Subsidiary to, directly or indirectly, make any Asset Sale of any
Equity Interests of any Subsidiary (at least 80% of the voting power of the
Capital Stock of which is owned by the Company) except pursuant to an Asset Sale
of all of the Equity Interests of such Subsidiary; provided that any sale of any
Equity Interest of any such Subsidiary to a Strategic Investor shall be deemed
not to be an Asset Sale for purposes of this Section 4.10, so long as such sale
of such Equity Interests does not result in such Subsidiary ceasing to be a
Subsidiary of the Company.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), or series of Affiliate Transactions, involving in the
aggregate in excess of $1.0 million, unless the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution adopted in good faith by a majority of the disinterested members of
the Board of Directors of the Company is set forth in an Officers' Certificate
certifying that such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Subsidiary other than those that would
have been obtained in a comparable transaction by the Company or such Subsidiary
with an unrelated Person; and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $25.0 million, an opinion as to the fairness to the Company of such
Affiliate Transaction from a financial point of view issued by a nationally
recognized consulting firm, business valuation firm or investment banking firm;
provided that (i) all agreements and arrangements with Affiliates, including
without limitation the Local Partner Agreements, the Fiber Lease Agreements, the
Management Agreements, network monitoring agreements and transactions in
connection therewith or pursuant thereto existing on the date of the 13% Note
Indenture and through the current term thereof; (ii) all arrangements and
transactions with Adelphia, including existing intercompany Indebtedness,
overhead charges made in the ordinary course of business, fiber lease
arrangements and similar services existing on the date of the 13% Note Indenture
and through the current term thereof; (iii) all employment arrangements approved
by the Board of Directors; (iv) all Restricted Payments made pursuant to Section
4.07 hereof; (v) transactions between or among the Company and/or its Wholly
Owned Subsidiaries; (vi) transactions between a General Partner Subsidiary and
the Restricted Joint Venture of which such General Partner Subsidiary is a
general partner; and (vii) management and network monitoring agreements between
the Company and any of its Joint Ventures, shall not be deemed Affiliate
Transactions.
<PAGE>
Section 4.12. Liens.
The Company shall not, and will not permit any of its Subsidiaries or
Permitted Joint Ventures to, directly or indirectly, create, incur, assume or
suffer to exist any Lien of any kind securing Indebtedness or trade payables
(other than Permitted Liens) upon any of their property or assets, now owned or
hereafter acquired, unless all payments due under this Indenture and the Notes
are secured on an equal and ratable basis with the obligations so secured until
such time as such obligations are no longer secured by a Lien.
Section 4.13. Line of Business.
The Company shall not, and will not permit any Subsidiary to, engage in
any business other than the Telecommunications Business and such business
activities as are incidental or related thereto.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest to the date of repurchase in accordance with the
procedures set forth in this Section 4.15 (the "Change of Control Payment").
Within 10 days following any Change of Control, the Company shall mail a notice
to each Holder stating: (1) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered will be accepted for
payment; (2) the purchase price and the purchase date, which shall be no later
than 30 business days from the date such notice is mailed (the "Change of
Control Payment Date"); (3) that any Note not tendered will continue to accrete
or accrue interest; (4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrete or accrue interest after the Change of
Control Payment Date; (5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to surrender the Notes,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Notes completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change of
Control Payment Date; (6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
<PAGE>
Holder, the principal amount of Notes delivered for purchase, and a statement
that such Holder is withdrawing his election to have the Notes purchased; and
(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, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes in connection with a
Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered payment in an amount equal to the purchase price for the Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) Prior to complying with clauses (a) and (b) above, but in any event
within 90 days following a Change of Control, the Company shall either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of the
Notes required by this Section 4.15.
(d) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and all other provisions of this Indenture
applicable to a Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of Control Offer.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Debt of the Company and senior in any respect in right of payment to the Notes.
<PAGE>
Section 4.17. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any Sale and Leaseback Transaction; provided that the Company or any
Subsidiary (other than a General Partner Subsidiary) may enter into a Sale and
Leaseback Transaction if (i) the Company or other entity could have incurred the
Indebtedness relating to such Sale and Leaseback Transaction pursuant to
Sections 4.09 and 4.12 hereof to incur secured Indebtedness in an amount equal
to the Attributable Debt with respect to such transaction, (ii) the net proceeds
of such Sale and Leaseback Transaction are at least equal to the fair market
value of such property as determined in good faith by the Board of Directors of
the Company and (iii) such proceeds are applied in accordance with Section 4.10
hereof.
Section 4.18. Loans to Subsidiaries and Joint Ventures.
All loans to Subsidiaries or Joint Ventures made by the Company from
time to time after the date of this Indenture will be evidenced by Intercompany
Notes in favor of the Company. All loans by the Company to any Subsidiary or
Joint Venture outstanding on the date of this Indenture will be evidenced by an
unsecured Intercompany Note. The Company shall not, and shall not permit any of
its Subsidiaries to, make any loans by Subsidiaries to other Subsidiaries and by
Subsidiaries to Joint Ventures in which such Subsidiary does not have an Equity
Interest, except that such loans may be (i) incurred and maintained between and
among the Company, its Subsidiaries and Permitted Joint Ventures in connection
with the incurrence of Indebtedness pursuant to clause (i) of Section 4.09
hereof or (ii) incurred and maintained between and among Related Networks in
connection with the incurrence of Indebtedness by such Related Networks pursuant
to the last proviso of paragraph (viii) of Section 4.09 hereof. A form of
Intercompany Note is attached as an annex hereto.
Section 4.19. Limitation on Status as Investment Company.
The Company shall not, and shall not permit any of its Subsidiaries to,
conduct its business in a fashion that would cause it to be required to register
as an "investment company" (as that term is defined in the Investment Company
Act of 1940, as amended) or otherwise become subject to regulation under the
Investment Company Act of 1940.
Section 4.20. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as inducement to
any consent, waiver or amendment of any terms or provisions of the Notes unless
such consideration is offered to be paid or agreed to be paid to all holders of
the Notes which so consent, waive or agree to amend in the time frame set forth
in solicitation documents relating to such consent, waiver or agreement.
<PAGE>
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of the
Company with or into a Wholly Owned Subsidiary of the Company, the Company or
the entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, either (x) be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Leverage Ratio test set
forth in the first paragraph of Section 4.09 hereof or (y) have a Consolidated
Leverage Ratio no greater than the Consolidated Leverage Ratio of the Company
immediately prior to such transaction.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
<PAGE>
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues for a
period of 30 days, whether or not prohibited by the provisions of Article 10
hereof;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including, without limitation, in connection with an offer to
purchase) or otherwise, whether or not prohibited by the provisions of Article
10 hereof;
(c) the Company fails to comply with any of the provisions of
Section 4.07, 4.10, 4.15 or 5.01 hereof;
(d) the Company fails to comply with the provisions described under
4.09 hereof; provided that, for purposes of the last paragraph of Section 4.09
only, in the event that the Company fails to comply with such paragraph because
Indebtedness is deemed to be incurred by a Restricted Joint Venture solely as a
result of such Restricted Joint Venture ceasing to be a Restricted Joint Venture
as a result of (i) the loss of a Local Partner or (ii) the loss of management
control of such Restricted Joint Venture, such failure continues for 90 days;
(e) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
30 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding;
(f) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is guaranteed by the Company or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
<PAGE>
(g) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary and such judgment or
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $5.0 million;
(h) the Company or any of its Significant Subsidiaries or any of its
Joint Ventures that would, if it were a Subsidiary, constitute a Significant
Subsidiary, or any group of Subsidiaries or Joint Ventures that, taken as a
whole, would constitute a Significant Subsidiary pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii)consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any of its Joint Ventures that would, if it were a
Subsidiary, constitute a Significant Subsidiary, or any group of
Subsidiaries or Joint Ventures that, taken as a whole, would constitute a
Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any of its Joint Ventures that would, if it
were a Subsidiary, constitute a Significant Subsidiary, or any group of
Subsidiaries or Joint Ventures that, taken as a whole, would constitute a
Significant Subsidiary for all or substantially all of the property of the
Company or any of its Significant Subsidiaries or any of its Joint
Ventures that would, if it were a Subsidiary, constitute a Significant
Subsidiary, or any group of Subsidiaries or Joint Ventures that, taken as
a whole, would constitute a Significant Subsidiary; or
(iii)orders the liquidation of the Company or any of its
Significant Subsidiaries or any of its Joint Ventures that would, if it
were a Subsidiary, constitute a Significant Subsidiary, or any group of
Subsidiaries or Joint Ventures that, taken as a whole, would constitute a
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
<PAGE>
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (h) and (i) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary) occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately; upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (h) and (i) of Section
6.01 hereof occurs with respect to the Company, any Significant Subsidiary or
any group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under this Indenture
except a continuing Default or Event of Default in payment of interest on, or
the principal of, the Notes. The Trustee may withhold from Holders of the Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to Section
3.07 hereof, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Notes. If an
Event of Default occurs prior to November 1, 2003 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
November 1, 2003, then the premium payable for purposes of this paragraph
beginning the date hereof and ending on November 1, 2003 shall be 112.000% of
the amount that would otherwise be due but for the provisions of this paragraph,
plus accrued interest, if any, to the date of payment.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with this Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
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 Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
<PAGE>
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
<PAGE>
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount 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 is authorized to 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes 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, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder 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 Holders, 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 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 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, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any 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 Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
<PAGE>
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all
compensation, expense and liabilities incurred, and all advances
made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on
the Notes for principal, premium and Liquidated Damages, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
premium and Liquidated Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes 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 a Trustee, a court in its discretion may require the filing by any party
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 does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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 its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
<PAGE>
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that
are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee 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 liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) 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.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing 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.
(a) The Trustee may conclusively rely upon any document 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.
<PAGE>
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
(g) Except in connection with compliance with TIA S310 or S311, the
Trustee shall only be charged with knowledge of Responsible Officers.
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 any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and 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 Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
<PAGE>
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA S 313(a) (but if no event described in TIA
S 313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA S 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA S 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA S 313(d). The
Company shall promptly 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 acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
<PAGE>
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA S 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
<PAGE>
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. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
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. Thereupon, 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. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has, or is a direct or indirect wholly owned Subsidiary of
a bank holding company that has, a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA S 310(a)(1), (2) and (5). The Trustee is subject to TIA S
310(b).
<PAGE>
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA S 311(a), excluding any creditor
relationship listed in TIA S 311(b). A Trustee who has resigned or been removed
shall be subject to TIA S 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article Eight. Subject to compliance with this Article Eight, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, and 4.17, hereof and clause (iv) of Section 5.01
hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
<PAGE>
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, 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
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(d) through 6.01(g) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
Liquidated Damages, if any, and interest on the outstanding Notes on the stated
date for payment thereof or on the applicable redemption date, as the case may
be, and the Company must specify whether the Senior Notes are being defeased to
maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming 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 amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
<PAGE>
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(h) or 6.01(i)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that on the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof 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 (including the Company acting as 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, premium, if any, and 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 cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof 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.
<PAGE>
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company.
Any money 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 and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for 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 such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), 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 notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following 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.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
<PAGE>
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article Five
hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture in accordance with, and to the extent
permitted by, Section 9.06 hereof.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof) and the Notes with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for, or purchase of, the Notes). Without the consent of at
least 75% in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, such Notes), no waiver or amendment to this Indenture may make any change in
the provisions of Article 10 hereof that adversely affects the rights of any
Holder of Notes. Section 2.08 hereof shall determine which Notes are considered
to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
<PAGE>
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
in accordance with and to the extent permitted by Section 9.06.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest and Liquidated Damages, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof);
<PAGE>
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions; or
(i) make any change in the foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
<PAGE>
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment
in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before Holders of the Notes shall
be entitled to receive any payment with respect to the Notes (except that
Holders may receive (A) Permitted Junior Securities and (B) payments and
other distributions made from any defeasance trust created pursuant to
Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as
provided in clause (i) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 10 shall be made to holders
of Senior Debt (except that Holders of Notes may receive (A) Permitted
Junior Securities and (B) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their
interests may appear.
Section 10.03. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (A) Permitted Junior Securities and (B) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:
(i) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement, indenture
or other document governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that then permits holders of the
Designated Senior Debt to accelerate its maturity and the Trustee receives
<PAGE>
a notice of the default (a "Payment Blockage Notice") from a Person who
may give it pursuant to Section 10.11 hereof. If the Trustee receives any
such Payment Blockage Notice, no subsequent Payment Blockage Notice shall
be effective for purposes of this Section unless and until (A) at least
360 days shall have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice and (B) all scheduled payments of principal,
premium, if any, and interest on the Securities that have come due have
been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been waived for a period of not less
than 90 days.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) the date upon which the default is cured or waived, or
(ii) in the case of a default referred to in clause (ii) of
Section 10.03(a) hereof, 179 days pass after notice is received if the
maturity of such Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.04. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
<PAGE>
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
Section 10.07. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt; or
(iii)prevent the Trustee or any Holder of Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
<PAGE>
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair or
subordinate the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt.
<PAGE>
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Hyperion Telecommunications, Inc.
Main at Water Street
P.O. Box 472
Coudersport, Pennsylvania 16915
Telecopier No.: (814) 274-8631
Attention: Daniel R. Milliard
With a copy to:
Buchanan Ingersoll
One Oxford Centre
301 Grant Street
20th Floor
Pittsburgh, Pennsylvania 15219-1410
Attention: Carl E. Rothenberger, Jr.
If to the Trustee:
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street, 19th Floor
New York, New York 10005
Telecopier No.: (212) 701-7684
Attention: Corporate Trust Department
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
<PAGE>
All notices and communications (other than those sent to Holders) 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 acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA S 313(c), to the extent required by the TIA. Failure to
mail a notice or communication to a Holder or any defect in it shall not affect
its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA S 312(b) with other Holders
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 S
312(c).
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:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
<PAGE>
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA S 314(a)(4)) shall comply with the provisions of TIA S 314(e)
and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, or this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
<PAGE>
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in 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.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table 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 of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
SIGNATURES
Dated as of March 2, 1999
HYPERION TELECOMMUNICATIONS, INC.
Issuer
By: /s/ Daniel R. Milliard
Name: Daniel R. Milliard
Title: President
Dated as of March 2, 1999
BANK OF MONTREAL TRUST COMPANY
TRUSTEE
By: /s/ Amy Roberts
Name: Amy Roberts
Title: Vice President
<PAGE>
EXHIBIT A
A-2
[Face of Note]
- - --------------------------------------------------------------------------------
CUSIP/CINS ____________
12% Senior Subordinated Notes due 2007
No. ___ $___________
HYPERION TELECOMMUNICATIONS, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on _____________, 2007.
Interest Payment Dates: ____________ and ____________
Record Dates: ____________ and ____________
Dated: _______________, 1999
HYPERION TELECOMMUNICATIONS, INC.
By:
Name:
Title:
By:
Name:
Title:
(SEAL)
This is one of the Notes referred to in the within-mentioned Indenture:
BANK OF MONTREAL TRUST COMPANY,
as Trustee
By: __________________________________
Authorized Signatory
- - --------------------------------------------------------------------------------
<PAGE>
A-4
[Back of Note]
12% Senior Subordinated Notes due 2007
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Hyperion Telecommunications, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 12% per annum from March 2, 1999 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 4.01 of the Indenture and relating to the
Registration Rights Agreement referred to below. The Company will pay interest
and Liquidated Damages semi-annually in arrears on May 1 and November 1 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). 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; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be May 1, 1999.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the April 15 or October
15 next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available funds will
be required with respect to principal of and interest, premium and Liquidated
Damages on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Bank of Montreal Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
<PAGE>
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of March 2, 1999 ("Indenture") between the Company and the Trustee. 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 (15 U.S.
Code SS 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the indenture shall govern and be controlling. The
Notes are unsecured obligations of the Company limited to $300.0 million in
aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company will not have the option to redeem the Notes prior to November 1, 2003.
Thereafter, the Company will have the option to redeem the Notes, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on
November 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003........................................ 106.000%
2004........................................ 103.000%
2005 and thereafter......................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to May 1, 2002, the Company may redeem up to a
maximum of 25% of the aggregate principal amount of the Notes then outstanding
at a redemption price of 112.000% of the principal amount thereof, with the net
proceeds from either (i) an underwritten public offering of the common stock of
the Company or (ii) a sale of the Capital Stock (other than Disqualified Stock)
of the Company to a Strategic Investor (excluding Affiliates of the Company) in
a single transaction or a series of related transactions for at least $25.0
million (clauses (i) and (ii) together, collectively referred to herein as
"Qualified Equity Offerings"); provided that, in either case, at least 75% in
aggregate principal amount of the Notes remain outstanding immediately after the
occurrence of such redemption; and provided, further, that such redemption must
occur within 90 days of the date of the closing of such Qualified Equity
Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company will not be
required to make mandatory redemption payments with respect to the Notes.
<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company will be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of
repurchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
five Business Days of each date on which the aggregate amount of Excess Proceeds
exceeds $2.5 million, the Company shall commence an offer to all Holders of
Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
<PAGE>
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the Notes,
whether or not prohibited by the provisions of Article 10 of the Indenture; (ii)
default in payment when due of principal of or premium, if any, on the Notes
when the same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase) or otherwise, whether or not prohibited by
the provisions of Article 10 of the Indenture; (iii) failure by the Company to
comply with Section 4.07, 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by
the Company for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding voting
as a single class to comply with certain other agreements in the Indenture, the
Notes ; (v) default under certain other agreements relating to Indebtedness of
the Company which default results in the acceleration of such Indebtedness prior
to its express maturity; (vi) certain final judgments for the payment of money
that remain undischarged for a period of 60 days; and (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Material
Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, 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 the Trustee.
<PAGE>
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, 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 of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in 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. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of March 2, 1999, among the Company and the parties named on
the signature pages thereof (the "Registration Rights Agreement").
18. 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 the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. 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.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Hyperion Telecommunications, Inc.
Main at Water Street
P.O. Box 472
Coudersport, Pennsylvania 16915
Attention: Daniel R. Milliard
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer
this Note to: (Insert
assignee's legal name)
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
___ Section 4.10 ___ Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
Date:
Your Signature:
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:
Signature Guarantee*:
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<S> <C> <C> <C> <C>
Principal Amount Signature of
Amount of decrease in Amount of increase in of this
Global Note authorized officer of Principal Amount
Principal Amount following such decrease Trustee or
Note
Date of Exchange of this Global Note of this Global Note (or increase) Custodian
---------------- ------------------- ------------------- ------------- ---------
* This schedule should be included only if the Note is issued in global form.
</TABLE>
<PAGE>
B-5
B-1
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Hyperion Telecommunications, Inc.
Main at Water Street
P.O. Box 472
Coudersport, Pennsylvania 16915
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street, 19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: 12% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of March 2, 1999
(the "Indenture"), between Hyperion Telecommunications, Inc., as issuer (the
"Company"), and Bank of Montreal Trust Company, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further
specified in Annex A hereto. In connection with the Transfer, the Transferor
hereby certifies that:
[CHECK ALL THAT APPLY]
1. ___ Check if Transferee will take delivery of a beneficial interest
in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
<PAGE>
2. __ Check if Transferee will take delivery of a beneficial interest
in the Temporary Regulation S Global Note, the Regulation S Global Note or a
Definitive Note pursuant to Regulation S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act [and/,]
(iii) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
3. ___ Check and complete if Transferee will take delivery of a
beneficial interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) ___ such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) ___ such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) ___ such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities
Act;
or
(d) ___ such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
<PAGE>
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such
Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI
Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. ___ Check if Transferee will take delivery of a beneficial
interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) ____ Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(b) ___ Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) ___ Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
Name:
Title:
Dated:
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) ___ a beneficial interest in the:
(i) ___ 144A Global Note (CUSIP ), or
-----------
(ii) ___ Regulation S Global Note (CUSIP ), or
------------
(iii) ___ IAI Global Note (CUSIP ); or
------------
(b) v a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) ___ a beneficial interest in the:
(i) ___ 144A Global Note (CUSIP ), or
-----------
(ii) ___ Regulation S Global Note (CUSIP ), or
------------
(iii)___ IAI Global Note (CUSIP ); or
(iv) ___ Unrestricted Global Note (CUSIP ); or
------------
(b) ___ a Restricted Definitive Note; or
(c) ___ an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
<PAGE>
C-4
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Hyperion Telecommunications, Inc.
Main at Water Street
P.O. Box 472
Coudersport, Pennsylvania 16915
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street, 19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: 12% Senior Subordinated Notes due 2007
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of March 2, 1999
(the "Indenture"), between Hyperion Telecommunications, Inc., as issuer (the
"Company"), and Bank of Montreal Trust Company, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
__________________________, (the "Owner") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Definitive Notes or
Beneficial Interests in an Unrestricted Global Note
<PAGE>
(a) ___ Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) ___ Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) ___ Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) ___ Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes for Restricted Definitive Notes or
Beneficial Interests in Restricted Global Notes
(a) ___ Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) ___ Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
<PAGE>
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE]___ 144A Global Note, ___ Regulation S Global Note, IAI Global Note
with an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
<PAGE>
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
Name:
Title:
Dated:
<PAGE>
D-2
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Hyperion Telecommunications, Inc.
Main at Water Street
P.O. Box 472
Coudersport, Pennsylvania 16915
Bank of Montreal Trust Company
Wall Street Plaza
88 Pine Street, 19th Floor
New York, New York 10005
Attention: Corporate Trust Department
Re: 12% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of March 2, 1999
(the "Indenture"), between Hyperion Telecommunications, Inc., as issuer (the
"Company"), and Bank of Montreal Trust Company, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) ___ a beneficial interest in a Global Note, or
(b) ___ a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
<PAGE>
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
[Insert Name of Accredited Investor]
By:
Name:
Title:
Dated:
<PAGE>
F-1
EXHIBIT E
FORM OF INTERCOMPANY NOTE
FOR VALUE RECEIVED, _______________, a _____________ corporation (the
"Maker"), promises to pay Hyperion Telecommunications, Inc., a Delaware
corporation (the "Lender"), or order to be paid, all cash advanced, from time to
time, together with interest on the unpaid principal amount at a rate per annum
equal to ___%, to the date of payment. All principal and accrued interest under
this Note shall be due and payable on demand][on __________].
This Note may be prepaid in whole or in part at any time without penalty or
premium.
The right to please any and all statutes of limitations as a defense to
demand hereunder is hereby waived to the extent permitted by law. The Maker, for
itself and its successors and assigns, waives presentment, demand, protest and
notice thereof or of dishonor, and waives the right to be released by reason of
any extension of time or change in the terms of payment of any change,
alteration, or release of any security given for the payment hereof.
This Note shall be governed by and construed in accordance with the laws of the
State of New York.
[MAKER]
By:
Name:
Title:
Hyperion Telecommunications, Inc.
By:
Name:
Title:
<PAGE>
Sch A-2
SCHEDULE A
FIBER LEASE AGREEMENT
1. Lease Agreement, dated as of December 12, 1995, by and between PEC
Energy Company and PECO Hyperion Telecommunications.
2. Lease Agreement, dated as of September 29, 1995, by and between
Capital Telecommunications, Inc. and Hyperion Telecommunications of
Harrisburg.
3. Facilities Lease Agreement, dated as of June 1, 1995, by and between
TKR Cable Company and New Jersey Fiber Technologies.
4. Lease Agreement, dated 1993, by and between Multimedia Cablevision,
Inc. and Multimedia Hyperion Telecommunications.
5. Facilities Agreement, dated as of June 30, 1994, by and between
International Cablevision, Inc. and NHT Partnership.
6. Fiber Usage Master Agreement, dated as of August 1, 1992, by and
between NewChannels Corp. and NewChannels/Hyperion Telecommunications
of New York.
7. Fiber Usage Master Agreement, dated as of August 1, 1992, by
and between NewChannels/Hyperion Telecommunications of New York and
Ionian Communications, L.P. d/b/a Adelphia Cable Communications.
8. License Agreement, dated as of 1992, by and between Continental
Cablevision of Jacksonville, Inc. and Continental Fiber Technologies,
Inc.
9. Facilities Lease Agreement, dated as of January 30, 1995, by and
between TCI TKR of Jefferson County, Inc. and Louisville Lightwave.
10. Contract for the Use of Capacity, dated as of May 1, 1994, as amended,
by and between Viacom International, Inc. and AVR of Tennessee, L.P.,
d/b/a Hyperion of Tennessee, L.P.
11. Facilities Agreement dated as of September 20, 1993, between TCI of
New York, Inc. and NHT Partnership.
12. License Agreement dated November 1, 1992, between Continental
Cablevision of Virginia, Inc. and Alternet of Virginia.
13. Facilities Agreement dated as of July 10, 1996, between TCI of
Lexington, Inc. and Louisville Lightwave.
14. Lease Agreement between Susquehanna Cable Co. and Susquehanna Hyperion
Telecommunications, dated as of August 1, 1996, as amended.
<PAGE>
15. Lease Agreement by and between Multi-Channel T.V. Cable Company d/b/a
Adelphia Cable Communications and Hyperion Telecommunications of
Vermont, Inc.
16. Lease Agreement by and between Allegheny Communications Connect,
Inc. and Allegheny Hyperion Telecommunications, LLC, dated as of
November 4, 1997.
17. Capacity Use Agreement, dated as of September 1, 1997, by and between
Entergy Hyperion Telecommunications of Arkansas, L.L.C. and Entergy
Local Fiber Company, a division of Entergy Technology Holding Company.
18. Capacity Use Agreement, dated as of September 1, 1997, by and between
Entergy Hyperion Telecommunications of Louisiana, L.L.C. and Entergy
Local Fiber Company, a division of Entergy Technology Holding Company.
19. Capacity Use Agreement, dated as of September 1, 1997, by and between
Entergy Hyperion Telecommunications of Mississippi, L.L.C. and Entergy
Local Fiber Company, a division of Entergy Technology Holding Company.
20. Any amendments and/or restatements of the above agreements.
<PAGE>
Sch B-2
SCHEDULE B
LOCAL PARTNERS
1. PECO Energy Company
2. Capital Telecommunications, Inc.
3. Sutton Capital Associates, Inc.
4. KRC/CCC Investment Partnership
5. A.C. Communications Inc.
5. Continental Telecommunications Corp. of Virginia
6. Multimedia Telecommunications, Inc.
7. TCI Telephony, Inc.
8. NewChannels Telecommunications of New York, Inc.
9. Continental Cablevision Investments, Inc.
10. TKR Cable of Kentucky, Inc.
11. Viacom Telecom Inc.
12. Robin Media Group, Inc.
13. InterMedia Partners Southeast
14. CCC-NJFT, Inc.
15. Advance/Newhouse Partnership
16. Digital Direct, Inc.
17. Lenfest Telephony, Inc.
18. Entergy Local Fiber Company, a division of Entergy Technology Holding
Company
19. Susquehanna Fiber Systems, Inc.
20. MediaOne
21. KRC-NJFT, Inc.
<PAGE>
22. Allegheny Communications Connect, Inc.
23. Any Local Partners listed under, or who are parties to the Local
Partner Agreements listed on, Schedule C.
24. Any successors to the above named entities.
<PAGE>
Sch C-2
SCHEDULE C
LOCAL PARTNER AGREEMENTS
1. Partnership Agreement of PECO Hyperion Telecommunications, dated as of
October 9, 1995, by and between Hyperion Telecommunications of
Pennsylvania, Inc. and PECO Energy Company.
2. Partnership Agreement of Hyperion Telecommunications of Harrisburg,
dated as of September 25, 1994 between Hyperion Telecommunications of
Pennsylvania, Inc. and Capital Telecommunications, Inc., as amended.
3. New Jersey Fiber Technologies Partnership Agreement, dated as of June
1994, by and among Hyperion Telecommunications of New Jersey, Inc.,
Sutton Capital Associates, Inc., KRC/CCC Investment Partnership and
A.C. Communications Inc.
4. Joint Venture Agreement of Alternet of Virginia, dated as of
November 1, 1992, by and between Hyperion Telecommunications of
Virginia, Inc. and Continental Telecommunications Corp. of Virginia.
5. General Partnership Agreement of Multimedia Hyperion
Telecommunications, dated as of September 1, 1993, by and between
Hyperion Telecommunications of Kansas, Inc., (assignee of Hyperion
Telecommunications, Inc.) and Multimedia Telecommunications, Inc.
6. NHT Partnership Agreement, dated as of September 20, 1993, by and among
Hyperion Telecommunications of New York, Inc., TCI Telephony, Inc. and
NewChannels Telecommunications of New York, Inc.
7. NewChannels/Hyperion Telecommunications of New York Agreement of
General Partnership, dated as of August 1, 1992 between Hyperion
Telecommunications of New York, Inc. and NewChannels Telecommunications
of New York, Inc., as amended, including First Addendum and Second
Addendum thereto.
8. Continental Fiber Technologies, Inc. Stock Purchase and Stockholders'
Agreement, dated as of August 31, 1992, by and among Hyperion
Telecommunications of Florida, Inc., Continental Cablevision
Investments, Inc. and Continental Fiber Technologies, Inc., n/k/a
MediaOne Fiber Technologies, Inc.
9. Limited Partnership Agreement of AVR of Tennessee, L.P., dated as of
November 15, 1993, by and among Hyperion Telecommunications of
Tennessee, Inc., InterMedia Partners Southeast and Robin Media Group,
Inc., as amended.
10. Louisville Lightwave General Partnership Agreement, dated as of
July 20, 1994, by and between Hyperion Telecommunication of Kentucky,
Inc. and TKR Cable of Kentucky, Inc., as amended.
<PAGE>
11. Limited Partnership Agreement of Hyperion of Tennessee, L.P., dated as
of July 31, 1996, by and among Hyperion Telecommunications of
Tennessee, Inc., InterMedia Partners Southeast and Robin Media Group,
Inc., as amended.
12. Partnership Agreement of Susquehanna Hyperion Telecommunications by and
between Hyperion Telecommunications of Pennsylvania, Inc., and
Susquehanna Fiber Systems, Inc., dated as of August 1, 1996.
13. Operating Agreement of Entergy Hyperion Telecommunications of
Louisiana, L.L.C. dated as of April 24, 1997.
14. Operating Agreement of Entergy Hyperion Telecommunications of
Mississippi, L.L.C. dated as of April 24, 1997.
15. Operating Agreement of Entergy Hyperion Telecommunications of
Arkansas, L.L.C. dated as of April 24, 1997.
16. Operating Agreement of Allegheny Hyperion Telecommunications, LLC,
dated as of November 4, 1997.
17. Any other Local Partner Agreement with a party listed on Schedule B.
18. Any amendments and/or restatements of the above agreements.
<PAGE>
Sch D-2
SCHEDULE D
MANAGEMENT AGREEMENTS
1. Management Agreement, dated as of October 1995, by and between
Hyperion Telecommunications, Inc. and PECO Hyperion Telecommunications.
2. Management Agreement, dated as of September 29, 1995, by and between
Hyperion Telecommunications, Inc. and Hyperion Telecommunications of
Harrisburg.
3. Management Agreement, dated as of June 1995, by and between Hyperion
Telecommunications, Inc. and New Jersey Fiber Technologies.
4. Management and Consulting Agreement, dated as of November 1, 1992, by
and between Hyperion Telecommunications of Virginia, Inc. and Alternet
of Virginia.
5. Services Agreement, dated as of November 18, 1993, by and between
Hyperion Telecommunications, Inc. and Multimedia Hyperion
Telecommunications.
6. Management Agreement, dated as of June 30, 1994, by and between
Hyperion Telecommunications of New York, Inc. and NHT Partnership.
7. Letter Agreement, dated as of July 13, 1994, by and among
Hyperion Telecommunications, Inc. and NewChannels Hyperion
Telecommunications (re: accounting).
8. Network Monitoring Agreement, dated as of October 1, 1994, by and among
Hyperion Telecommunications, Inc. and NewChannels Hyperion
Telecommunications.
9. Network Monitoring Agreement, dated as of August 1, 1993, between EMI
Communications Corp. and NewChannels Hyperion Telecommunications.
10. Letter Agreement, dated August 16, 1993, as amended November 1994,
between Hyperion Telecommunications, Inc. and NewChannels Hyperion
Telecommunications (re: accounting).
11. Letter Agreement, dated February 28, 1995, between Hyperion
Telecommunications, Inc. and NewChannels Hyperion Telecommunications
(re: accounting).
12. Network Monitoring Agreement, dated as of October 1, 1993, by and
between Hyperion Telecommunications, Inc. and Continental Fiber
Technologies d/b/a AlterNet, n/k/a MediaOne Fiber Technologies, Inc.
13. Management Agreement, dated as of January 30, 1995, by and between
Hyperion Telecommunications, Inc. and Louisville Lightwave.
<PAGE>
14. Management Agreement, dated as of November 15, 1993, by and between
Hyperion Telecommunications, Inc. and AVR of Tennessee, L.P., d/b/a
Hyperion of Tennessee, L.P., as amended.
15. Management Agreement, dated as of January 1, 1995, by and between
Hyperion Telecommunications, Inc. and Hyperion Telecommunications of
Vermont, Inc.
16. Management Agreement, dated as of June 27, 1995, by and between
Hyperion Telecommunications, Inc. and Hyperion Telecommunications of
Virginia, Inc.
17. Network Monitoring Agreement, dated as of October 1, 1993, between
Hyperion Telecommunications, Inc. and Alternet of Virginia.
18. Management and Consulting Agreement, dated as of June 1992, by and
between Hyperion Telecommunications of Florida, Inc. and Continental
Fiber Technologies, Inc.
19. Network Monitoring Agreement, dated as of December 1, 1994, between
Hyperion Telecommunications, Inc. and NewChannels Hyperion
Telecommunications.
20. Management Agreement between Hyperion Telecommunications, Inc. and
Entergy Hyperion Telecommunications of Louisiana, L.L.C. dated as of
April 24, 1997.
21. Management Agreement between Hyperion Telecommunications, Inc. and
Entergy Hyperion Telecommunications of Mississippi, L.L.C. dated as of
April 24, 1997.
22. Management Agreement between Hyperion Telecommunications, Inc. and
Entergy Hyperion Telecommunications of Arkansas, L.L.C. dated as of
April 24, 1997.
23. Management Agreement between Hyperion Telecommunications, Inc. and
Susquehanna Hyperion Telecommunications, dated as of August 1, 1996, as
amended.
24. Management Agreement between Hyperion Telecommunications, Inc. and
Allegheny Hyperion Telecommunications, LLC, dated as of November 4,
1997.
25. Any amendments and/or restatements of the above agreements.
<PAGE>
<TABLE>
<CAPTION>
Sch E-1
SCHEDULE E
FORM OF FINANCIAL INFORMATION AND OPERATING DATA
OF THE SUBSIDIARIES AND THE JOINT VENTURES PRESENTED BY CLUSTER
Date presented for the fiscal period ended ____________:
<S> <C> <C> <C> <C>
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
NORTH EAST MID-ATLANTIC MID- OTHER NETWORKS
FINANCIAL DATA SOUTH
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Total Revenue
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Total Capital Expenditures
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Total EBITDA
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Proportional Revenue\*
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Proportional Capital Expenditures\*
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Proportional EBITDA\*
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
STATISTICAL DATA
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Route Miles
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Fiber Miles
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Buildings connected
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
LEC-COs collocated\**
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
Voice Grade Equivalent Circuits
- - ---------------------------------------- ------------------ ------------------- ------------------ ==================
<FN>
- - ---------------
* Represents portion of revenue attributable to the Company.
** Local Exchange Carrier's central office.
</FN>
</TABLE>
<PAGE>
Sch F-1
<TABLE>
<CAPTION>
SCHEDULE F
FORM OF FINANCIAL INFORMATION AND OPERATING DATA
OF HYPERION OF TENNESSEE, INC., HYPERION OF FLORIDA, INC.,
HYPERION OF VERMONT, INC., HYPERION OF KENTUCKY, INC.
AND HYPERION OF NEW York, INC.
Date presented for the fiscal period ended ____________:
<S> <C>
- - ------------------------------------------------------------------------- ===========================================
FINANCIAL DATA ($ in thousands)
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Total Revenue
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Total Capital Expenditures
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Total EBITDA
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Gross Property, Plant and Equipment
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
STATISTICAL DATA
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Route Miles
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Fiber Miles
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Buildings connected
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
LEC-COs collocated\*
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Voice Grade Equivalent Circuits
- - ------------------------------------------------------------------------- ===========================================
- - ------------------------------------------------------------------------- ===========================================
Access Lines
- - ------------------------------------------------------------------------- ===========================================
<FN>
- - ---------------
* Local Exchange Carrier's central office.
</FN>
</TABLE>
EXHIBIT 10.01
CLASS B VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Voting Agreement") is dated as of March 5,
1999 among Adelphia Communications Corporation, a Delaware corporation
("Parent"), and the holders of Class B Common Stock of Century Communications
Corp., a New Jersey corporation (the "Company"), identified on Schedule 1 (the
"Class B Shareholders").
RECITALS
A. Parent, Adelphia Acquisition Subsidiary, Inc., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and the
Company have entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), providing for the merger of Century with and
into Merger Sub, on the terms, and subject to the conditions, set forth therein.
B. As an inducement to Parent to enter into the Merger Agreement and to
incur the obligations set forth therein, the Class B Shareholders have agreed to
enter into this Voting Agreement concurrently with the execution and delivery of
the Merger Agreement.
In consideration of the premises and the respective representations,
warranties, covenants, and agreements set forth herein, the Class B Shareholders
agree as follows.
Section 1. Definitions. Capitalized terms used but not defined herein
will have the meanings ascribed to them in the Merger Agreement.
Section 2. Representations and Warranties of the Class B Shareholders.
Each Class B Shareholder, severally and not jointly, represents and warrants to
Parent in respect to itself as follows:
(a) Authority. Such Class B Shareholder has all requisite
power and authority to enter into this Voting Agreement and to comply with its
obligations hereunder. This Voting Agreement has been duly executed and
delivered by such Class B Shareholder and constitutes the valid and binding
obligation of such Class B Shareholder, enforceable in accordance with its terms
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
and by equitable principles of general applicability.
(b) Non-contravention. The execution and delivery of this
Voting Agreement do not, and compliance with such Class B Shareholder's
obligations hereunder will not, (i) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to such Class B Shareholder or the
<PAGE>
Certificate of Incorporation or By-laws of the Company; (ii) result in a breach
or violation of or constitute a default (or an event that with the giving of
notice or the lapse of time or both would constitute a default) under or require
any consent, approval or authorization under any provision of any agreement for
borrowed money that is secured by a Lien upon the Class B Company Common Stock
owned by such Class B Shareholder or any trust or similar agreement applicable
to the Class B Company Common Stock owned by such Class B Shareholder.
(c) Ownership. Such Class B Shareholder is the record and
beneficial owner of, and has valid title to, the shares of Class B Company
Common Stock (the "Class B Shares") and Options, if any, set forth opposite the
name of such Class B Shareholder on Schedule 1 free and clear of any Lien (other
than any Lien deemed to be created hereby and restrictions on transfer arising
under federal and state securities laws). Such Class B Shareholder has the sole
right to vote such Class B Shares and any shares of Class A Company Common Stock
issuable on exercise of such Options or on conversion of such Class B Shares.
(d) Merger Agreement. Each Class B Shareholder understands and
acknowledges that Parent and Merger Sub are entering into the Merger Agreement
in reliance upon the Class B Shareholder's execution and delivery of this
Agreement.
Section 3. Agreement to Vote. Until the earlier of (i)
termination of the Merger Agreement pursuant to Section 9.01 thereof or (ii) the
Effective Time, each Class B Shareholder, severally and not jointly, agrees
that, at any meeting of shareholders of the Company or at any adjournment
thereof or in any other circumstances upon which its vote, consent or approval
(including written consent) is sought, such Class B Shareholder will vote, or
cause to be voted (including by execution of a written consent), its Class B
Shares: (i) in favor of the Merger, the approval and adoption of the Merger
Agreement and each of the other transactions contemplated by the Merger
Agreement and the calling of any shareholder meeting to consider any of the
foregoing; and (ii) against (A) any other merger agreement or other merger,
consolidation, combination, sale of substantial assets (other than the shares of
capital stock of Citizens Utilities Company owned by the Company),
reorganization, recapitalization, dissolution, liquidation or winding up of or
by the Company or any other Acquisition Transaction or (B) any amendment to the
Company's Certificate of Incorporation or By-laws or other proposal, which
amendment or proposal would impede, frustrate, prevent or nullify the Merger or
the Merger Agreement or any of the transactions contemplated by the Merger
Agreement or change the voting rights of any class of capital stock of the
Company.
Section 4. Covenants of the Class B Shareholders. Until the termination
of this Voting Agreement pursuant to Section 5, each Class B Shareholder,
severally and not jointly, agrees as follows:
(a) Except as provided in the immediately succeeding sentence
or pursuant to this Voting Agreement, such Class B Shareholder will not: (i)
sell, transfer, pledge, assign or otherwise encumber or dispose of (a
"Transfer"), or enter into any contract, option or other arrangement with
respect to a Transfer of, such Class B Shareholder's Class B Shares to any
Person other than pursuant to the Merger; (ii) convert such Class B Shares to
Class A Common Stock; or (iii) enter into any voting arrangement, whether by
proxy, power of attorney, voting agreement, voting trust or otherwise, with
respect to the Class B Shares. Each Class B Shareholder, for estate planning or
similar purposes, may, on notice to Parent, Transfer Class B Shares to a
<PAGE>
transferee following the due execution and delivery to Parent by such transferee
of a counterpart to this Voting Agreement.
(b) Such Class B Shareholder will execute and deliver the
written agreement contemplated by Section 5.03 of the Merger Agreement.
(c) Such Class B Shareholder will not solicit, initiate or
knowingly encourage the submission to the Company of any proposal relating to an
Acquisition Transaction or participate in any negotiations regarding, or furnish
any information to any Person for the purposes of encouraging, a proposal
relating to an Acquisition Proposal in all cases other than the Merger.
(d) Such Class B Shareholder will not take any action that
would in any way restrict, limit or interfere with the performance of such Class
B Shareholder's obligations hereunder or the transactions contemplated hereby.
Section 5. Termination. This Agreement will terminate on the
earlier of (i) June 5, 2000, (ii) the Effective Time or (iii) termination of the
Merger Agreement pursuant to Section 9.01 thereof.
<PAGE>
Section 6. Shareholder Capacity. No Class B Shareholder who is a
director or officer of the Company makes any agreement in this Voting Agreement
in his or her capacity as such director or officer. Each Class B Shareholder is
entering into this Voting Agreement solely in such Person's capacity as a
shareholder of the Company. The provisions of this Voting Agreement shall not
apply to actions taken or omitted to be taken by any such Person in his or her
capacity as a director or office of the Company.
Section 7. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in a court of the United States. This
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto waives any right to trial by
jury with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
EACH CLASS B SHAREHOLDER AGREES THAT, IN CONNECTION WITH ANY LEGAL SUIT
OR PROCEEDING ARISING WITH RESPECT TO THIS AGREEMENT, IT SHALL SUBMIT TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE
AND AGREES TO VENUE IN SUCH COURTS. EACH CLASS B SHAREHOLDER HEREBY APPOINTS THE
SECRETARY OF THE COMPANY AS HIS OR HER AGENT FOR SERVICE OF PROCESS FOR PURPOSES
OF THE FOREGOING SENTENCE ONLY. EACH PARTY HERETO WAIVES ANY RIGHT TO JURY TRIAL
IN CONNECTION WITH ANY SUCH SUIT OR PROCEEDING.
Section 8. Miscellaneous.
(a) All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed to have been duly given
when delivered in person, by overnight courier or by facsimile to the respective
parties as follows:
If to Parent:
Adelphia Communications Corporation
Main at Water Street
Coudersport, PA 16915
Telephone: 814-274-9830
Facsimile: 814-274-7098
Attention: Timothy J. Rigas, Executive Vice President
and
Colin Higgin, Esquire
with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 21st Floor
Pittsburgh, PA 15219
Telephone: 412-562-8839
Facsimile: 412-562-1041
Attention: Bruce I. Booken
Carl E. Rothenberger
If to any of the Class B Shareholders, to their respective addresses
set forth on Schedule A, with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Attention: Steven R. Finley
or such other address or facsimile number as such party may specify for the
purpose by written notice to the other parties. Each such notice, request or
other communication will be effective: (i) if delivered in person, when such
delivery is made at the address specified in this Section 8(a); (ii) if
delivered by reputable overnight courier, the next business day after such
notice, request or other communication is sent to the address specified in this
Section 8(a); or (iii) if delivered by facsimile, when such facsimile is
transmitted to the facsimile number specified in this Section 8(a) and the
appropriate confirmation is received.
<PAGE>
(b) The representations and warranties and agreements contained herein
and in any certificate or other writing delivered pursuant hereto will not
survive beyond the termination of this Voting Agreement.
(c) This Agreement may not be amended except by an instrument in
writing signed on behalf of all the parties.
(d) This Agreement will be construed in accordance with and governed by
the law of the State of Delaware applicable to agreements entered into and to be
performed wholly within such State.
(e) This Agreement may be 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. This Agreement will become effective
when each party shall have received counterparts hereof signed by all of the
other parties.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Voting
Agreement to be duly executed as of the day and year first above written.
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ James Brown
Name: James Brown
Title: Vice President
/s/ Leonard Tow
Leonard Tow
THE CLAIRE TOW TRUST
By: /s/ Leonard Tow
Leonard Tow, Trustee
By: /s/ Claire Tow
Claire Tow, Trustee
By: /s/ David Z. Rosensweig
David Z. Rosensweig, Trustee
THE TRUST CREATED BY CLAIRE TOW UNDER DATE OF DECEMBER 10, 1979
By: /s/ David Z. Rosensweig
David Z. Rosensweig, Trustee
<PAGE>
SCHEDULE 1
- - -------------------------------- -----------------------------------------
Class B Shareholder Class B Shares
- - -------------------------------- -----------------------------------------
- - -------------------------------- -----------------------------------------
Leonard Tow 18,971,095
- - -------------------------------- -----------------------------------------
- - -------------------------------- -----------------------------------------
Trust dated December 10, 1979 by
Claire Tow as Grantor 2,813,365
- - -------------------------------- -----------------------------------------
- - -------------------------------- -----------------------------------------
The Claire Tow Trust, created
under date of July 1973 by 20,537,599
Leonard Tow as Grantor
- - -------------------------------- -----------------------------------------
EXHIBIT 10.02
RIGAS CLASS B VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Voting Agreement") is dated as of
March 5, 1999 among Century Communications Corp., a New Jersey corporation
("Century"), and certain of the holders of Class B Common Stock of Adelphia
Communications Corporation, a Delaware corporation (the "Company"), identified
on Schedule 1 (the "Class B Stockholders").
RECITALS
A. The Company, Adelphia Acquisition Subsidiary, Inc., a
Delaware corporation and a wholly-owned subsidiary of the Company ("Merger
Sub"), and Century have entered into an Agreement and Plan of Merger, dated as
of the date hereof (the "Merger Agreement"), providing for the merger of Century
with and into Merger Sub, on the terms, and subject to the conditions, set forth
therein.
B As an inducement to Century to enter into the Merger
Agreement and to incur the obligations set forth therein, the Class B
Stockholders have agreed to enter into this Voting Agreement concurrently with
the execution and delivery of the Merger Agreement.
In consideration of the premises and the respective
representations, warranties, covenants, and agreements set forth herein, the
Class B Stockholders agree as follows.
Section 1. Definitions. Capitalized terms used but not
defined herein will have the meanings ascribed to them in the Merger Agreement.
Section 2. Representations and Warranties of the Class B
Stockholders. Each Class B Stockholder, severally and not jointly, represents
and warrants to Century in respect to himself as follows:
(a) Authority. Such Class B Stockholder has all requisite
power and authority to enter into this Voting Agreement and to comply with its
obligations hereunder. This Voting Agreement has been duly executed and
delivered by such Class B Stockholder and constitutes the valid and binding
obligation of such Class B Stockholder, enforceable in accordance with its terms
except as may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
and by equitable principles of general applicability.
(b) Non-contravention. The execution and delivery of this
Voting Agreement do not, and compliance with such Class B Stockholder's
obligations hereunder will not, (i) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to such Class B Stockholder or the
Certificate of Incorporation or By-laws of the Company; (ii) result in a breach
or violation of or constitute a default (or an event that with the giving of
notice or the lapse of time or both would constitute a default) under or require
any consent, approval or authorization under any provision of any agreement for
<PAGE>
borrowed money that is secured by a Lien upon the Class B Common Stock owned by
such Class B Stockholder or any trust or similar agreement applicable to the
Class B Common Stock owned by such Class B Stockholder.
(c) Ownership. Such Class B Stockholder is the record and
beneficial owner of, and has valid title to, the shares of Class B Common Stock
(the "Class B Shares") and Options, if any, set forth opposite the name of such
Class B Stockholder on Schedule 1 free and clear of any Lien (other than any
Lien deemed to be created hereby and restrictions arising under federal and
state securities laws and that certain Class B Stockholder Agreement, dated as
of July 1, 1986, by and among the Company, the Class B Stockholders and certain
other holders of the Class B Common Stock of the Company (the "Rigas Class B
Stockholder Agreement")). Except as set forth in the Rigas Class B Stockholder
Agreement, such Class B Stockholder has the sole right to vote such Class B
Shares and any shares of Class A Company Common Stock issuable on exercise of
such Options or on conversion of such Class B Shares. Nothing contained in the
Rigas Class B Stockholder Agreement will limit the ability of any Class B
Stockholder from complying with his obligations under this Agreement.
(d) Merger Agreement. Each Class B Stockholder understands and
acknowledges that Century is entering into the Merger Agreement in reliance upon
the Class B Stockholder's execution and delivery of this Agreement.
Section 3. Agreement to Vote. Until the earlier of (i)
termination of the Merger Agreement pursuant to Section 9.01 thereof or (ii) the
Effective Time, each Class B Stockholder, severally and not jointly, agrees
that, at any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which his vote, consent or approval
(including written consent) is sought, such Class B Stockholder will vote, or
cause to be voted (including by execution of a written consent), his Class B
Shares: (i) in favor of each item or proposal of the Company necessary to effect
the Merger and each of the other transactions contemplated by the Merger
Agreement and the calling of any stockholder meeting to consider any of the
foregoing; and (ii) against any amendment to the Company's Certificate of
Incorporation or By-laws or other proposal, which amendment or proposal would
impede, frustrate, prevent or nullify the Merger or the Merger Agreement or any
of the transactions contemplated by the Merger Agreement or change the voting
rights of any class of capital stock of the Company.
Section 4. Covenants of the Class B Stockholders. Until the
termination of this Voting Agreement pursuant to Section 5, each Class B
Stockholder, severally and not jointly, agrees as follows:
(a) Except as provided in the immediately succeeding sentence
or pursuant to this Voting Agreement, such Class B Stockholder will not: (i)
sell, transfer, pledge, assign or otherwise encumber or dispose of (a
"Transfer"), or enter into any contract, option or other arrangement with
<PAGE>
respect to a Transfer of, such Class B Stockholder's Class B Shares to any
Person; (ii) convert such Class B Shares to Class A Common Stock; or (iii) enter
into any voting arrangement, whether by proxy, power of attorney, voting
agreement, voting trust or otherwise, with respect to the Class B Shares, other
than any agreement that amends or restates the Rigas Class B Stockholder
Agreement and that is not inconsistent with the obligations of such Class B
Stockholder hereunder. Each Class B Stockholder, for estate planning or similar
purposes, may, on notice to Century, Transfer Class B Shares to a transferee
following the due execution and delivery to Century by such transferee of a
counterpart to this Voting Agreement.
(b) Such Class B Stockholder will not take any action that
would in any way restrict, limit or interfere with the performance of such Class
B Stockholder's obligations hereunder or the transactions contemplated hereby.
Section 5. Termination. This Agreement will terminate on the
earlier of (i) June 5, 2000, (ii) the Effective Time or (iii) termination of the
Merger Agreement pursuant to Section 9.01 thereof.
Section 6. Stockholder Capacity. No Class B Stockholder who is
a director or officer of the Company makes any agreement in this Voting
Agreement in his capacity as such director or officer. Each Class B Stockholder
is entering into this Voting Agreement solely in such Person's capacity as a
stockholder of the Company. The provisions of this Voting Agreement shall not
apply to actions taken or omitted to be taken by any such Person in his capacity
as a director or office of the Company.
Section 7. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in a court of the United
States. This being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto waives any right to
trial by jury with respect to any claim or proceeding related to or arising out
of this Agreement or any of the transactions contemplated hereby.
EACH CLASS B STOCKHOLDER AGREES THAT, IN CONNECTION WITH ANY
LEGAL SUIT OR PROCEEDING ARISING WITH RESPECT TO THIS AGREEMENT, IT SHALL SUBMIT
TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE AND AGREES TO VENUE IN SUCH COURTS. EACH CLASS B STOCKHOLDER HEREBY
APPOINTS THE SECRETARY OF THE COMPANY AS HIS OR HER AGENT FOR SERVICE OF PROCESS
FOR PURPOSES OF THE FOREGOING SENTENCE ONLY. EACH PARTY HERETO WAIVES ANY RIGHT
TO JURY TRIAL IN CONNECTION WITH ANY SUCH SUIT OR PROCEEDING.
<PAGE>
Section 8. Miscellaneous.
(a) All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed to have been duly given
when delivered in person, by overnight courier or by facsimile to the respective
parties as follows:
If to Century:
Century Communications Corp.
50 Locust Avenue
New Canaan, CT 06840
Telephone: 203-972-2000
Facsimile: 203-972-2013
Attention: Office of the President
with a copy to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Attention: Steven R. Finley
If to any of the Class B Stockholders, to their respective
addresses set forth on Schedule 1, with a copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre, 21st Floor
Pittsburgh, PA 15219
Telephone: 412-562-8839
Facsimile: 412-562-1041
Attention: Bruce I. Booken
Carl E. Rothenberger
or such other address or facsimile number as such party may specify for the
purpose by written notice to the other parties. Each such notice, request or
other communication will be effective: (i) if delivered in person, when such
delivery is made at the address specified in this Section 8(a); (ii) if
delivered by reputable overnight courier, the next business day after such
notice, request or other communication is sent to the address specified in this
Section 8(a); or (iii) if delivered by facsimile, when such facsimile is
transmitted to the facsimile number specified in this Section 8(a) and the
appropriate confirmation is received.
(b) The representations and warranties and agreements
contained herein and in any certificate or other writing delivered pursuant
hereto will not survive beyond the termination of this Voting Agreement.
<PAGE>
(c) This Agreement may not be amended except by an instrument
in writing signed on behalf of Century and Class B Stockholders holding a
majority of the Class B Shares subject to this Agreement.
(d) This Agreement will be construed in accordance with and
governed by the law of the State of Delaware applicable to agreements entered
into and to be performed wholly within such State.
(e) This Agreement may be 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. This Agreement will
become effective when each party shall have received counterparts hereof signed
by all of the other parties.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused
this Voting Agreement to be duly executed as of the day and year first above
written.
CENTURY COMMUNICATIONS CORP.
By: /s/ Scott Schneider
Name: Scott Schneider
Title: Chief Financial Officer
/s/ John J. Rigas
John J. Rigas
/s/ Michael J. Rigas
Michael J. Rigas
/s/ Timothy J. Rigas
Timothy J. Rigas
/s/James P. Rigas
James P. Rigas
<PAGE>
SCHEDULE 1
Class B Stockholder Class B Shares Options
John J. Rigas
Adelphia Communications Corporation 5,785,055 None.
Main at Water Street
Coudersport, PA 16915
Telephone: 814-274-9830
Facsimile: 814-274-6586
==========================
Michael J. Rigas 1,818,021 None.
Adelphia Communications Corporation
Main at Water Street
Coudersport, PA 16915
Telephone: 814-274-9830
Facsimile: 814-274-6586
==========================
Timothy J. Rigas 1,818,021 None.
Adelphia Communications Corporation
Main at Water Street
Coudersport, PA 16915
Telephone: 814-274-9830
Facsimile: 814-274-6586
==========================
James P. Rigas 1,053,685 None.
Adelphia Communications Corporation
Main at Water Street
Coudersport, PA 16915
Telephone: 814-274-9830
Facsimile: 814-274-6586
==========================
EXHIBIT 10.03
Hyperion Telecommunications, Inc.
$200,000,000
12% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
February 25, 1999
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
FIRST UNION CAPITAL MARKETS CORP.
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies & Gentlemen:
Hyperion Telecommunications, Inc., a corporation organized under the
laws of Delaware (the "Company"), proposes to issue to Salomon Smith Barney
Inc., Chase Securities Inc. and First Union Capital Markets Corp. (each, an
"Initial Purchaser," and together, the "Initial Purchasers") $200,000,000
principal amount of its 12% Senior Subordinated Notes due 2007 (the
"Securities"). The Securities and the Highland Securities (as defined) are to be
issued under an indenture (the "Indenture") dated as of March 2, 1999 between
the Company and Bank of Montreal Trust Company, as trustee (the "Trustee").
Certain terms used herein are defined in Section 14 hereof.
The Company also intends to issue an additional $100,000,000 principal
amount of its 12% Senior Subordinated Notes due 2007 (the "Highland Securities")
to Highland Holdings ("Highland") pursuant to a separate purchase agreement (the
"Highland Purchase Agreement"), dated as of the date hereof, between the Company
and Highland.
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities under the Securities Act, in reliance
upon exemptions from the registration requirements of the Securities Act.
In connection with the sale of the Securities, the Company has prepared
a preliminary offering memorandum, dated February 17, 1999 (as amended or
supplemented at the Execution Time, including any and all exhibits thereto and
any information and documents incorporated by reference therein, the
"Preliminary Memorandum"), and a final offering memorandum, dated February 25,
1999 ( as amended or supplemented at the Execution Time, including any and all
exhibits thereto and any information and documents incorporated by reference
therein, the "Final Memorandum"). Each of the Preliminary Memorandum and the
Final Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum, and any amendment or supplement
<PAGE>
thereto, in connection with the offer and sale of the Securities by the Initial
Purchaser. Unless stated to the contrary, any references herein to the terms
"amend," "amendment" or "supplement" with respect to the Final Memorandum shall
be deemed to refer to and include any information filed under the Exchange Act,
subsequent to the Execution Time, which is incorporated by reference therein.
It is understood and acknowledged that holders (including subsequent
transferees) of the Securities will have the registration rights set forth in
the registration rights agreement (the "Registration Rights Agreement"), to be
dated the Closing Date (as defined below), for so long as such Securities
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, and subject to
the terms and conditions set forth therein, the Company will, among other
things, agree to file with the Commission under the circumstances set forth
therein, (i) a registration statement under the Securities Act relating to the
Company's 12% Senior Subordinated Notes due 2007 (the "New Securities") to be
offered in exchange for the Securities (the "Exchange Offer") and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act relating to the resale by certain holders of the Securities,
and to use its best efforts to cause such registration statements to be declared
effective. The holders of the Highland Securities will also have certain
registration rights as set forth in the Registration Rights Agreement.
This Agreement, the Indenture, the Securities, the New Securities and
the Registration Rights Agreement are hereinafter referred to collectively as
the "Operative Documents."
The Company wishes to confirm as follows its agreement with you in
connection with your several purchases of the Securities.
1. Agreements to Sell and Purchase. The Company hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to each
Initial Purchaser and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Initial Purchaser agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 98.4% of the
principal amount thereof, plus accrued interest, if any, from March 2, 1999 to
the Closing Date, the principal amount of Securities set forth opposite the name
of such Initial Purchaser in Schedule I hereto.
2. Offering of Securities. Each Initial Purchaser, severally and not
jointly, represents and warrants to and agrees with the Company that:
(a) It has not offered or sold, and will not offer or sell,
any Securities except (i) to those it reasonably believes to be
qualified institutional buyers (as defined in Rule 144A under the
Securities Act, "QIBs") and that, in connection with each such sale, it
has taken or will take reasonable steps to ensure that the purchaser of
such Securities is aware that such sale is being made in reliance on
Rule 144A or (ii) in accordance with the restrictions set forth in
Exhibit A hereto.
(b) Neither it nor any person acting on its behalf has made or
will make offers or sales of the Securities in the United States by
means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States.
3. Delivery of the Securities and Payment Therefor. Delivery to the
Initial Purchasers of and payment for the Securities shall be made at the office
of Latham and Watkins, 885 Third Avenue, New York, New York 10022 at 10:00 A.M.,
New York City time, on March 2, 1999 or such later date (not later than March 4,
1999) as the Initial Purchasers shall designate, which date and time may be
<PAGE>
postponed by agreement between the Initial Purchasers and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date").
Delivery of the Securities shall be made to the Initial Purchasers
against payment by the Initial Purchasers of the purchase price thereof to or
upon the order of the Company by wire transfer of immediately available funds or
such other manner of payment as may be agreed by the Company and the Initial
Purchasers. Certificates for the Securities shall be registered in such names
and in such denominations as the Initial Purchasers may request not less than
two full business days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Initial Purchasers in New York, New York, not
later than 1:00 PM on the business day prior to the Closing Date.
4. Agreements of the Company. The Company agrees with the several
Initial Purchasers as follows:
(a) If at any time prior to the completion of the distribution
of the Securities by the Initial Purchasers (as determined by the Initial
Purchasers), any event occurs as a result of which the Final Memorandum, as then
amended or supplemented, would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading or if it should be necessary to amend or supplement the Final
Memorandum to comply with applicable law, the Company promptly: (i) will notify
the Initial Purchasers of any such event; (ii) subject to the requirements of
paragraph (c) of this Section 4, will prepare and provide to the Initial
Purchasers pursuant to paragraph (b) of this Section 4 an amendment or
supplement which will correct such statement or omission or effect such
compliance; and (iii) will supply any supplemented or amended Final Memorandum
to the several Initial Purchasers and counsel for the Initial Purchasers without
charge in such quantities as you may reasonably request.
(b) The Company will furnish to each Initial Purchaser and to
counsel for the Initial Purchasers, without charge, during the period referred
to in paragraph (a) of this Section 4, as many copies of the Final Memorandum
and any amendments and supplements thereto as it may reasonably request.
(c) The Company will not amend or supplement the Final
Memorandum, other than by filing documents under the Exchange Act that are
incorporated by reference therein, without the prior written consent of the
Initial Purchasers; provided, however, that, prior to the completion of the
distribution of the Securities by the Initial Purchasers (as determined by the
Initial Purchasers), the Company will not file any document under the Exchange
Act that is incorporated by reference in the Final Memorandum unless, at least
one Business Day prior to such proposed filing, the Company has furnished the
Initial Purchasers with a copy of such document for their review and the Initial
Purchasers have not reasonably objected to the filing of such document. The
Company will promptly advise the Initial Purchasers when any document filed
under the Exchange Act that is incorporated by reference in the Final Memorandum
shall have been filed with the Commission.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Preliminary Memorandum. The Company
consents to the use, in accordance with the provisions of the Securities Act and
with the securities or Blue Sky laws of the jurisdictions in which the
Securities are offered by the several Initial Purchasers and by dealers, prior
to the date of the Final Memorandum, of each Preliminary Memorandum so furnished
<PAGE>
by the Company. The Company consents to the use of the Final Memorandum in
accordance with the securities or Blue Sky laws of the jurisdictions in which
the Securities are offered by the several Initial Purchasers, in connection with
the offering and sale of the Securities.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale by the Initial Purchasers under the
laws of such jurisdictions as the Initial Purchasers may designate and will
maintain such qualifications in effect so long as required for the sale of the
Securities; provided that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other than
those arising out of the offering or sale of the Securities, in any jurisdiction
where it is not now so subject. The Company will promptly advise the Initial
Purchasers 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) The Company will not, and will not permit any of its
Affiliates to, resell any Securities that have been acquired by any of them
under circumstances that would require the registration of the Securities under
the Securities Act other than pursuant to the terms of the Registration Rights
Agreement.
(g) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities under the
Securities Act.
(h) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities or the Highland Securities
in the United States.
(i) So long as any of the Securities are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, the
Company will, during any period in which it is not subject to Section 13 or
15(d) of the Exchange Act, or it is not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act,
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser, any information required to be
provided by Rule 144A(d)(4) under the Securities Act. This covenant is intended
to be for the benefit of the holders, and the prospective purchasers designated
by such holders, from time to time of such restricted securities.
(j) During the period of five years after the date of this
Agreement, the Company will furnish to the Initial Purchasers (i) a copy of each
report of the Company mailed to securityholders generally or filed with the
Commission or the Nasdaq National Market and will promptly notify the Initial
Purchasers of such mailing or filing and (ii) furnish from time to time such
other information concerning the Company and its Subsidiaries as you may
reasonably request.
(k) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any directed selling efforts
with respect to the Securities or the Highland Securities, and each of them will
comply with the offering restrictions requirement of Regulation S. Terms used in
this paragraph have the meanings given to them by Regulation S.
<PAGE>
(l) The Company will cooperate with the Initial Purchasers and
use its best efforts to (i) effect the inclusion of the Securities as Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") Market
securities in accordance with the rules and regulations adopted by the NASD
relating to trading in the PORTAL Market and (ii) permit the Securities to be
eligible for clearance and settlement through The Depository Trust Company.
(m) The Company will not, and will not permit any of its
Affiliates to, for a period of 90 days following the Execution Time, without the
prior written consent of Salomon Smith Barney Inc., offer, sell or contract to
sell, or otherwise dispose of (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any Affiliate of the Company or any person in
privity with the Company or any Affiliate of the Company), directly or
indirectly, or announce the offering of, the Highland Securities (except with
respect to the purchase by Highland on the Closing Date of the Highland
Securities pursuant to the Highland Purchase Agreement) or any debt securities
issued or guaranteed by the Company (other than the Securities).
(n) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (other than pursuant to
Section 9 or Section 10 hereof) or if this Agreement shall be terminated by the
Initial Purchasers because of any failure or refusal on the part of the Company
to comply with the terms or fulfill any of the conditions of this Agreement, the
Company agrees to negotiate in good faith regarding the reimbursement to the
Initial Purchasers for out-of-pocket expenses (including fees and expenses of
counsel for the Initial Purchasers) incurred by you in connection herewith.
(o) The Company will not, and will not permit any of its
Affiliates to, take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in unlawful stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or the Highland Securities.
(p) The Company will apply the net proceeds from the sale of
the Securities and the Highland Securities substantially in accordance with the
description set forth in the Final Memorandum under the caption "Use of
Proceeds."
5. Representations and Warranties of the Company. The Company
represents and warrants to each Initial Purchaser that:
(a) The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. At the Execution
Time, on the Closing Date and on any settlement date, the Final Memorandum did
not, and will not (and any amendment or supplement thereto, at the date thereof,
at the Closing Date and on any settlement date, will not), contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading; provided, however, that the Company
makes no representation or warranty as to the information contained in or
omitted from the Preliminary Memorandum or the Final Memorandum, or any
amendment or supplement thereto, in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion therein.
(b) All the outstanding shares of Common Stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; and the capital stock of the
<PAGE>
Company conforms to the description thereof set forth under the caption
"Capitalization" in the Final Memorandum.
(c) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
the other Operative Documents and the Highland Purchase Agreement and to
consummate the transactions contemplated hereby and thereby, including, without
limitation, the corporate power and authority to issue, sell and deliver the
Securities as provided herein.
(d) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except insofar as indemnification and contribution provisions may be
limited by applicable law or public policy or equitable principles and subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity.
(e) The Indenture has been duly and validly authorized by the
Company and, upon its execution and delivery by the Company and assuming due
authorization, execution and delivery by the Trustee, will constitute the legal,
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(f) The Securities have been duly and validly authorized by
the Company and, when duly executed by the Company in accordance with the terms
of the Indenture, assuming due authentication of the Securities by the Trustee
and upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will be validly issued and delivered and will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company and the Guarantors in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The description
of the Securities in the Final Memorandum is accurate in all material respects.
(g) The New Securities have been duly and validly authorized
for issuance by the Company, and when executed by the Company in accordance with
the terms of the Indenture and delivered in accordance with the Exchange Offer
as provided for in the Registration Rights Agreement, and assuming due
authentication of the New Securities by the Trustee, the New Securities will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity. The description of the
New Securities in the Final Memorandum is accurate in all material respects.
(h) The Registration Rights Agreement has been duly and
validly authorized by the Company and, when duly executed and delivered by the
Company, will constitute the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. The description of the Registration Rights Agreement in
the Final Memorandum is accurate in all material respects.
<PAGE>
(i) The Highland Purchase Agreement has been duly and validly
authorized, executed and delivered by the Company and Highland, and constitutes
the legal, valid and binding agreement of the Company and Highland, enforceable
against the Company and Highland in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity. The Company and Highland have delivered to the Initial
Purchasers and counsel to the Initial Purchasers an executed copy of the
Highland Purchase Agreement, together will all other documents and agreements
related thereto, the form and substance of which has been reviewed and deemed
satisfactory by the Initial Purchasers and counsel to the Initial Purchasers.
(j) Each of the Company and its Subsidiaries (as defined) (A)
has been duly organized, is validly existing as a corporation or limited
liability company, as applicable, in good standing under the laws of its
respective jurisdiction of formation, (B) has all requisite corporate or limited
liability company power and authority to carry on its business as it is
currently being conducted and as described in the Final Memorandum and to own,
lease and operate its properties and (C) is duly qualified and in good standing
as a foreign corporation or limited liability company, as applicable, and is
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification
except, with respect to this clause (C), where the failure of the Company and
its Subsidiaries to be so qualified or in good standing does not and could not
reasonably be expected to (x) individually or in the aggregate, result in a
material adverse effect on the assets, liabilities, business, results of
operations, condition (financial or otherwise), cash flows, affairs or prospects
of the Company and the Subsidiaries, taken as a whole, (y) interfere with or
adversely affect the issuance or marketability of the Securities or (z) in any
manner draw into question the validity of this Agreement or the ability of the
Company and its Subsidiaries to conduct their businesses in the manner set forth
in the Final Memorandum (any of the events set forth in clauses (x), (y) or (z),
a "Material Adverse Effect"). The Company has no direct or indirect subsidiaries
as of the Closing Date other than those set forth on Schedule II hereto
(referred to herein collectively as "Subsidiaries" and individually as a
"Subsidiary").
(k) Each of the Joint Ventures (as defined) (A) has been duly
formed as a partnership, limited liability company or corporation, as
applicable, under the laws of its respective jurisdiction of formation, (B) has
all requisite partnership, limited liability company or corporate power and
authority, as applicable, to carry on its business as it is currently being
conducted and as described in the Final Memorandum and to own, lease and operate
its properties and (C) is duly qualified and in good standing as a foreign
partnership, limited liability company or corporation, as applicable, authorized
to do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification except, with
respect to this clause (C), where the failure to be so qualified or in good
standing does not and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor its Subsidiaries has any ownership
interest in any Joint Venture other than those set forth on Schedule III hereto
(referred to herein collectively as "Joint Ventures" and individually a "Joint
Venture").
<PAGE>
(l) All of the outstanding capital stock of each Subsidiary is
owned by the Company, free and clear of any and all security interests, claims,
liens, limitations on voting rights or other charges or encumbrances, other than
security interests, claims, liens, limitation on voting rights or other charges
or encumbrances arising from the pledge of the capital stock of Hyperion
Telecommunications of Kentucky, Inc., Hyperion Telecommunications of New York,
Inc., Hyperion Telecommunications of Vermont, Inc., Hyperion Telecommunications
of Tennessee, Inc. and Hyperion Telecommunications of Florida, Inc. as security
for the Company's 12 1/4% Senior Secured Notes due 2004. Except as disclosed in
the Final Memorandum, there are not currently, and there will not be as a result
of the transactions contemplated hereby, any outstanding subscriptions, rights,
warrants, calls, commitments of sale or options to acquire, or instruments
convertible into or exchangeable for, any capital stock or other equity interest
of the Company, any Subsidiary or any Joint Venture.
(m) None of the Company, the Subsidiaries or the Joint
Ventures is and, after giving effect to the transactions contemplated hereby,
none of them will be (A) in violation of its charter, bylaws, partnership
agreement or operating agreement, as applicable, (B) in default in the
performance of any bond, debenture, note, indenture, mortgage, deed of trust or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its properties is subject, or (C) in violation of any local,
state or Federal law, statute, ordinance, rule, regulation, requirement,
judgment or court decree (including, without limitation, the Communications Act
of 1934, as amended by the Telecommunications Act of 1996 (together, the
"Telecommunications Act"), and the rules and regulations of the Federal
Communications Commission (the "FCC") and environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable to the
Company, any Subsidiary, any Joint Venture or any of their respective assets or
properties (whether owned or leased) other than, in the case of clauses (B) and
(C), any default or violation that could not reasonably be expected to have a
Material Adverse Effect. There exists no condition that, with notice, the
passage of time or otherwise, would constitute a default under any such document
or instrument that could reasonably be expected to have a Material Adverse
Effect.
(n) There is (i) no action, suit or proceeding before or by
any court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or threatened or contemplated to which the Company, any of
the Subsidiaries or any of the Joint Ventures is or may be a party or to which
the business or property of the Company, any Subsidiary or any Joint Venture is
subject, (ii) no local, state or Federal law, statute, ordinance, rule,
regulation, requirement, judgment, court decree or order (including, without
limitation, the Telecommunications Act and the rules and regulations of the FCC)
that has been enacted, adopted or issued by any governmental agency or, to the
best of the Company's knowledge, that has been proposed by any governmental body
or (iii) no injunction, restraining order or order of any nature by a federal or
state court or foreign court of competent jurisdiction to which the Company, any
Subsidiary or any Joint Venture is or could reasonably be expected to be subject
or to which the business, assets, or property of the Company, any Subsidiary or
any Joint Venture are could reasonably be expected to be subject, that, in the
case of clauses (i), (ii) and (iii) above, (y) is required to be disclosed in
the Final Memorandum and that is not so disclosed, or (z) could reasonably be
expected to individually or in the aggregate, result in a Material Adverse
Effect.
(o) Neither the issuance and sale of the Securities, the
issuance and sale of the Highland Securities, the execution, delivery or
performance by the Company of this Agreement, the other Operative Documents and
the Highland Purchase Agreement, or the consummation by the Company, the
Subsidiaries and the Joint Ventures of the transactions contemplated hereby and
thereby violate, conflict with or constitute a breach of any of the terms or
provisions of, or constitute a default under (or an event that with notice or
the lapse of time, or both, would constitute a default under), or require
consent under, or result in the imposition of a lien or encumbrance on any
properties of the Company, any Subsidiary or any Joint Venture, or an
acceleration of any indebtedness of the Company, any Subsidiary or any Joint
Venture pursuant to, (i) the charter, bylaws, partnership agreement or operating
agreement governing the Company, any Subsidiary or any Joint Venture, (ii) any
bond, debenture, note, indenture, mortgage, deed of trust or other agreement or
instrument to which the Company, any Subsidiary or any Joint Venture is a party
or by which any of them or their property is or may be bound, (iii) any local,
state or federal law, statute, ordinance, rule, regulation or requirement
(including, without limitation, the Telecommunications Act and the rules and
regulations of the FCC and environmental laws, statutes, ordinances, rules or
regulations) applicable to the Company, any Subsidiary, any Joint Venture or any
of their respective assets or properties or (iv) any judgment, order or decree
of any court or governmental agency or authority having jurisdiction over the
Company, any Subsidiary, any Joint Venture or any of their respective assets or
properties, except in the case of clauses (ii), (iii) and (iv) for such
<PAGE>
violations conflicts, breaches, defaults, consents, impositions of liens or
accelerations that would not singly, or in the aggregate, have a Material
Adverse Effect. Other than as described in the Final Memorandum, no consent,
approval, authorization or order of, or filing, registration, qualification,
license or permit of or with, (A) any court or governmental agency, body or
administrative agency (including, without limitation, the FCC) or (B) any other
person is required for (1) the execution, delivery and performance by the
Company of this Agreement, the other Operative Documents and the Highland
Purchase Agreement or (2) the issuance and sale of the Securities and the
Highland Securities and the consummation of the other transactions contemplated
hereby and thereby, except (x) such as have been obtained and made (or, in the
case of the Registration Rights Agreement, will be obtained and made) under the
Securities Act, the Trust Indenture Act of 1939, as amended (the "TIA") and
state securities or Blue Sky laws and regulations or such as may be required by
the NASD or (y) where the failure to obtain any such consent, approval,
authorization or order of, or filing registration, qualification, license or
permit would not reasonably be expected to result in a Material Adverse Effect.
(p) The accountants who have certified or shall certify the
financial statements included or incorporated by reference in the Final
Memorandum are independent public accountants as required by the Securities Act.
(q) The financial statements, together with related schedules
and notes, included or incorporated by reference in the Final Memorandum,
present fairly the consolidated financial position, results of operations and
changes in financial position of the Company and the Subsidiaries on the basis
stated or incorporated by reference in the Final Memorandum at the respective
dates or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data included or incorporated by reference in the Final
Memorandum are accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company and the
Subsidiaries. The statistical information and data included in the Final
Memorandum are accurately presented in all material respects.
(r) Except as disclosed in the Final Memorandum, subsequent to
the respective dates as of which such information is given in the Final
Memorandum and the Preliminary Memorandum, (i) none of the Company, any
Subsidiary or any Joint Venture has incurred any liabilities or obligations,
direct or contingent, which are material, individually or in the aggregate, to
the Company, the Subsidiaries and the Joint Ventures taken as a whole, not
entered into any transaction not in the ordinary course of business, (ii) there
has not been, singly or in the aggregate, any change or development which could
reasonably be expected to result in a Material Adverse Effect, (iii) there has
been no dividend or distribution of any kind declared, paid or made by the
Company or its Subsidiaries on any class of capital stock and (iv) there has
been no distribution of profits or return of capital contribution by any Joint
Venture.
(s) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Securities (as determined by the Initial Purchasers), will not distribute any
offering material in connection with the offering and sale of the Securities or
the Highland Securities other than the Final Memorandum, the Preliminary
Memorandum or other materials, if any, permitted by the Securities Act.
<PAGE>
(t) There is (i) no unfair labor practice complaint pending or
threatened against the Company, or any Joint Venture, before the National Labor
Relations Board, any state or local labor relations board or any foreign labor
relations board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is
pending or threatened against the Company, any Subsidiary or any Joint Venture,
(ii) no significant strike, labor dispute, slowdown or stoppage pending or
threatened against the Company, any Subsidiary or any Joint Venture and (iii) no
union representation question existing with respect to the employees of the
Company, any Subsidiary or any Joint Venture that, in the case of clauses (i),
(ii) or (iii), could reasonably be expected to result in a Material Adverse
Effect. To the best of the Company's knowledge, no collective bargaining
organizing activities are taking place with respect to the Company, the
Subsidiaries or the Joint Ventures. None of the Company, any Subsidiary or any
Joint Venture has violated (A) any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of employees, (B) any
applicable wage or hour laws or (C) any provision of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder, which in the case of clause (A), (B) or (C) above could reasonably
be expected to result in a Material Adverse Effect.
(u) None of the Company, any Subsidiary or any Joint Venture
has violated any environmental, safety or similar law or regulation applicable
to it or its business or property relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), lacks any permit, license or other
approval required of it under applicable Environmental Laws or is violating any
term or condition of any such permit, license or approval which could reasonably
be expected to, either individually or in the aggregate, have a Material Adverse
Effect.
(v) Each of the Company, the Subsidiaries and the Joint
Ventures has (i) good and marketable title to all of the properties and assets
described in the Final Memorandum as owned by it, free and clear of all liens,
charges, encumbrances and restrictions, except such as are securing the
Company's 12 1/4% Senior Secured Notes due 2004, are described in the Final
Memorandum or would not have a Material Adverse Effect, (ii) peaceful and
undisturbed possession under all leases to which any of them is a party as
lessee, (iii) all licenses, certificates, permits, authorizations, approvals,
franchises and other rights from, and has made all declarations and filings
with, all federal, state and local authorities (including, without limitation,
the FCC), all self-regulatory authorities and all courts and other tribunals
(each an "Authorization") necessary to engage in the business as presently
conducted by each of them in the manner described in the Final Memorandum,
except as described in the Final Memorandum or where failure to hold such
Authorizations would not, individually or in the aggregate, have a Material
Adverse Effect and (iv) no reason to believe that any governmental body or
agency is considering limiting, suspending or revoking any such Authorization.
Except where the failure to be in full force and effect would not have a
Material Adverse Effect, all such Authorizations are valid and in full force and
effect and each of the Company, the Subsidiaries and the Joint Ventures is in
compliance with the terms and conditions of all such Authorizations and with the
rules and regulations of the regulatory authorities having jurisdiction with
respect thereto. All leases to which the Company, the Subsidiaries and the Joint
Ventures is a party are valid and binding and no default by the Company, any
Subsidiary or any Joint Venture has occurred and is continuing thereunder and no
defaults by the landlord are existing under any such lease that could reasonably
be expected to result in a Material Adverse Effect.
(w) Each of the Company, the Subsidiaries and the Joint
Ventures owns, possesses or has the right to employ all patents, patent rights,
licenses (including all FCC, state, local or other jurisdictional regulatory
licenses), inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
<PAGE>
software, systems or procedures), trademarks, service marks and trade names,
inventions, computer programs, technical data and information (collectively, the
"Intellectual Property") presently employed by the Company, its Subsidiaries or
the Joint Ventures in connection with the businesses now operated by it or which
are proposed to be operated by the Company, its Subsidiaries or the Joint
Ventures free and clear of and without violating any right, claimed right,
charge, encumbrance, pledge, security interest, restriction or lien of any kind
of any other person, and none of the Company, any Subsidiary or any Joint
Venture has received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing except as could not
reasonably be expected to have a Material Adverse Effect. The use of the
Intellectual Property in connection with the business and operations of the
Company, the Subsidiaries and the Joint Ventures does not infringe on the rights
of any person, except would not have a Material Adverse Effect.
(x) None of the Company, any Subsidiary, any Joint Venture or
any of their respective officers, directors, partners, employees, agents or
affiliates or any other person acting on behalf of the Company, any Subsidiary
or any Joint Venture, as the case may be, has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, official or employee of
any governmental agency (domestic or foreign), instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or other person who was, is or may be in a position to help or
hinder the business of the Company, any Subsidiary or any Joint Venture (or
assist the Company, any Subsidiary or any Joint Venture in connection with any
actual or proposed transaction) which (i) might subject the Company, any
Subsidiary or any Joint Venture, or any other individual or entity to any damage
or penalty in any civil, criminal or governmental litigation or proceeding
(domestic or foreign), (ii) if not given in the past, could reasonably be
expected to have had a Material Adverse Effect on the assets, business or
operations of the Company, any Subsidiary or any Joint Venture or (iii) if not
continued in the future, could reasonably be expected to have a Material Adverse
Effect.
(y) All tax returns required to be filed by the Company, each
of the Subsidiaries and each of the Joint Ventures in all jurisdictions have
been so filed. All taxes (including, without limitation, withholding taxes),
penalties and interest, assessments, fees and other charges due or claimed to be
due from such entities or that are due and payable have been paid, other than
those being contested in good faith and for which adequate reserves have been
provided or those currently payable without penalty or interest. There are no
proposed additional tax assessments against the Company, any Subsidiary, any
Joint Venture or the assets or property of the Company, any Subsidiary or any
Joint Venture.
(z) None of the Company, the Subsidiaries or the Joint
Ventures is now, and after sale of the Securities to be sold by the Company
hereunder, the sale of the Highland Securities and application of the net
proceeds from each such sale as described in the Final Memorandum under the
caption "Use of Proceeds" will not be (i) an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act or (ii) a "holding company" or a "subsidiary company" or an
"affiliate" of a holding company within the meaning of the PUC Act.
(aa) There are no holders of securities of the Company, the
Subsidiaries or the Joint Ventures who, by reason of the execution of this
Agreement, any other Operative Document or the Highland Purchase Agreement or
the consummation of the transactions contemplated hereby and thereby, have the
right to request or demand that the Company, any of the Subsidiaries or any of
the Joint Ventures register any of its securities under the Securities Act.
<PAGE>
(bb) Each of the Company, the Subsidiaries and the Joint
Ventures maintains a system of internal accounting controls sufficient to
provide reasonable assurance that: (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(cc) Each of the Company, the Subsidiaries and the Joint
Ventures maintains insurance covering its properties, operations, personnel and
businesses. Such insurance insures against such losses and risks as are adequate
in accordance with customary industry practice to protect the Company, the
Subsidiaries, the Joint Ventures and their respective businesses. None of the
Company, any Subsidiary or any Joint Venture has received notice from any
insurer or agent of such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance. All such
insurance is outstanding and duly in force on the date hereof.
(dd) Set forth on Exhibit B hereto is a list of each employee
pension or benefit plan with respect to which the Company or any corporation
considered an affiliate of the Company within the meaning of Section 407(d)(7)
of ERISA (an "ERISA Affiliate") is a party in interest or disqualified person.
The execution and delivery of this Agreement, the other Operative Documents and
the Highland Purchase Agreement and the issuance and sale of the Securities and
the Highland Securities will not involve any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended. The representation made by the Company in the preceding
sentence is made in reliance and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made by the QIBs as set
forth in the Final Memorandum under the caption "Notice to Investors."
(ee) None of (A) the execution, delivery and performance of
this Agreement or any other Operative Document, (B) the issuance and sale of the
Securities and the Highland Securities, (C) the application of the proceeds from
the issuance and sale of the Securities and the Highland Securities or (D) the
consummation of the transactions contemplated in connection with any of the
foregoing as set forth in the Final Memorandum, will violate Regulations U or X
promulgated by the Board of Governors of the Federal Reserve System or analogous
foreign laws and regulations.
(ff) Except pursuant to this Agreement and the other Operative
Documents, there are no contracts, agreements or understandings between the
Company, any of its Subsidiaries or any of its Joint Ventures and any other
person that would give rise to a valid claim against the Company or any of the
Initial Purchasers for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Securities.
(gg) The Company has filed in a timely manner each document or
report required to be filed by it pursuant to the Exchange Act and the rules and
regulations thereunder; each such document or report at the time it was filed
conformed to the requirements of the Exchange Act and the rules and regulations
thereunder; and none or such documents or reports contained an untrue statement
of any material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
<PAGE>
(hh) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of the Securities under the
Securities Act.
(ii) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities or the Highland Securities
in the United States.
(jj) The Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act.
(kk) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has engaged in any directed selling efforts
with respect to the Securities and the Highland Securities and each of them has
complied with the offering restrictions requirement of Regulation S. Terms used
in this paragraph have the meanings given to them by Regulation S.
(ll) The Company has not paid or agreed to pay to any person
any compensation for soliciting another to purchase any securities of the
Company (except as contemplated by this Agreement).
(mm) The Company has not taken, directly or indirectly, any
action designed to cause or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or the Highland Securities.
(nn) The information provided by the Company pursuant to
Section 4(i) hereof will not, at the date thereof, contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section
7(c), (d), (e) and (f) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, the directors, officers,
employees and agents of each Initial Purchaser and each person who controls any
Initial 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
Preliminary Memorandum, the Final Memorandum (or in any supplement or amendment
thereto) or any information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 4(i), 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, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
<PAGE>
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 Preliminary
Memorandum or the Final 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 any Initial Purchasers specifically for
inclusion therein; provided, further, that the indemnification contained in this
paragraph (a) with respect to any Preliminary Memorandum shall not inure to the
benefit of any Initial Purchaser (or to the benefit of any person controlling
such Initial Purchaser) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Securities by such Initial Purchaser to any
person if a copy of the Final Memorandum shall not have been delivered or sent
to such person and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in such Preliminary Memorandum
was corrected in the Final Memorandum, provided that the Company has delivered
the Final Memorandum to the several Initial Purchasers in requisite quantity on
a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability that the Company may otherwise
have.
(b) Each Initial Purchaser severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of 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 each Initial Purchaser, but only with reference to
written information relating to such Initial Purchaser furnished to the Company
by or on behalf of such Initial Purchaser specifically for inclusion in the
Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability any Initial Purchaser may otherwise have. The Company acknowledges
that the statements set forth in the last paragraph of the cover page regarding
the delivery of the Securities, the legend in the block capital letters and the
related disclosure on page 2 concerning stabilization, syndicate covering
transactions and penalty bids and, under the heading "Plan of Distribution," (i)
the sentences related to concessions and reallowances and (ii) the paragraph
related to stabilization, syndicate covering transactions and penalty bids in
the Preliminary Memorandum and the Final Memorandum, constitute the only
information furnished in writing by or on behalf of the Initial Purchasers for
inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 6 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 6, 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 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
<PAGE>
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that 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 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchasers 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 one or more of the Initial Purchasers may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and by the Initial Purchasers on the other from the offering of the
Securities; provided, however, that in no case shall any Initial Purchaser
(except as may be provided in any agreement among the Initial Purchasers
relating to the offering of the Securities) be responsible for any amount in
excess of the purchase discount or commission applicable to the Securities
purchased by such Initial Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Initial Purchasers shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Initial Purchasers on the other 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 the total net proceeds from the offering (before
deducting expenses) received by it, and benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions in each case set forth on the cover of the Final Memorandum.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company on the one hand or the Initial Purchasers on the other, the intent of
the parties and their relative knowledge, information and opportunity to correct
or prevent such untrue statement or omission. The Company and the Initial
Purchasers 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 6,
each person who controls an Initial Purchaser within the meaning of either the
Securities Act or the Exchange Act and each director, officer, employee and
agent of an Initial Purchaser shall have the same rights to contribution as such
Initial 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).
7. Conditions of Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of the
<PAGE>
Company contained herein at the Execution Time, the Closing Date and each
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company made in all certificates 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 effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, that would have a Material Adverse Effect on the Company,
the Subsidiaries and the Joint Ventures, taken as a whole, not contemplated by
the Final Memorandum, which in your opinion, as Initial Purchasers, would
materially adversely affect the market for the Securities, or (ii) any event or
development relating to or involving the Company, the Subsidiaries, the Joint
Ventures or any officer or director of the Company that makes any statement made
in the Final Memorandum untrue or which, in the opinion of the Company and its
counsel or the Initial Purchasers and their counsel, requires the making of any
addition to or change in the Final Memorandum in order to state a material fact
required by the Securities Act or any other law to be stated therein or
necessary in order to make the statements therein not misleading, if amending or
supplementing the Final Memorandum to reflect such event or development would,
in your opinion, as Initial Purchasers, materially adversely affect the market
for the Securities.
(b) You shall have received a certificate, dated the Closing
Date, signed on behalf of the Company by (i) the President or a Vice Chairman
and (ii) a Vice President, Vice Chairman, Secretary or Assistant Secretary, in
form and substance reasonably satisfactory to you, confirming, as of the Closing
Date, the matters set forth in the introduction of this Section 7 and in
paragraphs (a) and (k) of this Section 7, certain incumbency matters and that,
as of the Closing Date, the obligations of the Company to be performed hereunder
on or prior thereto have been duly performed.
(c) You shall have received on the Closing Date, an opinion,
dated the Closing Date, in form and substance satisfactory to you, of Buchanan
Ingersoll, counsel for the Company, to the effect set forth in Exhibit C hereto.
(d) You shall have received on the Closing Date an opinion,
dated the Closing Date, in form and substance satisfactory to you, of Swidler &
Berlin, special regulatory counsel to the Company, to the effect set forth in
Exhibit D hereto.
(e) You shall have received on the Closing Date an opinion,
dated the Closing Date, in form and substance satisfactory to you, of Downs
Rachlin & Martin, PC, special regulatory counsel to the Company, to the effect
set forth in Exhibit D hereto.
(f) You shall have received an opinion, dated the Closing
Date, in form and substance reasonably satisfactory to you, of Latham & Watkins,
counsel to the Initial Purchasers, covering such matters as are customarily
covered in such opinions.
(g) At the time this Agreement is executed and at the Closing
Date, you shall have received from Deloitte & Touche, independent public
accountants for the Company dated as of the date of this Agreement and of the
Closing Date, respectively, a customary comfort letter addressed to the you and
in form and substance satisfactory to you with respect to the financial
statements and certain financial information of the Company, the Subsidiaries
and the Joint Ventures contained or incorporated by reference in the Final
Memorandum.
<PAGE>
(h) (i) There shall not have been any change in the capital
stock of the Company nor any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business) from that
set forth or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto); (ii) there shall not have been, since the respective dates
as of which information is given in the Preliminary Memorandum and the Final
Memorandum (exclusive of any amendment or supplement thereto), except as may
otherwise be stated in the Final Memorandum and, any material adverse change in
the condition (financial or other), business, prospects, properties, net worth
or results of operations of the Company and the Subsidiaries taken as a whole;
and (iii) the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Preliminary Memorandum and the Final
Memorandum (exclusive of any amendment or supplement thereto).
(i) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.
(j) Prior to the Closing Date, the Company, the Subsidiaries
and the Joint Ventures shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have requested.
(k) Subsequent to the date hereof, there shall not have been
any decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the Securities Act) or any notice given of any intended or
potential decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
(l) The Company shall have entered into the Registration
Rights Agreement and each of the Company and the Trustee shall have entered into
the Indenture and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
(m) The Company and Highland shall have delivered to the
Initial Purchasers and counsel to the Initial Purchasers evidence satisfactory
to the Initial Purchasers that the Company has issued and sold to Highland the
Highland Securities for the consideration set forth in the Final Offering
Memorandum.
(n) The Company shall have delivered to the Initial Purchasers
a "lock-up" letter satisfactory to the Initial Purchasers from Highland.
(o) The Securities shall have been approved by the NASD for
trading on the PORTAL Market and shall be eligible for clearance and settlement
through The Depository Trust Company.
(p) The Company, the trustee under the indenture relating to
the Company's 13% Senior Discount Notes due 2003 and the trustee under the
indenture relating to the Company's 12 1/4% Senior Secured Notes due 2004 shall
have received the fairness opinions required under Section 4.11 of each such
indenture with respect to the purchase of the Highland Securities by Highland.
<PAGE>
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel. All certificates and documents signed by any
officer of the Company and delivered to you or to counsel for the Initial
Purchasers shall be deemed representations and warranties by the Company to each
Initial Purchaser as to the statements made therein. All certificates and
documents signed by any officer of the Company and delivered to you or to
counsel for the Initial Purchasers shall be deemed representations and
warranties by the Company to each Initial Purchaser as to the statements made
therein.
If any of the conditions specified in this Section 7 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Initial Purchasers and counsel for the Initial Purchasers,
this Agreement and all obligations of the Initial Purchasers hereunder may be
cancelled at, or at any time prior to, the Closing Date by the Initial
Purchasers. Notice of such cancellation shall be given to the Company in writing
or by telephone or facsimile confirmed in writing.
8. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction of the
Final Memorandum (including financial statements and exhibits thereto), the
Preliminary Memorandum, and each amendment or supplement to any of them; (ii)
the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the Final
Memorandum, the Preliminary Memorandum, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Securities; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any stamp
taxes in connection with the original issuance and sale of the Securities; (iv)
the printing (or reproduction) and delivery of this Agreement, the Blue Sky
Memoranda and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (v) the listing of
the Securities on PORTAL; (vi) the registration or qualification of the
Securities for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 4(d) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Initial Purchasers relating
to the preparation, printing or reproduction, and delivery of the Blue Sky
Memoranda and such registration and qualification); (vii) all fees and expenses
(including fees and expenses of counsel to the Company) of the Company in
connection with the approval of the Securities by DTC for "book-entry" transfer,
(viii) the rating of the Securities by rating agencies, (ix) the reasonable fees
and expenses of the Trustee and its counsel in connection with the Indenture and
the Securities, (x) the transportation and other expenses incurred by or on
behalf of the Company in connection with presentations to prospective purchasers
of the Securities; (xi) the fees and expenses of the Company's accountants and
the fees and expenses of counsel (including local and special counsel) for the
Company.
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Initial Purchasers)
the Securities which the defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase; provided, however, that in the event that the
aggregate amount of Securities which the defaulting Initial Purchaser or Initial
<PAGE>
Purchasers agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Initial
Purchasers shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting Initial
Purchasers do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Initial Purchaser or the Company. In the
event of a default by any Initial Purchaser as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Initial Purchasers shall determine in order that the required
changes in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.
Any notice under this Section 9 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
10. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, by written
notice given to the Company prior to delivery of and payment for the Securities,
if at any time prior to such time (i) trading in the Company's Common Stock
shall have been suspended by the Commission or the Nasdaq National Market, or
trading in securities generally on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or limited or minimum prices shall
have been established on either such Exchanges; (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 sole
judgment of the Initial Purchasers, impracticable or inadvisable to proceed with
the offering or delivery of the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers 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 Initial Purchasers or the Company
or any of the officers, directors or controlling persons referred to in Section
6 hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 4(n) and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Miscellaneous. Except as otherwise provided in Sections 4, 9 and 10
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at Hyperion Telecommunications, Inc., Main at Water Street, Coudersport,
Pennsylvania 16915, Attention: Edward E. Babcock, Jr., Vice President, Finance;
or (ii) if to you, as Initial Purchasers, care of Salomon Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Attention: General Counsel.
This Agreement has been and is made solely for the benefit of the
several Initial Purchasers, the Company, its directors and officers, and the
other controlling persons referred to in Section 6 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Initial Purchaser of any of the Securities in
his status as such purchaser.
<PAGE>
13. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
14. Definitions. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Affiliate" shall have the meaning specified in Rule 501(b) of
Regulation D.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in The City of New York.
"Commission" shall mean the Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean, the date and time that this
Agreement is executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"PUC Act" shall mean the Public Utility Holding Company Act of
1935, as amended.
"Regulation D" shall mean Regulation D under the Securities
Act.
"Regulation S" shall mean Regulation S under the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"TIA" shall mean the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission promulgated thereunder.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Initial Purchasers.
Very truly yours,
HYPERION TELECOMMUNICATIONS, INC.
By: /s/ Daniel R. Milliard
Name: Daniel R. Milliard
Title: President
Confirmed as of the date first above mentioned.
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
FIRST UNION CAPITAL MARKETS CORP.
By: SALOMON SMITH BARNEY INC.
By: /s/ Todd C. Alexander
Name: Todd C. Alexander
Title: Director
<PAGE>
S-I
SCHEDULE I
HYPERION TELECOMMUNICATIONS INC.
Aggregate Principal Amount of
Initial Purchaser Securities Purchased
Salomon Smith Barney Inc...................... $125,000,000
Chase Securities Inc.......................... 37,500,000
First Union Capital Markets Corp.............. $ 37,500,000
------------------------
TOTAL.................................. $200,000,000
========================
<PAGE>
S-II
SCHEDULE II
SUBSIDIARIES
Hyperion Telecommunications, Inc.
Hyperion Communications General Holdings, Inc.
Hyperion Communications Capital, Inc.
Hyperion Communications Long Haul, L.P.
Hyperion Telecommunications International, Inc.
Hyperion Communications International, LLC
Hyperion Communications of Alabama, LLC
Hyperion Communications of Arkansas, LLC
Hyperion Telecommunications of Arkansas, Inc.
Hyperion Communications of Connecticut, Inc.
Hyperion Communications of Delaware, LLC
Hyperion Communications of District of Columbia, LLC
Hyperion Telecommunications of Florida, Inc.
Hyperion Communications of Florida, LLC
Hyperion Communications of Georgia, LLC
Hyperion Communications of Illinois, Inc.
Hyperion Communications of Indiana, L.P.
Hyperion Telecommunications of Kansas, Inc.
Hyperion Communications of Kansas, LLC
Hyperion Communications of Kentucky, Inc.
Hyperion Telecommunications of Lexington, Inc.
Hyperion Telecommunications of Louisville, Inc.
Hyperion Telecommunications of Louisiana, Inc.
Hyperion Communications of Maine, Inc.
Hyperion Communications of Maryland, LLC
Hyperion Telecommunications of Baltimore, L.L.C.
Hyperion Communications of Massachusetts, Inc.
Hyperion Communications of Michigan, Inc.
Hyperion Telecommunications of Mississippi, Inc.
Hyperion Communications of Mississippi, L.P.
Hyperion Communications of New Hampshire, Inc.
Hyperion Telecommunications of New Jersey, Inc.
<PAGE>
Hyperion Telecommunications of Central New Jersey, Inc.
Hyperion Communications of New Jersey, LLC
Hyperion Communications of New York, Inc.
Hyperion Communications of Eastern New York, Inc.
Hyperion Telecommunications of Albany, Inc.
Hyperion Telecommunications of Buffalo, Inc.
Hyperion Telecommunications of Syracuse, Inc.
Hyperion Telecommunications of North Carolina, Inc.
Hyperion Communications of North Carolina, L.P.
Hyperion Communications of Ohio, Inc.
Hyperion Telecommunications of Ohio, L.L.C.
Hyperion Telecommunications of Pennsylvania, Inc.
Hyperion Telecommunications of Coudersport, Inc.
Hyperion Communications of Pennsylvania, LLC
Hyperion Telecommunications of Pittsburgh, L.L.C.
Hyperion Telecommunications of Scranton, Inc.
Hyperion Telecommunications of Harrisburg, Inc.
Hyperion Communications of Rhode Island, Inc.
Hyperion Communications of South Carolina, Inc.
Hyperion Telecommunications of Tennessee, Inc.
Hyperion Communications of Tennessee, L.P.
Hyperion Communications of Nashville, L.P.
Hyperion Communication of Texas, L.P.
Hyperion Communications of West Virginia, LLC
Hyperion Communications of Vermont, Inc.
Hyperion Enhanced Networks of Virginia, Inc.
Hyperion Telecommunications of Virginia, Inc.
Hyperion Communications of Virginia, LLC
Hyperion Telecommunications of Southwest Virginia, L.L.C.
<PAGE>
S-III
SCHEDULE III
JOINT VENTURES
Entergy Hyperion Telecommunications of Arkansas, L.L.C.
MediaOne Fiber Technologies, Inc.
Multimedia Hyperion Telecommunications
Entergy Hyperion Telecommunications of Louisiana, L.L.C.
Entergy Hyperion Telecommunications of Mississippi, L.L.C.
Allegheny Hyperion Telecommunications, L.L.C.
Hyperion Susquehanna Telecommunications
PECO Hyperion Telecommunications
AVR of Tennessee, L.P. d/b/a Hyperion of Tennessee, L.P.
MediaOne of Virginia
<PAGE>
A-1
EXHIBIT A
SELLING RESTRICTIONS FOR OFFERS
AND SALES OUTSIDE THE UNITED STATES
1. (a) The Securities have not been and will not be registered
under the Securities Act. Each Initial Purchaser, severally and not jointly,
represents and agrees that, except as otherwise permitted by Section 2(a)(i) of
the Agreement to which this is an exhibit, it has offered and sold the
Securities, and will offer and sell the Securities, (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with Rule
903 of Regulation S under the Securities Act. Accordingly, each Initial
Purchaser represents and agrees that neither it, nor any of its Affiliates nor
any person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Securities within the meaning under
Regulation S, and that it and they have complied and will comply with the
offering restrictions requirement of Regulation S. Each Initial Purchaser agrees
that, at or prior to the confirmation of sale of Securities (other than a sale
of Securities pursuant to Section 2(a)(i) of the Agreement to which this is an
exhibit), it shall have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the distribution compliance period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and March 2, 1999, except in either case in
accordance with Regulation S or Rule 144A under the Securities
Act. Terms used above have the meanings given to them by
Regulation S."
(b) Each Initial Purchaser also, severally and not jointly,
represents and agrees that it has not entered and will not enter into any
contractual arrangement with any distributor with respect to the distribution of
the Securities, except with its affiliates or with the prior written consent of
the Company.
(c) Terms used in this section have the meanings given to them
by Regulation S.
2. Each Initial Purchaser, severally and not jointly,
represents and agrees 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 as agent (except in circumstances which do not
constitute an offer to the public within the meaning of the Companies Act 1989
of Great Britain), (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 of the United Kingdom with respect
to anything done by it in relation to the Securities in, from or otherwise
involving 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 a kind
described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
<PAGE>
B-1
EXHIBIT B
LIST OF EMPLOYEE PENSION AND BENEFIT
PLANS OF HYPERION TELECOMMUNICATIONS, INC.
AND ITS SUBSIDIARIES
Adelphia Communications Corporation Employee Benefit Plan
Adelphia Communications Corporation 401(k) Savings and Protection Profit
Sharing Plan
<PAGE>
C-1
EXHIBIT C
FORM OF OPINION OF BUCHANAN INGERSOLL
<PAGE>
D-1
EXHIBIT D
FORM OF OPINION OF REGULATORY COUNSEL
EXHIBIT 10.04
Hyperion Telecommunications, Inc.
$300,000,000
12% Senior Subordinated Notes due 2007
REGISTRATION RIGHTS AGREEMENT
New York, New York
March 2, 1999
Salomon Smith Barney Inc.
Chase Securities Inc.
First Union Capital Markets Corp.
As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
399 Greenwich Street
New York, New York 10013
Highland Holdings
Main at Water Street
Coudersport, Pennsylvania 16915
Dear Sirs:
Hyperion Telecommunications, Inc., a corporation organized
under the laws of Delaware (the "Company"), proposes to issue and sell (i) to
certain purchasers (the "Initial Purchasers"), upon the terms set forth in a
purchase agreement, dated as of February 23, 1999 (the "Purchase Agreement"),
$200,000,000 aggregate principal amount of its 12% Senior Subordinated Notes due
2007 (the "Securities") relating to the initial placement of the Securities (the
"Initial Placement") and (ii) to Highland Holdings ("Highland"), upon terms set
forth in a separate purchase agreement with the Company (the "Highland Purchase
Agreement"), $100,000,000 of the Company's Securities on the same date as the
Initial Placement. To induce the Initial Purchasers and Highland to enter into
the Purchase Agreement and the Highland Purchase Agreement, respectively and to
satisfy a condition of the Initial Purchasers' and Highland's respective
obligations thereunder, the Company agrees with each of the Initial Purchasers
and Highland for their benefit and the benefit of the holders from time to time
of the Securities (including the Initial Purchasers and Highland) (each a
"Holder" and, together, the "Holders"), as follows:
<PAGE>
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified Person shall mean any other
Person that, directly or indirectly, is in control of, is controlled by, or is
under common control with, such specified Person. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; and the terms "controlling" and "controlled"
shall have meanings correlative to the foregoing.
"Broker-Dealer" shall mean any broker or dealer registered as
such under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange
Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Exchange Offer Registration Period" shall mean the one-year
period following the consummation of the Registered Exchange Offer, exclusive of
any period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" shall mean a
registration statement of the Company on an appropriate form under the Act with
respect to the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" shall mean any Holder (which may include
any Initial Purchaser) that is a Broker-Dealer and elects to exchange for New
Securities any Securities that it acquired for its own account as a result of
market-making activities or other trading activities (but not directly from the
Company or any Affiliate of the Company) for New Securities.
"Final Memorandum" shall have the meaning set forth in the
Purchase Agreement.
"Highland" shall have the meaning set forth in the preamble
hereto.
<PAGE>
"Holder" shall have the meaning set forth in the preamble
hereto.
"Indenture" shall mean the Indenture relating to the
Securities, dated as of the date hereof, 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.
"Initial Placement" shall have the meaning set forth in the
preamble hereto.
"Initial Purchaser" shall have the meaning set forth in the
preamble hereto.
"Losses" shall have the meaning set forth in Section 6(d)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.
"Managing Underwriters" shall mean the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering.
"New Securities" shall mean debt securities of the Company
identical in all material respects to the Securities (except that the cash
interest and interest rate step-up provisions and the transfer restrictions
shall be modified or eliminated, as appropriate) and to be issued under the
Indenture.
"Prospectus" shall mean the prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities or the New Securities covered
by such Registration Statement, and all amendments and supplements thereto and
all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble hereto.
"Highland Purchase Agreement" shall have the meaning set forth
in the preamble hereto.
"Registered Exchange Offer" shall mean the proposed offer of
the Company to issue and deliver to the Holders of the Securities that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Securities, a like aggregate principal amount of the
New Securities.
"Registration Statement" shall mean any Exchange Offer
Registration Statement or Shelf Registration Statement that covers any of the
Securities or the New Securities pursuant to the provisions of this Agreement,
<PAGE>
any 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.
"Securities" shall have the meaning set forth in the preamble
hereto. Unless the context otherwise requires, the term "Securities" refers
collectively to the $200,000,000 in aggregate principal amount to be purchased
by the Initial Purchasers and the $100,000,000 in aggregate principal amount to
be purchased by Highland.
"Shelf Registration" shall mean a registration effected
pursuant to Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 3
hereof which covers some or all of the Securities or New Securities, as
applicable, on an appropriate form under Rule 415 under the Act, or any similar
rule that may be adopted by the Commission, 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" shall mean the trustee with respect to the
Securities under the Indenture.
"underwriter" shall mean any underwriter of Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer. (a) The Company shall prepare
and, not later than 90 days following the date of the original issuance of the
Securities (or if such 90th day is not a Business Day, the next succeeding
Business Day), shall file with the Commission the Exchange Offer Registration
Statement with respect to the Registered Exchange Offer. The Company shall use
its best efforts to cause the Exchange Offer Registration Statement to become
effective under the Act within 150 days of the date of the original issuance of
the Securities (or if such 150th day is not a Business Day, the next succeeding
Business Day).
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming that such Holder is
not an Affiliate of the Company, acquires the New Securities in the ordinary
course of such Holder's business, has no arrangements with any Person to
participate in the distribution of the New Securities and is not prohibited by
any law or policy of the Commission from participating in the Registered
Exchange Offer) to trade such New Securities from and after their receipt
without any limitations or restrictions under the Act and without material
restrictions under the securities laws of a substantial proportion of the
several states of the United States.
<PAGE>
(c) In connection with the Registered Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than
20 Business Days and not more than 30 Business Days after the date
notice thereof is mailed to the Holders (or, in each case, longer if
required by applicable law);
(iii) use its best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act,
supplemented and amended as required, under the Act to ensure that it
is available for sales of New Securities by Exchanging Dealers during
the Exchange Offer Registration Period;
(iv) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan in New York
City, which may be the Trustee, the New Securities Trustee or an
Affiliate of either of them;
(v) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last Business Day
on which the Registered Exchange Offer is open;
(vi) prior to effectiveness of the Exchange Offer Registration
Statement, provide a supplemental letter to the Commission (A) stating
that the Company is conducting the Registered Exchange Offer in
reliance on the position of the Commission in Exxon Capital Holdings
Corporation (pub. avail. May 13, 1988), Morgan Stanley and Co., Inc.
(pub. avail. June 5, 1991); and (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the New Securities to be received in the
Registered Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Registered
Exchange Offer is acquiring the New Securities in the ordinary course
of business and has no arrangement or understanding with any Person to
participate in the distribution of the New Securities; and
(vii) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
<PAGE>
(i) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation in accordance
with Section 4(s) all Securities so accepted for exchange; and
(iii) cause the New Securities Trustee promptly to
authenticate and deliver to each Holder of Securities a principal
amount of New Securities equal to the principal amount of the
Securities of such Holder so accepted for exchange.
(e) Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Registered Exchange Offer to
participate in a distribution of the New Securities (x) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission in Morgan Stanley and Co., Inc. (pub. avail. June 5,
1991) and Exxon Capital Holdings Corporation (pub. avail. May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993
and similar no-action letters; and (y) must comply with the registration and
prospectus delivery requirements of the Act in connection with any secondary
resale transaction, and such secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K under
the Act if the resales are of New Securities obtained by such Holder in exchange
for Securities acquired by such Holder directly from the Company or one of its
Affiliates. Accordingly, each Holder participating in the Registered Exchange
Offer shall be required to represent to the Company that, at the time of the
consummation of the Registered Exchange Offer:
(i) any New Securities received by such Holder will be
acquired in the ordinary course of business;
(ii) such Holder will have no arrangement or understanding
with any Person to participate in the distribution of the Securities or
the New Securities within the meaning of the Act; and
(iii) such Holder is not an Affiliate of the Company.
(f) If any Initial Purchaser or Highland determines that it is
not eligible to participate in the Registered Exchange Offer with respect to the
exchange of Securities constituting any portion of an unsold allotment, at the
request of such Initial Purchaser, the Company shall issue and deliver to such
Initial Purchaser or the Person purchasing New Securities registered under a
Shelf Registration Statement as contemplated by Section 3 hereof from such
Initial Purchaser, in exchange for such Securities, a like principal amount of
New Securities. The Company shall use its best efforts to cause the CUSIP
Service Bureau to issue the same CUSIP number for such New Securities as for New
Securities issued pursuant to the Registered Exchange Offer.
3. Shelf Registration. (a) If (i) due to any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered Exchange Offer as contemplated by Section 2 hereof; or (ii) for
<PAGE>
any other reason the Registered Exchange Offer is not consummated within 180
days of the date hereof; (iii) any Initial Purchaser or Highland so requests
with respect to Securities that are not eligible to be exchanged for New
Securities in the Registered Exchange Offer and that are held by it following
consummation of the Registered Exchange Offer; (iv) any Holder (other than an
Initial Purchaser) is not eligible to participate in the Registered Exchange
Offer; or (v) in the case of any Initial Purchaser that participates in the
Registered Exchange Offer or acquires New Securities pursuant to Section 2(f)
hereof, such Initial Purchaser does not receive freely tradeable New Securities
in exchange for Securities constituting any portion of an unsold allotment (it
being understood that (x) the requirement that an Initial Purchaser deliver a
Prospectus containing the information required by Item 507 or 508 of Regulation
S-K under the Act in connection with sales of New Securities acquired in
exchange for such Securities shall result in such New Securities being not
"freely tradeable" and (y) the requirement that an Exchanging Dealer deliver a
Prospectus in connection with sales of New Securities acquired in the Registered
Exchange Offer in exchange for Securities acquired as a result of market-making
activities or other trading activities shall not result in such New Securities
being not "freely tradeable"), the Company shall effect a Shelf Registration
Statement in accordance with subsection (b) below.
(b)(i) The Company shall as promptly as practicable (but in no
event more than 30 days after so required or requested pursuant to this
Section 3), file with the Commission and thereafter shall use its best
efforts to cause to be declared effective under the Act on or prior to
90 days after so required or requested pursuant to this Section 3 a
Shelf Registration Statement relating to the offer and sale of the
Securities or the New Securities, as applicable, by the Holders thereof
from time to time in accordance with the methods of distribution
elected by such Holders and set forth in such Shelf Registration
Statement; provided, however, that no Holder (other than an Initial
Purchaser or a Regis Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement
unless such Holder agrees in writing to be bound by all of the
provisions of this Agreement applicable to such Holder; and provided,
further, that with respect to New Securities received by an Initial
Purchaser in exchange for Securities constituting any portion of an
unsold allotment, the Company may, if permitted by current
interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Item 507 or 508 of Regulation S-K, as
applicable, in satisfaction of its obligations under this subsection
with respect thereto, and any such Exchange Offer Registration
Statement, as so amended, shall be referred to herein as, and governed
by the provisions herein applicable to, a Shelf Registration Statement.
(ii) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended
as required by the Act, in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the date
the Shelf Registration Statement is declared effective by the
Commission or such shorter period that will terminate when all the
Securities or New Securities, as applicable, covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the
"Shelf Registration Period"). The Company shall be deemed not to have
<PAGE>
used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not
being able to offer and sell such Securities during that period, unless
(A) such action is required by applicable law; or (B) such action is
taken by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including
the acquisition or divestiture of assets, so long as the Company
promptly thereafter complies with the requirements of Section 4(k)
hereof, if applicable.
(iii) The Company shall cause the Shelf Registration Statement
and the related Prospectus and any amendment or supplement thereto, as
of the effective date of the Shelf Registration Statement or such
amendment or supplement, (A) to comply in all material respects with
the applicable requirements of the Securities Act and the rules and
regulations of the Commission; and (B) not to contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
4. Additional Registration Procedures. In connection with
any Shelf Registration Statement and, to the extent applicable, any Exchange
Offer Registration Statement, the following provisions shall apply.
(a) The Company shall:
(i) furnish to you, not less than five Business Days prior to
the filing thereof with the Commission, a copy of any Exchange Offer
Registration Statement and any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein (including all documents incorporated by
reference therein after the initial filing) and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably propose;
(ii) include the information set forth in Annex A hereto on
the facing page of the Exchange Offer Registration Statement, in Annex
B hereto in the forepart of the Exchange Offer Registration Statement
in a section setting forth details of the Exchange Offer, in Annex C
hereto in the underwriting or plan of distribution section of the
Prospectus contained in the Exchange Offer Registration Statement, and
in Annex D hereto in the letter of transmittal delivered pursuant to
the Registered Exchange Offer;
(iii) if requested by an Initial Purchaser, include the
information required by Item 507 or 508 of Regulation S-K, as
applicable, in the Prospectus contained in the Exchange Offer
Registration Statement; and
<PAGE>
(iv) in the case of a Shelf Registration Statement, include
the names of the Holders that propose to sell Securities pursuant to
the Shelf Registration Statement as selling security holders.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment thereto and
any Prospectus forming part thereof and any amendment or supplement
thereto complies in all material respects with the Act and the rules
and regulations thereunder; and
(ii) any 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.
(c) The Company shall advise you, the Holders of Securities
covered by any Shelf Registration Statement and any Exchanging Dealer under any
Exchange Offer Registration Statement that has provided in writing to the
Company a telephone or facsimile number and address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, shall confirm such
advice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the Prospectus until the
Company shall have remedied the basis for such suspension):
(i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for any amendment
or supplement to the Registration Statement or the Prospectus or for
additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(v) of the occurrence or nonoccurrence of any event that
requires any change in the Registration Statement or the 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 (in the case of the
Prospectus, in the light of the circumstances under which they were
made) not misleading.
<PAGE>
(d) The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement or the qualification of the securities therein for sale in any
jurisdiction at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities
covered by any Shelf Registration Statement, without charge, at least one copy
of such Shelf Registration Statement and any post-effective amendment thereto,
including all material incorporated therein by reference, and, if the Holder so
requests in writing, all exhibits thereto (including exhibits incorporated by
reference therein).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and each
amendment or supplement thereto as such Holder may reasonably request. The
Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of securities in connection with the
offering and sale of the securities covered by the Prospectus, or any amendment
or supplement thereto, included in the Shelf Registration Statement.
(g) The Company shall furnish to each Exchanging Dealer which
so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including all
material incorporated by reference therein, and, if the Exchanging Dealer so
requests in writing, all exhibits thereto (including exhibits incorporated by
reference therein).
(h) The Company shall promptly deliver to each Initial
Purchaser, each Exchanging Dealer and each other Person required to deliver a
Prospectus during the Exchange Offer Registration Period, without charge, as
many copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as any such Person may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by any Initial Purchaser, any Exchanging Dealer
and any such other Person that may be required to deliver a Prospectus following
the Registered Exchange Offer in connection with the offering and sale of the
New Securities covered by the Prospectus, or any amendment or supplement
thereto, included in the Exchange Offer Registration Statement.
(i) Prior to the Registered Exchange Offer or any other
offering of Securities pursuant to any Registration Statement, the Company shall
arrange, if necessary, for the qualification of the Securities or the New
Securities for sale under the laws of such jurisdictions as any Holder shall
reasonably request and will maintain such qualification in effect so long as
required; provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not then so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the Initial Placement, the Registered Exchange Offer or any
offering pursuant to a Shelf Registration Statement, in any such jurisdiction
where it is not then so subject.
<PAGE>
(j) The Company shall cooperate with the Holders of Securities
to facilitate the timely preparation and delivery of certificates representing
New Securities or Securities to be issued or sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request.
(k) Upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Company shall promptly prepare a
post-effective amendment to the applicable Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to Initial Purchasers of the
securities included therein, the Prospectus will not include an 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. In such circumstances, the period of effectiveness of the
Exchange Offer Registration Statement provided for in Section 2 and the Shelf
Registration Statement provided for in Section 3(b) shall each be extended by
the number of days from and including the date of the giving of a notice of
suspension pursuant to Section 4(c) to and including the date when the Initial
Purchasers, the Holders of the Securities and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section.
(l) Not later than the effective date of any Registration
Statement, the Company shall provide a CUSIP number for the Securities or the
New Securities, as the case may be, registered under such Registration Statement
and provide the Trustee with printed certificates for such Securities or New
Securities, in a form eligible for deposit with The Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earnings statement satisfying the provisions of
Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the New
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act in a timely manner.
(o) The Company may require each Holder of securities to be
sold pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement. The Company may exclude from such Shelf Registration
Statement the Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.
(p) In the case of any Shelf Registration Statement, the
Company shall enter into such agreements and take all other appropriate actions
(including if requested an underwriting agreement in customary form) in order to
expedite or facilitate the registration or the disposition of the Securities,
<PAGE>
and in connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification provisions and procedures no less favorable
than those set forth in Section 6 (or such other provisions and procedures
acceptable to the Majority Holders and the Managing Underwriters, if any, with
respect to all parties to be indemnified pursuant to Section 6).
(q) In the case of any Shelf Registration Statement, the
Company shall:
(i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating
in any disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by the Holders or any such
underwriter, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by the Holders or
any such underwriter, attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by
the Holders or any such underwriter, attorney, accountant or agent,
unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality;
(iii) make such representations and warranties to the Holders
of Securities registered thereunder and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase
Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the Managing Underwriters, if any)
addressed to each selling Holder and the underwriters, if any, covering
such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
<PAGE>
primary underwritten offerings; and
(vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any, including those to evidence compliance with
Section 4(k) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(q)
shall be performed at (A) the effectiveness of such Registration Statement and
each post-effective amendment thereto; and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(r) In the case of any Exchange Offer Registration Statement,
the Company shall:
(i) make reasonably available for inspection by such Initial
Purchaser, and any attorney, accountant or other agent retained by such
Initial Purchaser, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by such Initial
Purchaser or any such attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by
such Initial Purchaser or any such attorney, accountant or agent,
unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality;
(iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to such Initial Purchaser and its
counsel, addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Initial
Purchaser or its counsel;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to such
Initial Purchaser, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
primary underwritten offerings, or if requested by such Initial
Purchaser or its counsel in lieu of a "cold comfort" letter, an
agreed-upon procedures letter under Statement on Auditing Standards No.
35, covering matters requested by such Initial Purchaser or its
counsel; and
(vi) deliver such documents and certificates as may be
reasonably requested by such Initial Purchaser or its counsel,
including those to evidence compliance with Section 4(k) and with
conditions customarily contained in underwriting agreements.
The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this
Section 4(r) shall be performed at the close of the Registered Exchange Offer
and the effective date of any post-effective amendment to the Exchange Offer
Registration Statement.
(s) If a Registered Exchange Offer is to be consummated, upon
delivery of the Securities by Holders to the Company (or to such other Person as
directed by the Company) in exchange for the New Securities, the Company shall
mark, or caused to be marked, on the Securities so exchanged that such
Securities are being canceled in exchange for the New Securities. In no event
shall the Securities be marked as paid or otherwise satisfied.
(t) The Company will use its best efforts (i) if the
Securities have been rated prior to the initial sale of such Securities, to
confirm such ratings will apply to the Securities or the New Securities, as the
case may be, covered by a Registration Statement; or (ii) if the Securities were
not previously rated, to cause the Securities covered by a Registration
Statement to be rated with at least one nationally recognized statistical rating
agency, if so requested by Majority Holders with respect to the related
Registration Statement or by any Managing Underwriters.
(u) In the event that any Broker-Dealer shall underwrite any
Securities or participate as a member of an underwriting syndicate or selling
group or "assist in the distribution" (within the meaning of the Rules of Fair
Practice and the By-Laws of the National Association of Securities Dealers,
Inc.) thereof, whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or otherwise,
assist such Broker-Dealer in complying with the requirements of such Rules and
By-Laws, including, without limitation, by:
(i) if such Rules or By-Laws shall so require, engaging a
"qualified independent underwriter" (as defined in such Rules) to
participate in the preparation of the Registration Statement, to
exercise usual standards of due diligence with respect thereto and, if
any portion of the offering contemplated by such Registration Statement
is an underwritten offering or is made through a placement or sales
agent, to recommend the yield of such Securities;
<PAGE>
(ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters
provided in Section 6 hereof; and
(iii) providing such information to such Broker-Dealer as may
be required in order for such Broker-Dealer to comply with the
requirements of such Rules.
(v) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities or the New
Securities, as the case may be, covered by a Registration Statement.
5. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of counsel acting in connection therewith.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder of Securities or New Securities, as the
case may be, covered by any Registration Statement (including each Initial
Purchaser and Regis Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each Person who controls
any such Holder within the meaning of either the 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 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 Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or the Prospectus, 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 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 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 therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any such
Holder specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute as provided
in Section 6(d) to Losses of each any underwriter of Securities or New
Securities, as the case may be, registered under a Shelf Registration Statement,
their directors, officers, employees or agents and each Person who controls such
underwriter on substantially the same basis as that of the indemnification of
the Initial Purchasers, Highland and the selling Holders provided in this
Section 6(a) and shall, if requested by any Holder, enter into an underwriting
agreement reflecting such agreement, as provided in Section 4(p) hereof.
<PAGE>
(b) Each Holder of securities covered by a Registration
Statement (including each Initial Purchaser and Regis Purchaser and, with
respect to any Prospectus delivery as contemplated in Section 4(h) hereof, each
Exchanging Dealer) severally agrees to indemnify and hold harmless the Company
each of its directors each of its officers who signs such Registration Statement
and each Person who controls the Company within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity from the Company
to each such Holder, but only with reference to written information relating to
such Holder furnished to the Company by or on behalf of such Holder specifically
for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 or 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, 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 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.
<PAGE>
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party shall
have a joint and several obligation 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 such indemnified party may be subject in such proportion as
is appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from the
Initial Placement and the Registration Statement which resulted in such Losses;
provided, however, that in no case shall any Initial Purchaser, Regis Purchaser
or any subsequent Holder of any Security or New Security be responsible, in the
aggregate, for any amount in excess of the purchase discount or commission
applicable to such Security, or in the case of a New Security, applicable to the
Security that was exchangeable into such New Security, as set forth on the cover
page of the Final Memorandum, nor shall any underwriter be responsible for any
amount in excess of the underwriting discount or commission applicable to the
securities purchased by such underwriter under the Registration Statement which
resulted in such Losses. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the indemnifying pa7rty and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, 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 the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set forth on
the cover page of the Final Memorandum and (y) the total amount of additional
interest which the Company was not required to pay as a result of registering
the securities covered by the Registration Statement which resulted in such
Losses. Benefits received by the Initial Purchasers shall be deemed to be equal
to the total purchase discounts and commissions as set forth in the Purchase
Agreement, benefits received by Highland shall be deemed to equal the
consideration paid for the Securities it purchased on the date of the Initial
Placement as set forth in the Highland Purchase Agreement, and benefits received
by any other Holders shall be deemed to be equal to the value of receiving
Securities or New Securities, as applicable, registered under the Act. Benefits
received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to, among other things,
whether any alleged untrue statement or omission relates to information provided
by the indemnifying party, on the one hand, or by the indemnified party, on the
other hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) 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 Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each Person who
<PAGE>
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each Person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each 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).
(e) The provisions of this Section will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling Persons referred
to in this Section hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. Underwritten Registrations. (a) If any of the Securities
or New Securities, as the case may be, covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the Managing Underwriters
shall be selected by the Majority Holders.
(b) No Person may participate in any underwritten offering
pursuant to any Shelf Registration Statement, unless such Person (i) agrees to
sell such Person's Securities or New Securities, as the case may be, on the
basis reasonably provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements; and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
8. No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
9. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
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 the Majority Holders (or, after the consummation of any Registered
Exchange Offer in accordance with Section 2 hereof, of New Securities); provided
that, with respect to any matter that directly or indirectly affects the rights
of any Initial Purchaser hereunder, the Company shall obtain the written consent
of each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities or New Securities, as the case may be, are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of Securities or New Securities, as the case
may be, being sold rather than registered under such Registration Statement.
<PAGE>
10. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery:
(a) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this Section, which
address initially is, with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture, with a copy in like manner to
Salomon Smith Barney Inc.;
(b) if to you, initially at the respective addresses set
forth in the Purchase Agreement; and
(c) if to the Company, initially at its address set forth in
the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
The Initial Purchasers, Highland or the Company by notice to
the other parties may designate additional or different addresses for subsequent
notices or communications.
11. Successors. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Securities and the New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and the New Securities, and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
12. Counterparts. This agreement may be in signed
counterparts, each of which shall an original and all of which together shall
constitute one and the same agreement.
13. Headings. The headings used herein are for convenience
only and shall not affect the construction hereof.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York.
15. Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
<PAGE>
16. Securities Held by the Company, etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other than
subsequent Holders of Securities or New Securities if such subsequent Holders
are deemed to be Affiliates solely by reason of their holdings of such
Securities or New Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a building agreement
among the Company, the several Initial Purchasers and Highland.
Very truly yours,
HYPERION TELECOMMUNICATIONS, INC.
By: /s/ Daniel R. Milliard
Name: Daniel R. Milliard
Title: President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
FIRST UNION CAPITAL MARKETS CORP.
By: SALOMON SMITH BARNEY INC.
By: /s/ Michael Anderson
Name: Michael Anderson
Title: Managing Director
<PAGE>
HIGHLAND HOLDINGS
By: /s/ Timothy J. Rigas
its general partner
<PAGE>
ANNEX A
Each Broker-Dealer that receives New 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 New 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 New
Securities received in exchange for Securities where such 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 close of business one year after the
Expiration Date, it will make this Prospectus available to any Broker-Dealer for
use in connection with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each Broker-Dealer that receives New Securities for its own account in exchange
for Securities, where such 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 New
Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each Broker-Dealer that receives New 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 New 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 New Securities received in
exchange for Securities where such 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 close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Broker-Dealer for use in connection with any such
resale. In addition, until __________, 2000, all dealers effecting transactions
in the New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by brokers-dealers. New 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 New 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 New
Securities. Any Broker-Dealer that resales New 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 New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities 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.
For a period of one year after the Expiration Date, 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 (including the expenses of one counsel
for the holder of the Securities) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the 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.]
<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
acquired the New Securities in the ordinary course of its business, it is not
engaged in, and does not intend to engage in, a distribution of New Securities
and it has no arrangements or understandings with any Person to participate in a
distribution of the New Securities. If the undersigned is a Broker-Dealer that
will receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchange for New Securities 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 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.
EXHIBIT 10.05
HIGHLAND HOLDINGS
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
February 25, 1999
Hyperion Telecommunications, Inc.
Main at Water Street
Coudersport, Pennsylvania 16915
Re: Purchase of 12% Senior Subordinated Notes due 2007 (the "Notes")
----------------------------------------------------------------
Gentlemen:
The undersigned hereby agrees to purchase directly from you, and you
agree to sell to the undersigned, upon the terms and subject to the conditions
set forth herein, an aggregate of $100,000,000 of the $300,000,000 of Notes
being offered by Hyperion Telecommunications, Inc., a Delaware corporation (the
"Company"), at a purchase price of $98,400,000 (the "Highland Notes"). Each
capitalized term used herein without being defined herein shall have the meaning
ascribed to it in the Purchase Agreement, of even date herewith, among the
Company, Salomon Smith Barney Inc., Chase Securities Inc. and First Union
Capital Markets Corp., with respect to the offering and sale of $200 million of
the Notes (the "Purchase Agreement").
The parties hereto agree that the undersigned is entitled to rely on
the representations and warranties made by the Company in the Purchase
Agreement; provided, however, that the undersigned represents and warrants to
the Company that such representations and warranties are true and correct to the
best of its knowledge.
The purchase and sale of the Highland Notes as contemplated hereby
shall take place on the Closing Date concurrently with the closing on the Notes
with the Initial Purchasers. No commissions or discounts shall be paid to any
placement agent for such purchase or sale of the Highland Notes. The Highland
Notes shall be purchased and shall be held for investment.
The obligations of the parties hereto are conditioned upon the
concurrent closing on the purchase and sale of the Notes as contemplated by the
Purchase Agreement. This Agreement shall be terminated without liability on the
part of any party hereto in the event that the Purchase Agreement is terminated.
<PAGE>
This Agreement shall be effective upon execution and delivery, by the
parties thereto, of the Purchase Agreement.
This Agreement may be executed in one or more counterparts each of
which, taken together, shall constitute one and the same agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York without giving effect to the
principles of conflicts of law thereof.
Very truly yours,
HIGHLAND HOLDINGS
By: /s/ Timothy J. Rigas
Name: Timothy J. Rigas
Title: General Partner
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of
the date first written above.
HYPERION TELECOMMUNICATIONS, INC.
By: /s/ Daniel R. Milliard
Name: Daniel R. Milliard
Title: President
