UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended September 30, 1999
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from ______________ to _____________
Commission File Number: 0-16014
ADELPHIA COMMUNICATIONS
CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2417713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One North Main Street
Coudersport, PA 16915-1141
(Address of principal executive offices) (Zip code)
814-274-9830
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
At November 12, 1999, 113,021,937 shares of Class A common stock, par value $.01
per share, and 10,834,476 shares of Class B common stock, par value $.01 per
share, of the registrant were outstanding.
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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C>
Condensed Consolidated Balance Sheets - December 31, 1998 and
September 30, 1999............................................................................. 3
Condensed Consolidated Statements of Operations - Three and Nine Months Ended
September 30, 1998 and 1999.................................................................... 4
Condensed Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1998 and 1999.................................................................... 5
Notes to Condensed Consolidated Financial Statements............................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................................ 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................... 26
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................................................. 28
Item 2. Changes in Securities and Use of Proceeds..................................................... 28
Item 3. Defaults Upon Senior Securities.............................................................. 28
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 29
Item 5. Other Information............................................................................ 30
Item 6. Exhibits and Reports on Form 8-K.............................................................. 31
SIGNATURES............................................................................................. 32
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except share amounts)
December 31, September 30,
1998 1999
------------ -----------
ASSETS:
<S> <C> <C>
Property, plant and equipment - net $ 1,207,655 $ 1,721,975
Intangible assets - net 1,029,159 1,153,708
Cash and cash equivalents 398,644 893,191
U.S. government securities - pledged 58,054 29,451
Investments 196,893 143,644
Subscriber receivables - net 53,911 97,254
Prepaid expenses and other assets - net 114,625 264,067
Investment in and amounts due from Olympus 191,408 541,461
Related party receivables - net 44,108 96,611
----------- -----------
Total $ 3,294,457 $ 4,941,362
=========== ===========
LIABILITIES, PREFERRED STOCK, COMMON STOCK AND
OTHER STOCKHOLDERS' EQUITY (DEFICIENCY):
Subsidiary debt $ 1,717,240 $ 1,561,838
Parent debt 1,810,212 2,406,342
Accounts payable 96,985 96,240
Subscriber advance payments and deposits 19,377 20,133
Accrued interest and other liabilities 137,131 136,925
Deferred income taxes 109,609 102,946
----------- -----------
Total liabilities 3,890,554 4,324,424
----------- -----------
Minority interests 48,784 4,133
----------- -----------
Adelphia Business Solutions Redeemable Exchangeable Preferred Stock 228,674 252,261
----------- -----------
13% Series B Cumulative Redeemable Exchangeable Preferred Stock 148,191 148,320
----------- -----------
Commitments and contingencies (Note 8)
Convertible preferred stock, common stock and other stockholders' equity
(deficiency):
8 1/8% Series C convertible preferred stock ($100,000 liquidation preference) 1 1
5 1/2% Series D convertible preferred stock ($575,000 liquidation preference) -- 29
Class A common stock, $.01 par value, 200,000,000 shares authorized,
31,258,843 and 51,416,867 shares issued, respectively 313 514
Class B common stock, $.01 par value, 25,000,000 shares authorized,
10,834,476 shares issued and outstanding 108 108
Additional paid-in capital 738,102 2,302,444
Accumulated deficit (1,760,270) (1,883,560)
Class A common stock held in escrow -- (58,099)
Treasury stock, at cost, 0 and 1,091,524 shares of Class A common stock and
0 and 20,000 shares of 8 1/8% Series C convertible preferred stock, respectively -- (149,213)
----------- -----------
Convertible preferred stock, common stock and
other stockholders' equity (deficiency) (1,021,746) 212,224
=========== ===========
Total $ 3,294,457 $ 4,941,362
=========== ===========
See notes to condensed consolidated financial statements.
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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------
1998 1999 1998 1999
-----------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 169,387 $ 240,320 $ 452,680 $ 672,814
Operating expenses:
Direct operating and programming 56,595 79,623 150,697 219,553
Selling, general and administrative 33,043 75,303 87,800 186,030
Depreciation and amortization 46,083 65,639 125,113 186,190
--------- --------- --------- ---------
Total 135,721 220,565 363,610 591,773
--------- --------- --------- ---------
Operating income 33,666 19,755 89,070 81,041
--------- --------- --------- ---------
Other income (expense):
Priority investment income from Olympus 12,000 12,000 36,000 36,000
Other income 113 -- 1,113 --
Interest expense - net (63,317) (59,976) (185,828) (191,759)
Equity in loss of Olympus and other joint ventures (14,803) (22,305) (49,158) (60,240)
Equity in loss of Adelphia Business Solutions joint ventures (2,614) (246) (9,487) (7,340)
Minority interest in net losses of subsidiaries 8,543 12,755 14,003 38,815
Adelphia Business Solutions preferred stock dividends (7,166) (8,108) (20,806) (23,587)
Gain on sale of investment -- -- 1,520 2,354
--------- --------- --------- ---------
Total (67,244) (65,880) (212,643) (205,757)
--------- --------- --------- ---------
Loss before income taxes and extraordinary loss (33,578) (46,125) (123,573) (124,716)
Income tax (expense) benefit (852) 3,580 10,927 7,626
--------- --------- --------- ---------
Loss before extraordinary loss (34,430) (42,545) (112,646) (117,090)
Extraordinary loss on early retirement of debt (1,733) -- (4,337) (10,027)
--------- --------- --------- ---------
Net loss (36,163) (42,545) (116,983) (127,117)
Dividend requirements applicable to preferred stock (6,906) (14,332) (20,664) (27,332)
--------- --------- --------- ---------
Net loss applicable to common stockholders $ (43,069) $ (56,877) $(137,647) $(154,449)
========= ========= ========= =========
Basic and diluted net loss per weighted average share of
common stock before extraordinary loss $ (1.16) $ (0.95) $ (4.12) $ (2.56)
Basic and diluted extraordinary loss on early retirement of
debt per
debt per weighted average share of common stock (0.05) -- (0.13) (0.18)
--------- --------- --------- ---------
Basic and diluted net loss per weighted average share
of common stock $ (1.21) $ (0.95) $ (4.25) $ (2.74)
========= ========= ========= =========
Weighted average shares of common stock
outstanding (in thousands) 35,533 60,163 32,418 56,329
========= ========= ========= =========
See notes to condensed consolidated financial statements.
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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Nine Months Ended September 30,
-----------------------------
1998 1999
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (116,983) $ (127,117)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 125,113 186,190
Noncash interest expense 23,252 24,898
Noncash dividends 20,806 23,587
Equity in loss of Olympus and other joint ventures 49,158 60,240
Equity in loss of Adelphia Business Solutions joint ventures 9,487 7,340
Gain on sale of investments (1,520) (2,354)
Minority interest in losses of subsidiaries (14,003) (38,815)
Extraordinary loss on early retirement of debt 4,337 10,027
Decrease in deferred income taxes, net of effect of acquisitions (11,003) (6,895)
Changes in operating assets and liabilities, net of effect of
acquisitions:
Subscriber receivables (11,902) (38,365)
Prepaid expenses and other assets (22,617) (74,758)
Accounts payable 32,525 (2,814)
Subscriber advance payments and deposits 1,062 756
Accrued interest and other liabilities (16,503) 5,279
----------- -----------
Net cash provided by operating activities 71,209 27,199
----------- -----------
Cash flows used for investing activities:
Acquisitions (462,180) (189,788)
Expenditures for property, plant and equipment (244,878) (404,009)
Investments in Adelphia Business Solutions joint ventures (31,657) (27,421)
Investments in other joint ventures (17,992) (14,602)
Purchase of minority interest (15,580) --
Sale of U.S. government securities - pledged 30,965 30,626
Amounts invested in and advanced to
Olympus and related parties (101,616) (459,816)
Other 3,065 (22,100)
----------- -----------
Net cash used for investing activities (839,873) (1,087,110)
----------- -----------
Cash flows provided by financing activities:
Proceeds from debt 495,494 1,224,625
Repayments of debt (362,990) (874,966)
Costs associated with financings (4,002) (20,416)
Premium paid on early retirement of debt (3,634) (7,413)
Net proceeds from issuance of convertible preferred stock -- 557,649
Net proceeds from issuance of Class A common stock 267,767 856,559
Net proceeds from issuance of Adelphia Business Solutions
Class A common stock 191,682 --
Payments to acquire treasury stock -- (149,213)
Preferred stock dividends paid (26,026) (32,367)
----------- -----------
Net cash provided by financing activities 558,291 1,554,458
----------- -----------
Increase in cash and cash equivalents (210,373) 494,547
Cash and cash equivalents, beginning of period 381,403 398,644
----------- -----------
Cash and cash equivalents, end of period $ 171,030 $ 893,191
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands, except per share amounts)
The accompanying unaudited condensed consolidated financial statements
of Adelphia Communications Corporation and its majority owned subsidiaries
("Adelphia" or the "Company") have been prepared in accordance with the rules
and regulations of the Securities and Exchange Commission.
In the opinion of management, all adjustments, consisting of only
normal recurring accruals necessary for a fair presentation of the financial
position of Adelphia at September 30, 1999, and the results of operations for
the three and nine months ended September 30, 1998 and 1999, have been included.
On March 30, 1999, Adelphia elected to change its fiscal year from a year ending
on March 31 to a year ending on December 31. The decision was made to conform to
general industry practice and for certain administrative purposes. The change
was effective for the nine months ended December 31, 1998. The Company filed its
Transition Report on Form 10-K for the nine months ended December 31, 1998 on
May 25, 1999. These condensed consolidated financial statements should be read
in conjunction with Adelphia's consolidated financial statements included in its
Annual Report on Form 10-K for the year ended March 31, 1998 and its Transition
Report on Form 10-K for the nine months ended December 31, 1998. The results of
operations for the three and nine months ended September 30, 1999 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999.
On October 25, 1999, the shareholders of Hyperion Telecommunications,
Inc. ("Hyperion"), a majority owned subsidiary of Adelphia, elected to change
the name of Hyperion to Adelphia Business Solutions, Inc. ("Adelphia Business
Solutions" or "ABIZ"). The name change was effective October 25, 1999.
1. Significant Events Subsequent to December 31, 1998:
On January 13, 1999, Adelphia completed offerings of $100,000 of 7 1/2%
Senior Notes due 2004 and $300,000 of 7 3/4% Senior Notes due 2009. Net proceeds
from these offerings, after deducting offering expenses, were approximately
$393,700. Of this amount, Adelphia used approximately $160,000 to pay accrued
interest and retire a portion of its 9 1/2% Senior Pay-In-Kind Notes due 2004.
Adelphia used the remainder to repay borrowings under revolving credit
facilities of its subsidiaries which may be reborrowed and used for general
corporate purposes. The terms of these notes are similar to those of Adelphia's
other publicly held senior debt.
On January 14, 1999, Adelphia completed offerings totaling 8,600,000
shares of its Class A common stock. In those offerings, Adelphia sold 4,600,000
newly issued shares of Class A common stock to Goldman, Sachs & Co. at $43.25
per share and it also sold 4,000,000 shares of its Class A common stock at
$43.25 per share to entities controlled by the Rigas family. Adelphia used the
proceeds of approximately $372,000 from these offerings to repay subsidiary bank
debt, which may be reborrowed and used for general corporate purposes.
On January 21, 1999, Adelphia acquired Verto Communications, Inc.
("Verto") pursuant to a merger agreement between Adelphia, Verto and Verto's
shareholders. These systems served approximately 56,000 subscribers in the
greater Scranton, PA area at the date of acquisition. In connection with the
Verto acquisition, Adelphia issued 2,561,024 shares of its Class A common stock
to the former owners of Verto and assumed approximately $35,000 of net
liabilities of Verto. The acquisition was accounted for under the purchase
method of accounting. Accordingly, the financial results of the acquired systems
are included in the consolidated results of Adelphia effective from the date
acquired.
<PAGE>
On January 29, 1999, Adelphia purchased from Telesat shares of
Adelphia's stock, owned by Telesat, for a price of $149,213. In the transaction,
Adelphia purchased 1,091,524 shares of Class A common stock and 20,000 shares of
Series C Cumulative convertible preferred stock which are convertible into an
additional 2,358,490 shares of Class A common stock. These shares represent
3,450,014 shares of common stock on a fully converted basis.
On March 2, 1999, Adelphia Business Solutions issued $300,000 of 12%
Senior Subordinated Notes due 2007 (the "Subordinated Notes"). An entity
controlled by members of the Rigas family purchased $100,000 of the Subordinated
Notes directly from Adelphia Business Solutions at a price equal to the
aggregate principal amount less the discount to the initial purchasers. The net
proceeds of approximately $295,000 were or will be used to fund Adelphia
Business Solutions' acquisition of interests held by local partners in certain
of its markets and will be used to fund capital expenditures and investments in
its networks and for general corporate and working capital purposes.
On March 31, 1999, Adelphia Business Solutions consummated purchase
agreements with subsidiaries of MediaOne of Colorado, Inc. ("MediaOne"), its
local partner in the Jacksonville, FL and Richmond, VA networks, whereby
MediaOne received approximately $81,520 in cash for MediaOne's ownership
interests in these networks. In addition, Adelphia Business Solutions will be
responsible for the payment of fiber lease liabilities due to MediaOne in the
amount of approximately $14,500 over the next ten years. As a result of the
transactions, Adelphia Business Solutions' ownership interest in each of these
networks increased to 100%.
On April 9, 1999, Adelphia entered into a stock purchase agreement with
Highland Holdings, a general partnership controlled by members of the family of
John J. Rigas, pursuant to which Adelphia agreed to sell to Highland Holdings
and Highland Holdings agreed to purchase, $375,000 of Adelphia's Class B common
stock. The purchase price for the Class B common stock will be $60.76 per share,
which is equal to the public offering price less the underwriting discount in
the April 28, 1999 public offering of Class A common stock described below, plus
an interest factor. Closing under this stock purchase agreement is to occur by
January 23, 2000 as determined by Highland Holdings at its discretion.
On April 28, 1999, Adelphia completed an offering of $350,000 of 7 7/8%
Senior Notes due 2009. Net proceeds from this offering, after deducting offering
expenses, were approximately $345,000. Adelphia used the proceeds to repay
borrowings under subsidiary credit agreements, a portion of which was
reborrowed to fund acquisitions which closed on October 1, 1999. The terms of
these notes are similar to those of Adelphia's existing publicly held senior
debt.
On April 28, 1999, Adelphia sold 8,000,000 shares of its Class A common
stock. Net proceeds of the offering, after deducting offering expenses, were
approximately $485,500. Adelphia used the net proceeds to repay borrowings under
subsidiary credit agreements, a portion of which the Company reborrowed to fund
the acquisitions which closed on October 1, 1999.
On April 30, 1999, and, in a related transaction on May 14, 1999,
Adelphia sold an aggregate 2,875,000 shares of 5 1/2% Series D convertible
preferred stock with a liquidation preference of $200 per share. The preferred
stock accrues dividends at $11 per share annually and is convertible at $81.45
per share into an aggregate of 7,059,546 shares of Class A common stock of
Adelphia. The preferred stock is redeemable at the option of Adelphia on or
after May 1, 2002 at 103% of the liquidation preference. Net proceeds from the
convertible preferred stock offering were approximately $557,000 after deducting
underwriter discounts and commissions and offering expenses. Adelphia used the
net proceeds to repay borrowings under subsidiary credit agreements, a portion
of which the Company reborrowed to fund the acquisitions which closed on
October 1, 1999.
<PAGE>
On May 6, 1999, certain subsidiaries and affiliates of Adelphia and
Olympus closed on an $850,000 credit facility. The credit facility consists of a
$600,000, 8 1/2 year reducing revolving credit loan and a $250,000, 9 year term
loan. Proceeds from initial borrowings were held as cash and used to repay
existing indebtedness, which may be reborrowed and used for capital
expenditures, investments, and other general corporate purposes.
On May 26, 1999, the Company announced that it had agreed to swap
certain cable systems with Comcast Corporation ("Comcast") and Jones Intercable,
Inc. ("Jones") in a geographic rationalization of the companies' respective
markets. Adelphia will add approximately 440,000 subscribers in the Los Angeles,
CA area and the West Palm/Fort Pierce, FL area. In exchange, Comcast and Jones
will receive systems currently owned or managed serving approximately 464,000
subscribers in suburban Philadelphia, PA, Ocean County, NJ, Ft. Myers, FL,
Michigan, New Mexico and Indiana. All systems involved in the transactions will
be valued by agreement between the parties or, following a failure to reach
agreement, by independent appraisals, with any difference in relative value to
be funded with cash or additional cable systems. The system swaps are subject to
customary closing conditions and regulatory approvals and are expected to close
by mid-2000.
On September 21, 1999, Adelphia Business Solutions announced its
decision to extend its fiber optic network into the Western half of the United
States. Management believes this expansion will enable Adelphia Business
Solutions to offer its services in approximately 200 markets throughout the
country.
On October 1, 1999, Adelphia entered into a stock purchase agreement
with Highland Holdings in which Adelphia agreed to sell to Highland Holdings and
Highland Holdings agreed to purchase $137,500 of Adelphia's Class B common
stock. The purchase price for the Class B common stock will be $55.00 per share,
which is equal to the public offering price less the underwriting discount in
the October 6, 1999 public offering of Class A common stock described below,
plus an interest factor. Closing under this stock purchase agreement is to occur
by July 2, 2000 as determined by Highland Holdings at its discretion.
On October 1, 1999, Adelphia completed its previously announced
redemption of the interests in Olympus held by Telesat Cablevision, Inc., a
subsidiary of FPL Group, Inc. The redemption was made in exchange for non cash
assets of Olympus valued at approximately $108,000 pursuant to the previously
announced redemption agreement between the parties.
On October 1, 1999, Adelphia acquired Century Communications Corp.,
through a merger whereby Century was merged with and into a wholly owned
subsidiary of Adelphia, Arahova Communications, Inc., pursuant to an agreement
and plan of merger, dated as of March 5, 1999, and as amended on July 12, 1999
and as further amended on July 29, 1999. In connection with the closing of the
Century acquisition, Adelphia issued approximately 47,800,000 new shares of
Adelphia Class A common stock and paid approximately $811,900 to the
stockholders of Century, and assumed approximately $1,700,000 of debt. This
transaction was approved by Century and Adelphia stockholders at their
respective stockholders' meetings on October 1, 1999. As of August 31, 1999,
Century had approximately 1,610,000 basic subscribers after giving effect to
Century's pending joint venture with AT&T. At the effective time of the merger,
Adelphia also purchased Citizens Cable Company's 50% interest in the
Citizens/Century Cable Television Joint Venture, one of Century's 50% owned
joint ventures, for a purchase price of approximately $157,500, comprised of
approximately $27,700 in cash, approximately 1,850,000 shares of
Adelphia Class A common stock and the assumption of indebtedness. This joint
venture serves approximately 92,300 basic subscribers in California and was
<PAGE>
jointly owned by Century and Citizens Cable Company, a subsidiary of Citizens
Utilities Company. The acquisition was accounted for under the purchase method
of accounting. Accordingly, the financial results of the acquired systems will
be included in the consolidated results of Adelphia effective from the date
acquired.
On October 1, 1999, Adelphia acquired FrontierVision Partners, L.P.
("FrontierVision"). As of June 30, 1999, FrontierVision served approximately
710,000 basic subscribers primarily in Ohio, Kentucky, New England and Virginia.
In connection with the acquisition, Adelphia issued 7,000,000 shares of its
Class A common stock, assumed debt of approximately $1,100,000 and paid cash of
approximately $543,300. The acquisition was accounted for under the purchase
method of accounting. Accordingly, the financial results of the acquired systems
will be included in the consolidated results of Adelphia effective from the date
acquired.
On October 1, 1999, Adelphia acquired Harron Communications Corp.
("Harron"). As of June 30, 1999, Harron served approximately 299,000 basic
subscribers primarily in Southeastern Pennsylvania, Michigan, Massachusetts and
New Hampshire. In connection with the acquisition, Adelphia paid approximately
$852,700 in cash and assumed debt of approximately $303,000. The acquisition was
accounted for under the purchase method of accounting. Accordingly, the
financial results of the acquired systems will be included in the consolidated
results of Adelphia effective from the date acquired.
On October 6, 1999, Adelphia sold 6,000,000 shares of its Class A
common stock. Net proceeds of the offering, after deducting offering expenses,
were approximately $330,000. Adelphia initially invested the net proceeds in
cash equivalents and advanced or contributed a portion of the remaining net
proceeds to certain subsidiaries to repay borrowings under subsidiary credit
agreements.
On October 13, 1999, Adelphia Business Solutions registered with the
Securities and Exchange Commission to sell up to $1,500,000 in debt securities,
preferred and common stock, depository shares and other equity securities. This
filing became effective on October 22, 1999. Proceeds are planned to be used for
general corporate purposes, including capital spending, acquisitions, debt
repayment, investments and other purposes and to facilitate the national
expansion.
In addition to the acquisitions mentioned above on or prior to October
29, 1999, Adelphia completed several acquisitions. These acquisitions served
approximately 102,000 basic subscribers at the date of acquisition primarily in
Ohio, Virginia, Kentucky, Pennsylvania and West Virginia and were purchased for
an aggregate price of approximately $484,500. These acquisitions were accounted
for under the purchase method of accounting. Accordingly, the financial results
of the acquired system will be included in the consolidated results of Adelphia
effective from the date acquired.
On November 10, 1999, Adelphia announced that it had sold $500,000 of 9
3/8% Senior Notes due 2009. Net proceeds from this offering, after deducting
offering expenses, will be approximately $495,500. Adelphia plans to use a
portion of the net proceeds to redeem the entire $125,000 of its 11 7/8% Senior
Debentures due 2004 at 104.5% of principal amount plus accrued interest and to
use the remainder to repay borrowings under revolving credit facilities of its
subsidiaries, which may be reborrowed and used for general corporate purposes,
including acquisitions, capital expenditures and investments. The terms of these
notes are similar to those of Adelphia's existing publicly held senior debt. The
transaction is expected to close on November 16, 1999.
<PAGE>
The following unaudited financial information assumes that the
acquisitions that were consummated after September 30, 1999 had occurred on
January 1, 1998.
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1999
--------------------------------------
<S> <C> <C>
Revenue $ 1,357,703 $ 1,743,796
Loss before extraordinary loss (459,113) (42,583)
Net loss (484,924) (79,942)
Basic and diluted net loss per weighted average
share of common stock (5.63) (0.73)
</TABLE>
The decrease in net loss for the nine months ended September 30, 1999
as compared to the same period in the prior year is due primarily to the gain on
the sale of discontinued operations of Centennial Cellular and the Australian
operations of Century, of approximately $314,000 during the nine months ended
September 30, 1999.
2. Debt:
Debt is summarized as follows:
<TABLE>
<CAPTION>
Subsidiary Debt:
December 31, September 30,
1998 1999
----------------- ----------------
<S> <C> <C>
Notes to banks and institutions $ 1,200,970 $ 697,589
13% Senior Discount Notes of ABIZ due 2003 220,784 245,052
12 1/4% Senior Secured Notes of ABIZ due 2004 250,000 250,000
12% Senior Subordinated Notes of ABIZ due 2007 - 300,000
Other subsidiary debt 45,486 69,197
----------------- ----------------
Total subsidiary debt $ 1,717,240 $ 1,561,838
================= ================
</TABLE>
The following information updates to September 30, 1999, certain
disclosures included in Note 3 to Adelphia's consolidated financial statements
contained in the Transition Report on Form 10-K for the nine months ended
December 31, 1998.
<TABLE>
<S> <C>
Commitments for additional borrowings,
as of September 30, 1999 $ 1,239,620
Weighted average interest rate payable by subsidiaries
under credit agreements with banks and institutions 6.74%
Percentage of subsidiary notes to banks and institutions that
bear interest at fixed rates for at least one year (including the effects
of interest rate swap agreements) 2.31%
</TABLE>
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<TABLE>
<CAPTION>
Parent Debt:
December 31, September 30,
1998 1999
----------------- -----------------
<S> <C> <C> <C> <C> <C>
10 1/4% Senior Notes due 2000 $ 99,653 $ 99,815
9 1/4% Senior Notes due 2002 325,000 325,000
8 1/8% Senior Notes due 2003 149,285 149,384
10 1/2% Senior Notes due 2004 150,000 150,000
7 1/2% Senior Notes due 2004 - 100,000
9 7/8% Senior Notes due 2007 347,586 347,738
8 3/8% Senior Notes due 2008 299,197 299,243
7 3/4% Senior Notes due 2009 - 300,000
7 7/8% Senior Notes due 2009 - 350,000
11 7/8% Senior Debentures due 2004 124,613 124,651
9 7/8% Senior Debentures due 2005 128,531 128,664
9 1/2% Pay-In-Kind Notes due 2004 186,347 31,847
----------------- -----------------
Total parent debt $ 1,810,212 $ 2,406,342
================= =================
</TABLE>
<TABLE>
<CAPTION>
3. Investments:
Adelphia's nonconsolidated investments are as follows:
December 31, September 30,
1998 1999
----------- -----------
Investments accounted for using the equity method:
Gross investment:
<S> <C> <C>
ABIZ investments in joint ventures $ 138,614 $ 64,325
Benbow PCS Ventures, Inc. 17,170 17,227
Mobile communications 18,249 19,307
Other 2,308 3,650
--------- ---------
Total 176,341 104,509
--------- ---------
Investments accounted for using the cost method:
Niagara Frontier Hockey, L.P. 44,897 48,675
SuperCable ALK International 3,190 3,190
Programming ventures 1,469 9,570
Mobile communications 2,925 3,193
Other 672 617
--------- ---------
Total 53,153 65,245
--------- ---------
Total investments before cumulative equity in net losses 229,494 169,754
Cumulative equity in net losses (32,601) (26,110)
--------- ---------
Total investments $ 196,893 $ 143,644
========= =========
</TABLE>
On September 30, 1999, the FCC granted Adelphia Business Solutions request to
transfer, and Adelphia Business Solutions transferred the licenses from Baker
Creek Communications to a wholly owned subsidiary of Adelphia Business
Solutions. The licenses are included in Prepaid expenses and other assets-net
on the Condensed Consolidated Balance Sheet at September 30, 1999.
<PAGE>
4. Related Party Investments and Receivables:
Related party receivables - net represent advances to managed
partnerships, the Rigas family and Rigas family controlled entities. No related
party advances are collateralized.
Investments in and amounts due from Olympus is comprised of the
following:
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
-------------------- --------------------
<S> <C> <C>
Cumulative equity in loss over investment in Olympus $ (102,888) $ (119,300)
Amounts due from Olympus 294,296 660,761
==================== ====================
$ 191,408 $ 541,461
==================== ====================
</TABLE>
The investment in Olympus represents a 50% voting interest in such
partnership and is being accounted for using the equity method. On October 1,
1999, Adelphia completed its previously announced redemption of the interest in
Olympus held by Telesat Cablevision, Inc., a subsidiary of FPL Group, Inc.
Summarized unaudited results of operations of Olympus are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------------
1998 1999
---------------- -----------------
<S> <C> <C>
Revenues $ 156,497 $ 192,857
Net loss (15,265) (37,325)
Net loss of general and limited partners after priority return (80,855) (115,215)
</TABLE>
5. Net Loss Per Weighted Average Share of Common Stock:
Basic net loss per weighted average share of common stock is computed
based on the weighted average number of common shares outstanding after giving
effect to dividend requirements on the Company's preferred stock. Diluted net
loss per common share is equal to basic net loss per common share because the
Company's convertible preferred stock had an antidilutive effect for the periods
presented; however, the convertible preferred stock could have a dilutive effect
on earnings per share in future periods.
6. Supplemental Financial Information:
Cash payments for interest were $217,722 and $231,402 for the nine
months ended September 30, 1998 and 1999, respectively. Accumulated depreciation
of property, plant and equipment amounted to $730,873 and $846,906 at December
31, 1998 and September 30, 1999, respectively. Accumulated amortization of
intangible assets amounted to $249,618 and $299,710 at December 31, 1998 and
September 30, 1999, respectively. Interest expense - net includes interest
income of $7,907 and $22,710 for the three months ended September 30, 1998 and
1999 and $24,794 and $58,723 for the nine months ended September 30, 1998 and
1999, respectively. Interest income includes interest income from affiliates on
long-term loans and for reimbursement of interest expense on revolving credit
agreements related to short-term borrowings by such affiliates.
<PAGE>
On February 15, 1999, Adelphia issued 1,000,000 shares of Class A
common stock to an escrow account as a deposit for the acquisition of
FrontierVision.
7. Income Taxes:
Income tax (expense) benefit for the three and nine months ended
September 30, 1998 and 1999 was substantially comprised of deferred tax.
8. Commitments and Contingencies:
Reference is made to Note 1 and to Management's Discussion and Analysis
of Financial Condition and Results of Operations and Legal Proceedings for a
discussion of material commitments and contingencies.
9. Recent Accounting Pronouncements:
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. Management of the Company has not completed its
evaluation of the impact of SFAS No. 133 on the Company's consolidated financial
statements. In July 1999, SFAS No. 137 was issued to delay the effective date of
SFAS No. 133 to fiscal quarters of fiscal years beginning after June 15, 2000.
10. Business Segment Information:
Refer to Item 2 of this Quarterly Report on Form 10-Q for information
regarding business segments as of December 31, 1998 and September 30, 1999 and
for the three and nine months ended September 30, 1998 and 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
Introduction
On October 1, 1999, the Company completed the acquisition of the
Olympus partnership interests held by FPL Group, Inc. and the acquisitions of
FrontierVision Partners, L.P., Century Communications Corp. and Harron
Communications Corp. (collectively, the "Recent Acquisitions"). See Note 1 to
the Condensed Consolidated Financial Statements contained in this Form 10-Q. As
of the time of filing of this Form 10-Q, all of these transactions were
completed, but are not reflected in the results of operations of the Company for
the three and nine months ended September 30, 1999. After the completion of the
quarter ended June 30, 1999, the Company filed unaudited financial information,
audited financial statements and unaudited pro forma financial information
related to the Recent Acquisitions on a Form 8-K. In addition, during the period
January 13, 1999 through April 30, 1999, the Company entered into several
financing transactions, the proceeds of which were or may be used to fund one or
more of the Recent Acquisitions or for other general corporate purposes. See
Note 1 to the Condensed Consolidated Financial Statements contained in this Form
10-Q.
Results of Operations
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-Q, including Management's Discussion and Analysis of Financial Condition
and Results of Operations, is forward-looking, such as information relating to
the effect of future regulation, future capital commitments and the effects of
competition. Such forward-looking information involves important risks and
uncertainties that could significantly affect expected results in the future
from those expressed in any forward-looking statements made by, or on behalf of,
the Company. These risks and uncertainties include, but are not limited to,
uncertainties relating to economic conditions, acquisitions and divestitures,
the availability and cost of capital, government and regulatory policies, the
pricing and availability of equipment, materials, inventories and programming,
product acceptance, technological developments, year 2000 issues and changes in
the competitive environment in which the Company operates. Readers are cautioned
that such forward-looking statements are only predictions, that no assurance can
be given that any particular future results will be achieved, and that actual
events or results may differ materially. In evaluating such statements, readers
should specifically consider the various factors which could cause actual events
or results to differ materially from those indicated by such forward-looking
statements. For further information regarding those risks and uncertainties and
their potential impact on the Company, see the prospectus and most recent
prospectus supplement filed under Registration Statement No. 333-78027, under
the caption "Risk Factors."
Adelphia Communications Corporation and its subsidiaries ("Adelphia" or
the "Company") operate primarily in two lines of business within the
telecommunications industry: cable television and related investments
("Adelphia, excluding Adelphia Business Solutions) and competitive local
exchange carrier ("CLEC") telephony ("Adelphia Business Solutions"). The balance
sheet data as of December 31, 1998 and September 30, 1999, and the other data
for the three and nine months ended September 30, 1998 and 1999, of Adelphia
Business Solutions presented below have been derived from the consolidated
financial statements of Adelphia Business Solutions not included herein.
A majority owned subsidiary of the Company, Adelphia Business
Solutions, together with its subsidiaries owns CLEC networks and investments in
CLEC joint ventures and manages those networks and joint ventures. Adelphia
Business Solutions is an unrestricted subsidiary for purposes of the Company's
indentures. For further information regarding Adelphia Business Solutions, which
also files reports pursuant to the Securities Exchange Act of 1934, see Adelphia
Business Solutions' Form 10-Q for the quarterly period ended September 30, 1999.
<PAGE>
<TABLE>
<CAPTION>
Summarized unaudited financial information of Adelphia, Adelphia
Business Solutions and Adelphia, excluding Adelphia Business Solutions is as
follows:
Balance Sheet Data: December 31, September 30,
1998 1999
---------------- ----------------
Adelphia Consolidated
<S> <C> <C>
Total assets $ 3,294,457 $ 4,941,362
Total debt 3,527,452 3,968,180
Cash 398,644 893,191
Investments (a) 229,494 169,754
Redeemable preferred stock 376,865 400,581
Convertible preferred stock - net (liquidation preference) 100,000 675,000
Adelphia Business Solutions
Total assets $ 836,342 $ 1,078,885
Total debt 494,109 839,108
Cash 242,570 125,988
Investments (a) 138,614 64,325
Redeemable preferred stock 228,674 252,261
Adelphia, excluding Adelphia Business Solutions
Total assets $ 2,458,115 $ 3,862,477
Total debt 3,033,343 3,129,072
Cash 156,074 767,203
Investments (a) 90,880 105,429
Redeemable preferred stock 148,191 148,320
Convertible preferred stock - net (liquidation preference) 100,000 675,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
Other Data: Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------
1998 1999 1998 1999
------------- ---------------------------------------
Adelphia Consolidated
<S> <C> <C> <C> <C>
Revenues $ 169,387 $ 240,320 $ 452,680 $ 672,814
Priority investment income from Olympus 12,000 12,000 36,000 36,000
Operating expenses (b) 89,638 154,926 238,497 405,583
Depreciation and amortization expense 46,083 65,639 125,113 186,190
Operating income 33,666 19,755 89,070 81,041
Interest expense - net (63,317) (59,976) (185,828) (191,759)
Preferred stock dividends (14,072) (22,440) (41,470) (50,919)
Capital expenditures 104,597 177,223 244,878 404,009
Cash paid for acquisitions 381,082 7,523 462,180 189,788
Cash used for investments 15,022 9,596 49,649 42,023
Adelphia Business Solutions
Revenues $ 12,098 $ 43,347 $ 24,553 $ 99,000
Operating expenses (b) 17,447 55,834 38,624 129,655
Depreciation and amortization expense 9,843 18,168 20,413 45,289
Operating loss (15,192) (30,655) (34,484) (75,944)
Interest expense - net (5,371) (14,842) (21,063) (29,795)
Preferred stock dividends (7,166) (8,108) (20,806) (23,587)
Capital expenditures 68,231 100,587 145,490 232,418
Cash paid for acquisitions -- 2,850 58,330 129,118
Cash used for investments 10,611 2,749 32,150 27,421
Adelphia, excluding Adelphia Business Solutions
Revenues $ 157,289 $ 196,973 $ 428,127 $ 573,814
Priority investment income from Olympus 12,000 12,000 36,000 36,000
Operating expenses (b) 72,191 99,092 199,873 275,928
Depreciation and amortization expense 36,240 47,471 104,700 140,901
Operating income 48,858 50,410 123,554 156,985
Interest expense - net (57,946) (45,134) (164,765) (161,964)
Preferred stock dividends (6,906) (14,332) (20,664) (27,332)
Capital expenditures 36,366 76,636 99,388 171,591
Cash paid for acquisitions 381,082 4,673 403,850 60,670
Cash used for investments 4,411 6,847 17,499 14,602
<FN>
(a) Represents total investments before cumulative equity in net losses.
(b) Amount excludes depreciation and amortization.
</FN>
</TABLE>
<PAGE>
Adelphia earned substantially all of its revenues in the three and nine
months ended September 30, 1998 and 1999 from monthly subscriber fees for basic,
satellite, premium and ancillary services (such as installations and equipment
rentals), CLEC telecommunications services, local and national advertising
sales, high speed data services and pay-per-view programming.
The changes in Adelphia's operating results for the three and nine
months ended September 30, 1999 compared to the same period of the prior year,
were primarily the result of acquisitions, rate increases and expansion of
existing operations.
The high level of depreciation and amortization associated with the
significant number of acquisitions in recent years, the continued upgrade and
expansion of systems and interest costs associated with financing activities
will continue to have a negative impact on the reported results of operations.
Also, significant charges for depreciation, amortization and interest are
expected to be incurred in the future by Olympus, which will adversely impact
Adelphia's future results of operations. Adelphia expects to report net losses
for the next several years.
The following tables set forth certain cable television system data at
the dates indicated for Company Owned, Olympus and Managed Systems. The "Olympus
Systems" are systems owned by Olympus. The "Managed Systems" are affiliated
systems managed by Adelphia.
<TABLE>
<CAPTION>
September 30, Percent
-------------------------- Increase
1998 1999 (Decrease)
----------- ----------- --------
Homes Passed by Cable
<S> <C> <C> <C>
Company Owned Systems 2,124,473 2,271,432 6.9%
Olympus Systems 828,500 970,630 17.2%
Managed Systems 284,716 179,210 (37.1%)
--------- --------- ---
Total Systems 3,237,689 3,421,272 5.7%
========= ========= ===
Basic Subscribers
Company Owned Systems 1,530,699 1,637,047 6.9%
Olympus Systems 551,588 646,759 17.3%
Managed Systems 216,229 134,697 (37.7%)
--------- --------- ---
Total Systems 2,298,516 2,418,503 5.2%
========= ========= ===
</TABLE>
Managed Systems' data, as of September 30, 1999, reflect the sales,
after September 30, 1998, of systems consisting of approximately 75,900 homes
passed and approximately 62,100 basic subscribers to Olympus.
<PAGE>
The following table is derived from Adelphia's Condensed Consolidated
Statements of Operations that are included in this Form 10-Q and sets forth the
historical percentage relationship to revenues of the components of operating
income contained in such financial statements for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1998 1999 1998 1999
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Direct operating and programming 33.4% 33.1% 33.3% 32.6%
Selling, general and administrative 19.5% 31.3% 19.4% 27.6%
Depreciation and amortization 27.2% 27.3% 27.6% 27.7%
---------- --------- --------- ---------
Operating income 19.9% 8.3% 19.7% 12.1%
========== ========= ========= =========
</TABLE>
Revenues. The primary revenue sources reflected as a percentage of
total revenues were as follows for the three months ended September 30, 1998 and
1999:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------------
1998 1999
-------------- --------------
<S> <C> <C>
Regulated service and equipment 73% 63%
Premium programming 10% 8%
Advertising sales and other services 10% 12%
Competitive local exchange carrier services 7% 17%
</TABLE>
Revenues increased approximately 41.9% and 48.6% for the three and nine
months ended September 30, 1999 compared with the same periods of 1998. The
increases are attributable to the following:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1999 1999
---------------- ---------------
<S> <C> <C>
Acquisitions 65% 65%
Basic subscriber growth 3% 2%
Cable rate increases 9% 12%
Premium programming - (1%)
Competitive local exchange carrier services 9% 12%
Advertising sales and other services 14% 10%
</TABLE>
Effective August 1, 1999, certain rate increases related to regulated
cable services were implemented in substantially all of the Company's systems.
Advertising revenues and revenues derived from other strategic service offerings
such as CLEC services, high-speed data services, long distance and paging also
had a positive impact on revenues for the three and nine months ended September
<PAGE>
30, 1999. The Company expects to implement rate increases related to certain
regulated cable services in substantially all of the Company's systems during
the next fiscal year.
Direct Operating and Programming Expenses. These expenses, which are
mainly basic and premium programming costs and technical expenses, increased
40.7% and 45.7% for the three and nine months ended September 30, 1999 compared
with the same period of 1998. Adelphia Business Solutions expenses increased due
to higher costs associated with an increase in off-net resale costs, the
expansion of operations at its Network Operating Control Center ("NOCC"), an
increase in the number and size of the operations of the networks, which
resulted in increased employee related costs, equipment maintenance costs, cost
related to planned expansion into new markets, and the consolidation of the
Jacksonville, Richmond, Wichita, Baton Rouge, Jackson, and Little Rock markets.
The increases in Adelphia excluding Adelphia Business Solutions were primarily
due to increased operating expenses from acquired systems, increased programming
costs, incremental costs associated with increased subscribers and new services.
Selling, General and Administrative Expenses. These expenses, which are
mainly comprised of costs related to system offices, customer service
representatives and sales and administrative employees, increased 127.9% and
111.9% for the three and nine months ended September 30, 1999 compared with the
same period of 1998. Adelphia Business Solutions expenses increased due to
increased expenses associated with its network expansion plan, an increase in
the sales force; the development of a sales presence in many new markets, an
increase in corporate overhead costs to accommodate the growth in the number,
size and operations of the networks as a result of the expansion and the
consolidation of the Jacksonville, Richmond. Wichita, Baton Rouge, Jackson, and
Little Rock markets. The increases in Adelphia excluding Adelphia Business
Solutions were primarily due to incremental costs associated with
acquisitions, subscriber growth, new services and an increase in administrative
employees preparing for the recently completed acquisitions.
Depreciation and Amortization. Depreciation and amortization, excluding
Adelphia Business Solutions, increased 31.0% and 34.6% for the three and nine
months ended September 30, 1999, compared with the same period of 1998 primarily
due to increased depreciation and amortization related to acquisitions, as well
as increased capital expenditures made during the past several years.
Depreciation and amortization for Adelphia Business Solutions increased 84.6%
and 121.9% for the three and nine months ended September 30, 1999 compared with
the same period of 1998. These increases were primarily a result of increased
depreciation resulting from the higher depreciable asset base at the NOCC and
its wholly owned networks, the consolidation of several of its networks and
increased amortization of deferred financing costs.
Priority Investment Income. Priority investment income is comprised of
payments received from Olympus of accrued priority return on the Company's
investment in 16.5% preferred limited partner ("PLP") interests in Olympus.
Interest Expense - Net. Interest expense - net, excluding Adelphia
Business Solutions, decreased 22.1% and 1.7% for the three and nine months ended
September 30, 1999 compared with the same period of 1998. Interest expense -
net, including Adelphia Business Solutions, decreased 5.3% for the three months
ended September 30, 1999, as compared with the same period of 1998 due to
increased interest income from affiliates. Interest expense-net including ABS
increased 3.2% for the nine months ended September 30, 1999, as compared with
the same period of 1998. The increases were primarily due to incremental debt
related to acquisitions and other new debt issuances. Interest expense includes
noncash accretion of original issue discount on the Adelphia Business Solutions
13% Senior Discount Notes and other noncash interest expense totaling $8,522 and
$24,898 for the three and nine months ended September 30, 1999 compared with
$7,908 and $23,252 for the same period of 1998.
Equity in Loss of Joint Ventures. The equity in loss of joint ventures
represents primarily (i) the Company's pro-rata share of Olympus' losses and the
accretion requirements of Olympus' PLP interests, and (ii) Adelphia Business
Solutions' pro-rata share of its less than majority owned partnerships'
operating losses. Equity in loss of Olympus and other joint ventures has
increased primarily due to an increase in interest, depreciation and
amortization expenses for Olympus during the respective periods.
<PAGE>
Minority Interest in Net Losses of Subsidiaries. As a result of
Adelphia Business Solutions' IPO, which occurred on May 8, 1998, a portion of
Adelphia Business Solutions' net loss applicable to common stockholders is
attributable to minority interests.
Extraordinary Loss on Early Retirement of Debt. During the nine months
ended September 30, 1999, Adelphia redeemed $154,500 of its 9 1/2% Senior
Pay-In-Kind Notes due 2004 at 103.56% of principal and repaid certain
institutional indebtedness. As a result of these transactions, Adelphia
recognized an extraordinary loss of $10,027 for the nine months ended September
30, 1999.
Preferred Stock Dividends. Preferred stock dividends increased by
107.5% and 32.3% for the three and nine months ended September 30, 1999 compared
with the same period of 1998. The increase is due primarily to the payment of
dividends on the 5 1/2% Series D Convertible Preferred Stock made during the
three months ended September 30, 1999.
Liquidity and Capital Resources
The cable television and other telecommunication businesses are capital
intensive and typically require continual financing for the construction,
modernization, maintenance, expansion and acquisition of cable and other
telecommunication systems. The Company historically has committed significant
capital resources for these purposes and for investments in Olympus and other
affiliates and entities. These expenditures were funded through long-term
borrowings, stock offerings and, to a lesser extent, internally generated funds.
The Company's ability to generate cash to meet its future needs will depend
generally on its results of operations and the continued availability of
external financing.
The Company has made a substantial commitment to the technological
development of its systems and is aggressively investing in the upgrade of the
technical capabilities of its cable plant in a cost efficient manner. The
Company continues to deploy fiber optic cable and to upgrade the technical
capabilities of its broadband networks in order to increase network capacity,
digital capability, two-way communication and network reliability.
The design of the current system upgrade, when completed, will deploy
on average one fiber optic node for every two system plant miles or
approximately one fiber node for every 180 homes passed compared to the industry
norm of 500 to 1,000 homes passed per fiber optic node. Approximately 75% of the
system will be upgraded to 750 Mhz. Approximately 25% of the plant will remain
at 550 Mhz. The upgraded system will be completely addressable and provide
two-way communication capability. The additional bandwidth will enable the
Company to offer additional video programming and data services. A portion of
the bandwidth will be allocated to new service offerings such as two-way data,
telephony and video-on-demand.
Capital expenditures for Adelphia, excluding Adelphia Business
Solutions, for the nine months ended September 30, 1998 and 1999 were $99,388
and $171,591, respectively. Capital expenditures, including Adelphia Business
Solutions, for the nine months ended September 30, 1998 and 1999 were $244,878
and $404,009, respectively. Capital expenditures for ABS for the nine months
ended September 30, 1999 compared with the nine months ended September 30, 1998,
increased primarily due to the upgrade of plant in markets in which Adelphia
Business Solutions purchased its local partners' interests, payments for
indefeasible right of use agreements for fiber optic networks and the
commencement of switching services. The Company estimates that capital
expenditures excluding Adelphia Business Solutions will be in the range of
approximately $750,000 to $850,000 from October 1, 1999 through the quater ended
December 31, 2000, which includes the recently completed acquisitions. Adelphia
Business Solutions estimates that, in addition to the cash and cash equivalents
on hand and the U.S. government securities pledged as of September 30, 1999, a
total of approximately $550,000 will be required to fund capital expenditures,
working capital requirements, operating losses and pro rata investments in the
joint ventures from October 1,
<PAGE>
1999 through the quarter ending December 31, 2000.
The Company generally has funded its working capital requirements,
capital expenditures and investments in Olympus and other affiliates and
entities through long-term borrowings, primarily from banks and insurance
companies, short-term borrowings, internally generated funds and the issuance of
parent company public debt and equity and Adelphia Business Solutions public
debt and equity. The Company generally has funded the principal and interest
obligations on its long-term borrowings from banks and insurance companies by
refinancing the principal with new loans or through the issuance of parent
company debt or equity securities, and by paying the interest out of internally
generated funds. Adelphia has funded the interest obligations on its public
borrowings from internally generated funds.
The Company's financing strategy has generally been to maintain its
public long-term debt at the parent holding company level while the Company's
consolidated subsidiaries have their own senior and subordinated credit
arrangements with banks and insurance companies or, for Adelphia Business
Solutions, its own public debt and equity. The Company's public indentures and
subsidiary credit agreements contain covenants that, among other things, require
the maintenance of certain financial ratios (including compliance with certain
debt to cash flow ratios in order to incur additional indebtedness); place
limitations on borrowings, investments, affiliate transactions, dividends and
distributions; and contain certain cross default provisions relating to Adelphia
or its subsidiaries.
At September 30, 1999, the Company's total outstanding debt aggregated
$3,968,180, which included $2,406,342 of parent debt, $839,108 of Adelphia
Business Solutions debt and $722,730 of other subsidiary debt. As of September
30, 1999, Adelphia's subsidiaries had an aggregate of $2,132,811 in unused
credit lines and cash and cash equivalents, which includes $600,000 also
available to affiliates, part of which is subject to achieving certain levels of
operating performance.
The Company's weighted average interest rate on notes payable to banks
and institutions was approximately 7.27% at September 30, 1998 compared to 6.74%
at September 30, 1999. At September 30, 1999, approximately 2.31% of such debt
was subject to fixed interest rates for at least one year under the terms of
such debt or applicable interest rate swap agreements.
The following table sets forth the mandatory reductions in principal
under all debt agreements for each of the next four years and three months based
on amounts outstanding at September 30, 1999:
<TABLE>
<S> <C>
Three months ending December 31, 1999 $ 4,256
Year ending December 31, 2000 136,698
Year ending December 31, 2001 57,330
Year ending December 31, 2002 413,973
Year ending December 31, 2003 656,010
</TABLE>
The Company plans to continue to explore and consider new commitments,
arrangements or transactions to refinance existing debt, increase the Company's
liquidity or decrease the Company's leverage. These could include, among other
things, the future issuance by Adelphia, or its subsidiaries, of public or
private equity or debt and the negotiation of new or amended credit facilities.
These could also include entering into acquisitions, joint ventures or other
investment or financing activities, although no assurance can be given that any
such transactions will be consummated. The Company's ability to borrow under
current credit facilities and to enter into refinancings and new financings is
<PAGE>
limited by covenants contained in Adelphia's indentures and its subsidiaries'
credit agreements, including covenants under which the ability to incur
indebtedness is, in part, a function of applicable ratios of total debt to cash
flow.
For information regarding significant events and financings subsequent
to December 31, 1998, including the Recent Acquisitions subsequent to September
30, 1999 and the related use of capital resources to consummate them, see
"Introduction" above and Note 1 to the Condensed Consolidated Financial
Statements contained in this Form 10-Q.
The Company believes that cash and cash equivalents, internally
generated funds, borrowings under the existing credit facilities, and future
financing sources will be sufficient to meet its short-term and long-term
liquidity and capital requirements. Although in the past the Company has been
able to refinance its indebtedness or obtain new financing, there can be no
assurance that the Company will be able to do so in the future or that the terms
of such financings would be favorable.
Management believes that the telecommunications industry, including the
cable television and telephone industries, continues to be in a period of
consolidation characterized by mergers, joint ventures, acquisitions, sales of
all or part of cable or telephone companies or their assets, and other
partnering and investment transactions of various structures and sizes involving
cable or other telecommunications companies. The Company continues to evaluate
new opportunities that allow for the expansion of its business through the
acquisition or development of additional telecommunications systems in
geographic proximity to its existing regional markets or in locations that can
serve as a basis for new market areas. The Company, like other
telecommunications companies, has participated from time to time and is
participating in preliminary discussions with third parties regarding a variety
of potential transactions, and the Company has considered and expects to
continue to consider and explore potential transactions of various types with
other cable and telecommunications companies. However, no assurances can be
given as to whether any such transaction may be consummated or, if so, when, or
that additional competition from this industry consolidation will not have an
adverse effect on the Company.
Regulatory and Competitive Matters
The cable television operations of the Company may be adversely
affected by changes and developments in governmental regulation, competitive
forces and technology. The cable television industry and the Company are subject
to extensive regulation at the federal, state and local levels. The 1992 Cable
Act significantly expanded the scope of regulation of certain subscriber rates
and a number of other matters in the cable industry, such as mandatory carriage
of local broadcast stations and retransmission consent, and increased the
administrative costs of complying with such regulations. The FCC has adopted
rate regulations that establish, on a system-by-system basis, maximum allowable
rates for (i) basic and cable programming services (other than programming
offered on a per-channel or per-program basis), based upon a benchmark
methodology, and (ii) associated equipment and installation services based upon
cost plus a reasonable profit. Under the FCC rules, franchising authorities are
authorized to regulate rates for basic services and associated equipment and
installation services, and the FCC will regulate rates for regulated cable
programming services in response to complaints filed with the agency. The
Telecommunications Act of 1996 (the "1996 Act") ended FCC regulation of cable
programming service tier rates on March 31, 1999.
Rates for basic services are set pursuant to a benchmark formula.
Alternatively, a cable operator may elect to use a cost-of-service methodology
to show that rates for basic services are reasonable. Refunds with interest will
be required to be paid by cable operators who are required to reduce regulated
rates. The FCC has reserved the right to reduce or increase the benchmarks it
has established. The rate regulations also limit increases in regulated rates to
an inflation indexed amount plus increases in certain costs such as taxes,
franchise fees, costs associated with specific franchise requirements and
<PAGE>
increased programming costs. Cost-based adjustments to these capped rates can
also be made in the event a cable operator adds or deletes channels or completes
a significant system rebuild or upgrade. Because of the limitation on rate
increases for regulated services, future revenue growth from cable services will
rely to a much greater extent than has been true in the past on increased
revenues from unregulated services and new subscribers than from increases in
previously unregulated rates.
The FCC has adopted regulations implementing all of the requirements of
the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or
refine the rate regulations. Adelphia cannot predict the effect of the 1996 Act
or future legislative or rulemaking proceedings or changes to the rate
regulations. No assurance can be given as to what other future actions Congress,
the FCC or other regulatory authorities may take or the effects thereof on
Adelphia.
Cable television companies operate under franchises granted by local
authorities which are subject to renewal and renegotiation from time to time.
Because such franchises are generally non-exclusive, there is a potential for
competition with the systems from other operators of cable television systems,
including public systems operated by municipal franchising authorities
themselves, and from other distribution systems capable of delivering television
programming to homes. The 1992 Cable Act and the 1996 Act contain provisions
which encourage competition from such other sources. The Company cannot predict
the extent to which competition will materialize from other cable television
operators, local telephone companies, other distribution systems for delivering
television programming to the home, or other potential competitors, or, if such
competition materializes, the extent of its effect on the Company.
The 1996 Act repealed the prohibition on CLECs from providing video
programming directly to customers within their local exchange areas other than
in rural areas or by specific waiver of FCC rules. The 1996 Act also authorized
CLECs to operate "open video systems" ("OVS") without obtaining a local cable
franchise, although CLECs operating such a system can be required to make
payments to local governmental bodies in lieu of cable franchise fees. Where
demand exceeds capacity, up to two-thirds of the channels on an OVS must be
available to programmers unaffiliated with the CLEC. The statute states that the
OVS scheme supplants the FCC's "video dialtone" rules. The FCC has promulgated
rules to implement the OVS concept, and New Jersey Bell Telephone Company has
been granted permission to convert its video dialtone authorization in Dover
Township, New Jersey to an OVS authorization. New Jersey Bell Telephone Company
terminated its OVS operation in Dover Township, New Jersey at the end of 1998.
Recently, RCN Telecom Services, Inc. has been granted permission to convert its
video dialtone authorization in the Philadelphia Region to an OVS authorization.
The Company believes that the provision of video programming or other
services by telephone companies in competition with the Company's existing
operations could have an adverse effect on the Company's financial condition and
results of operations. At this time, the impact of any such effect is not known
or estimable.
The Company also competes with DBS service providers. DBS has been
available to consumers since 1994. A single DBS satellite can provide more than
100 channels of programming. DBS service can be received virtually anywhere in
the United States through the installation of a small outdoor antenna. DBS
service is being heavily marketed on a nationwide basis by several service
providers. Although the impact to date has not been material, any future impact
of DBS competition on the Company's future results is not known or estimable.
<PAGE>
Year 2000 Issue
The year 2000 issue refers to the inability of computerized systems and
technologies to recognize and process dates beyond December 31, 1999. The
Company has evaluated the impact of the year 2000 issue on its business
applications and its products and services. This could present risks to the
operations of the Company's business in several ways. The evaluation included a
review of the Company's information technology systems, cable network equipment,
telephony equipment, and other embedded technologies. A significant portion of
the Company's computerized systems and technologies have been developed,
installed or upgraded in recent years and are generally more likely to be year
2000 ready. The Company's evaluation also included evaluating the potential
impact as a result of its reliance on third-party systems that may have the year
2000 issue.
Computerized business applications that could be adversely affected by
the year 2000 issue include:
o information processing and financial reporting systems;
o customer billing systems;
o customer service systems;
o telecommunication transmission and reception systems; and
o facility systems.
System failure or miscalculation could result in an inability to
process transactions, send invoices, accept customer orders or provide customers
with products and services. Customers could also experience a temporary
inability to receive or use the Company's products and services.
The Company has developed a program to assess and address the year
2000 issue. This program consists of the following phases:
o inventorying and assessing the impact on affected technology and
systems,
o developing solutions for affected technology and systems;
o modifying or replacing affected technology and systems;
o testing and verifying solutions;
o implementing solutions; and
o developing contingency plans.
The Company has substantially completed its inventory and assessment of
affected computerized systems and technologies. The Company is in the final
stages of its year 2000 compliance program with respect to the remediation of
the affected systems and technologies.
The Company has engaged a consulting firm familiar with its financial
reporting systems. This firm has developed and tested year 2000 solutions that
the Company has implemented. The Company has certified all eight financial
systems as year 2000 compliant.
A third-party billing vendor currently facilitates customer billing.
This third-party vendor has certified that it implemented and successfully
tested its own year 2000 solution in April 1999.
Telecommunication plant rebuilds and upgrades in recent years have
minimized the potential impact of the year 2000 issue on the Company's
facilities, customer service, telecommunication transmission and reception
systems. The Company has substantially completed a comprehensive internal
inventory and assessment of all hardware components and component controlling
software throughout its telecommunication networks and has implemented
substantially all modifications, upgrades or replacements resulting from the
internal review.
<PAGE>
Costs incurred to date directly related to addressing the year 2000
issue have been approximately $1,075. The Company has also redeployed internal
resources to meet the goals of its year 2000 program. The Company currently
estimates the total cost of its year 2000 remediation program to be
approximately $2,055. Although the Company will continue to incur substantial
capital expenditures in the ordinary course of meeting its telecommunications
system upgrade goals through the year 2000, it will not specifically accelerate
its expenditures to facilitate year 2000 readiness, and accordingly such
expenditures are not included in the above estimate.
The Company is communicating with others with whom it does significant
business to determine their year 2000 readiness and to determine the extent to
which the Company is vulnerable to the year 2000 issue related to those third
parties. The Company purchases much of its technology from third parties. There
can be no assurance that the systems of other companies on which the Company's
systems rely will be year 2000 ready or timely converted into systems compatible
with the Company systems. The Company's failure or a third-party's failure to
become year 2000 ready or the Company's inability to become compatible with
third parties with which the Company has a material relationship, including
companies that the Company acquires, may have a material adverse effect on the
Company, including significant service interruption or outages; however, the
Company cannot currently estimate the extent of any such adverse effects.
The Company is in the process of identifying secondary sources to
supply its systems or services in the event it becomes probable that any of its
systems will not be year 2000 ready prior to the end of 1999. The Company is
also in the process of identifying secondary vendors and service providers to
replace those vendors and service providers whose failure to be year 2000 ready
could lead to a significant delay in the Company's ability to provide its
service to its customers.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company uses fixed and variable rate debt and fixed rate redeemable
preferred stock to fund its working capital requirements, capital expenditures
and acquisitions. These debt arrangements expose the Company to market risk
related to changes in interest rates. The Company enters into pay-fixed interest
rate swap agreements to effectively convert a portion of its variable-rate debt
to fixed-rate debt to reduce the risk of incurring higher interest costs due to
rising interest rates. As of September 30, 1999, the Company had interest rate
swap agreements covering notional principal of $75,000 that expire through 2008
and that fix the interest rate at an average of 6.70%. The Company also enters
into receive-fixed interest rate swap agreements to effectively convert a
portion of its fixed-rate debt to a variable-rate debt which is indexed to LIBOR
to reduce the risk of incurring higher interest costs in periods of falling
interest rates. As of September 30, 1999, the Company had interest rate swap
agreements covering notional principal of $45,000 that expire through 2003 and
that have a variable rate at an average of 5.59%. The Company enters into
interest rate cap agreements to reduce the risk of incurring higher interest
costs due to rising interest rates. As of September 30, 1999, the Company had
interest rate cap agreements covering a notional amount of $400,000, which
expire in 2002 and cap rates at an average rate of 7.25%. The Company does not
enter into any interest rate swap or cap agreements for trading purposes. The
Company is exposed to market risk in the event of non-performance by the banks.
No such non-performance is expected. The table below summarizes the fair values
and contract terms of the Company's financial instruments subject to interest
rate risk as of September 30, 1999.
<TABLE>
<CAPTION>
Expected Maturity Fair
---------------------------------------------------------------------
1999 2000 2001 2002 2003 Thereafter Total Value
----------- ---------- ---------- ----------- ----------- ---------- ----------- ------------
Debt and Redeemable
Preferred Stock:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate $ -- $ 112,375 $ 3,000 $ 325,000 $ 453,840 $2,789,109 $3,683,324 $3,565,698
Average Interest Rate 10.23% 10.22% 10.23% 10.25% 10.18% 10.15% -- --
Variable Rate $ 15,597 $ 23,736 $ 44,936 $ 48,437 $ 60,797 $ 557,909 $ 751,412 $ 751,412
Average Interest Rate 7.23% 7.41% 7.71% 7.83% 8.00% 7.68% -- --
Interest Rate Swaps
and Caps:
Variable to Fixed $ -- $ -- $ -- $ -- $ -- $ 75,000 $ 75,000 $ 3,535
Average Pay Rate -- -- -- -- -- 6.70% -- --
Average Receive Rate -- -- -- -- -- 7.16% -- --
Fixed to Variable -- -- -- -- 45,000 -- 45,000 (729)
Average Pay Rate -- -- -- -- 5.59% -- -- --
Average Receive Rate -- -- -- -- 6.96% -- -- --
Interest Rate Caps $ -- $ -- $ -- $ 400,000 $ -- $ -- $ 400,000 $ 2,538
Average Cap Rate -- -- -- 7.25% -- -- -- --
</TABLE>
<PAGE>
Interest rates on variable debt are estimated by us using the average
implied forward London Interbank Offer Rate ("LIBOR") rates for the year of
maturity based on the yield curve in effect at September 30, 1999, plus the
borrowing margin in effect at September 30, 1999. Average receive rates on the
variable to fixed swaps are estimated by us using the average implied forward
LIBOR rates for the year of maturity based on the yield curve in effect at
September 30, 1999.
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On February 24, 1999, Hyperion was served with a summons and complaint
filed in the United States District Court for the Northern District of New York,
Case Number 99-CV-268, by Hyperion Solutions Corporation ("Solutions"), which is
described in the complaint as a company in the business of developing, marketing
and supporting comprehensive computer software tools, executive information
systems and applications that companies use to improve their business
performance. The complaint alleges, among other matters, that Hyperion's use of
the name "Hyperion" in its business infringes upon various trademarks and
service marks of Solutions in violation of federal trademark laws and violates
various New York business practices, advertising and business reputation laws.
The complaint seeks, among other matters, to enjoin Hyperion from using the name
or mark "Hyperion" in Hyperion's business as well as to recover unspecified
damages, treble damages and attorney's fees. Management of Hyperion believes
that Hyperion has meritorious defenses to the complaint and intends to
vigorously defend this lawsuit. Although management believes that this lawsuit
will not in any event have a material adverse effect upon Hyperion, no assurance
can be given regarding the effect upon Hyperion if Solutions were to prevail in
this lawsuit.
On or about March 10, 1999, a lawsuit was commenced by the filing of a
class action complaint by one of Century's Class A common stockholders on behalf
of himself and all others similarly situated naming Century's Class B common
stockholders and all of Century's directors as defendants for alleged breaches
of fiduciary duty in connection with approval of the merger consideration. The
complaint was filed in the Superior Court in the State of Connecticut under the
caption Robert Lowinger v. Century Communications Corp., et. al. Century and
Adelphia were also named as defendants for allegedly aiding and abetting in the
foregoing alleged breaches of fiduciary duty. The complaint seeks damages in an
unspecified amount and such other relief as may be appropriate. On July 21,
1999, the court granted the defendants' motion for extension of time to answer
or otherwise respond to the complaint to the earlier of November 15, 1999 or
twenty days after the effective date of the merger, which the Company has done.
There are no other material pending legal proceedings, other than
routine litigation incidental to the business, to which the Company is a part of
or which any of its property is subject.
Item 2. Changes in Securities and Use of Proceeds
See Note 1 to the Condensed Consolidated Financial Statements regarding
agreements for private placements of common stock under Section 4(2) of the
Securities Act in connection with the FrontierVision acquisition and the April
1999 and October 1999 stock purchase agreements with Highland Holdings.
Item 3. Defaults Upon Senior Securities
None
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of the stockholders of the Company was held
on October 1, 1999. Stockholders entitled to vote a total of 137,018,185 votes
out of 158,673,103 votes attributable to all shares of the Company's outstanding
capital stock were represented at the meeting either in person or by proxy. At
such meeting (a) the stockholders approved, as required by the Nasdaq National
Market, the issuance of shares of Adelphia's Class A common stock in connection
with the merger of Century Communications Corp. with and into a wholly owned
subsidiary of Adelphia.
<TABLE>
<CAPTION>
Class of Broker
Stock Vote For Withheld Abstain Non-voting
------------- -------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
(a) Approval of issuance of Class A
common stock in connection
with merger Class A 28,469,361 197,555 6,509 --
Class B 108,344,760 -- -- --
</TABLE>
The annual meeting of the stockholders of the Company was held on
October 25, 1999. Stockholders entitled to vote a total of 145,396,632 votes out
of 158,673,103 votes attributable to all shares of the Company's outstanding
capital stock were represented at the meeting either in person or by proxy. At
such meeting, (a) one director (the "Class A Director") was elected by vote of
the holders of Class A Common Stock voting as a separate class, (b) nine
directors, ("Class A and B Directors") were elected by vote of the holders of
Class A Common Stock and the holders of Class B Common Stock voting together and
(c) approval of amendment to Article IV of the Certificate of incorporation
increasing authorized shares of capital stock from 230,000,000 to 1,550,000,000,
authorized shares of Class A Common Stock from 200,000,000 to 1,200,000,000,
authorized shares of Class B Common Stock from 25,000,000 to 300,000,000 and
authorized shares of Preferred Stock from 5,000,000 to 50,000,000.
<PAGE>
<TABLE>
<CAPTION>
The stockholder voting results are as follows:
Class of Broker
Stock Vote for Withheld Abstain Non-votes
------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
(a) Class A Director Elected
Perry S. Patterson Class A 36,541,359 460,513 -- --
(b) Class A and B Director Elected
John J. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Michael J. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Timothy J. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
James P. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Pete J. Metros Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Dennis P. Coyle Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Leslie J. Gelber Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Peter L. Venetis Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
Erland E. Kailbourne Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760
(c) Amendment to Article IV
increase in Capital Stock Class A 29,983,218 6,783,347 285,307 --
Class B 108,344,760
</TABLE>
Item 5. Other Information
(a) On November 10, 1999, Adelphia Business Solutions, Inc., a majority
owned subsidiary of Adelphia, issued a press release announcing a proposed
offering of approximately $300,000 in Class A common stock to the public and a
proposed sale of approximately $150,000 in Class B common stock to Adelphia. A
copy of the press release is attached as Exhibit 99.02 to this Form 10-Q and is
incorporated by reference herein.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. Description
1.01 Underwriting Agreement dated October 1, 1999 regarding the sale of
6,000,000 shares of Class A common stock of Adelphia (filed herewith).
3.01 Certificate of Incorporation of Adelphia Communications Corporation, as
amended through October 25, 1999 (filed herewith).
3.02 Bylaws of Adelphia Communications Corporation, as amended through
September 30, 1999 (filed herewith).
10.01 Stock Purchase Agreement dated October 1, 1999 between Adelphia
Communications Corporation and Highland Holdings (filed herewith).
10.8 Bank Credit Facility dated May 6, 1999 among the registrant, other
borrowers and the lenders named therein (incorporated herein by
reference to Exhibit 10.01 to Current Report on Form 8-K for the event
dated September 16, 1999 filed by Adelphia Communications Corporation
(File No. 0-16014)).
27.01 Financial Data Schedule (supplied for the information of the
Commission).
99.01 Press release dated November 10, 1999 regarding the sale of Senior
Notes by Adelphia (filed herewith).
99.02 Press release dated November 10, 1999 regarding the sale of Class A
common stock by Adelphia Business Solutions, Inc. (filed herewith).
(b) Reports on Form 8-K:
Form 8-Ks were filed for events dated July 12, 1999, August 11, 1999,
September 9, 1999, September 16, 1999, September 21, 1999, September 29, 1999
and October 1, 1999, which reported information under items 2,5 and/or 7
thereof. No financial statements were filed with such Form 8-Ks, other than the
financial statements and proforma financial information filed under Item 7 for a
Form 8-K for the event dated October 1, 1999.
<PAGE>
SIGNATURES
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.
ADELPHIA COMMUNICATIONS CORPORATION
(Registrant)
Date: November 15, 1999 By: /s/ Timothy J. Rigas
Timothy J. Rigas
Executive Vice President (authorized
officer), Chief Financial Officer
and Treasurer
EXHIBIT 1.01
6,000,000 Shares
Adelphia Communications Corporation
Class A Common Stock
UNDERWRITING AGREEMENT
October 1, 1999
SALOMON SMITH BARNEY INC.
as Representative of the several Underwriters named on Schedule I
hereto
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies & Gentlemen:
Adelphia Communications Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell an aggregate of 6,000,000 shares (the
"Firm Shares") of its Class A Common Stock, $.01 par value per share (the "Class
A Common Stock"), to the several underwriters named on Schedule I hereto (the
"Underwriters") for whom Salomon Smith Barney Inc., is acting as representative
in such capacity, the "Representative"). The Company also proposes to sell to
the Underwriters, upon the terms and conditions set forth in Section 2 hereof,
up to an additional 900,000 shares (the "Additional Shares") of Class A Common
Stock. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares." The Company previously announced the following
pending acquisitions: Olympus Communications, L.P., FrontierVision Partners,
L.P., Harron Communications Corp. and Century Communications Corp. (collectively
the "Acquired Companies"). With respect to the representations, warranties and
agreements made by the Company in this Agreement concerning the Acquired
Companies, such representations, warranties and agreements shall be limited to
the knowledge of the Company in all cases.
The Company wishes to confirm as follows its agreement with the
Underwriters in connection with the purchase of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a Registration Statement on Form S-3 under the Act (the "Registration
Statement"), including a prospectus and a prospectus supplement relating to the
Shares. The term "Registration Statement" as used in this Underwriting Agreement
means the Registration Statement (including all financial schedules and
exhibits), as supplemented or amended at the time of the execution of this
Underwriting Agreement. If a post-effective amendment or supplement to a
registration statement is filed in connection with the offering of the Shares,
the term "Registration Statement" as used in this Underwriting Agreement means
the Registration Statement as amended by said post-effective amendment or
supplement. The term "Prospectus" as used in this Underwriting Agreement means
the prospectus (including the prospectus supplement relating to the Shares) in
the form included in the Registration Statement, or, if the prospectus
(including the prospectus supplement relating to the Shares) included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus (or a prospectus supplement)
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Underwriting Agreement means the prospectus
(including the prospectus supplement relating to the Shares) in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus (including the prospectus
supplement relating to the Shares) filed with the Commission pursuant to Rule
424(b). Any reference in this Underwriting Agreement to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the Registration Statement or the Prospectus
and any reference to any amendment or supplement to the Registration Statement
or the Prospectus shall be deemed to refer to and include any documents filed
after such date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") which, upon filing, are incorporated by reference therein, as
required by paragraph (b) of Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the Registration Statement, the Prospectus, or any amendment or
supplement thereto.
For purposes of this Underwriting Agreement: "Rules and Regulations"
means the rules and regulations adopted by the Commission under either the Act
or the Exchange Act, as applicable.
2. 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
Underwriter 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 Underwriter severally agrees to purchase from
the Company, at a purchase price of $55.00 per share (the "purchase price per
share"), the Firm Shares as set forth in Schedule I hereto.
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, 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, the Underwriters shall
have the right to purchase from the Company, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised at
any time and from time to time prior to 5:00 P.M., New York City time, on the
30th day after the date of the Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
Nasdaq National Market is open for trading), up to an aggregate of 900,000
Additional Shares. Additional Shares may be purchased only for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares.
3. Terms of Public Offering. The Company has been advised by the
Underwriters that the Underwriters propose to make a public offering of their
respective portions of the Firm Shares as soon after this Underwriting Agreement
has become effective as in the Underwriters' judgment is advisable and initially
to offer the Firm Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Latham & Watkins, 885 Third Avenue, New York, New York 10022 at 10:00 A.M., New
York City time, on October 6, 1999 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement between the
Underwriters and the Company.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Latham & Watkins at such time on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than five business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from the Representative on behalf of the Underwriters to the Company of
the Underwriters' determination to purchase a number, specified in such notice,
of Additional Shares. The place of closing for any Additional Shares and the
Option Closing Date for such Shares may be varied by agreement between the
Representative on behalf of the Underwriters and the Company.
Certificates for the Firm Shares and any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as the Underwriters shall request prior to 9:30 A.M., New York City time, on the
second business day preceding the Closing Date or the Option Closing Date, as
the case may be. Such certificates shall be made available to the Underwriters
in New York City for inspection and packaging not later than 9:30 A.M., New York
City time, on the business day next preceding the Closing Date or the Option
Closing Date, as the case may be. The certificates evidencing the Firm Shares or
any Additional Shares to be purchased hereunder shall be delivered to the
Underwriters on the Closing Date or the Option Closing Date, as the case may be,
against payment of the purchase price therefor in immediately available funds.
5. Agreements of the Company. The Company agrees with the Underwriters
as follows:
(a) If, at the time this Underwriting Agreement is executed
and delivered, it is necessary for a post-effective amendment thereto to be
declared effective before the offering of the Underwritten Shares may commence,
the Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will advise
the Underwriters promptly and, if requested by the Underwriters, will confirm
such advice in writing, when the Registration Statement or such post-effective
amendment has become effective.
(b) The Company will advise the Underwriters promptly and, if
requested by the Underwriters, will confirm such advice in writing: (i) of any
request by the Commission for amendment of or a supplement to the Registration
Statement or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (e)
below, of the happening of any event which makes any statement of a material
fact made in the Registration Statement or the Prospectus untrue or which
requires the making of any additions to or changes in the Registration Statement
or the Prospectus in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to the Underwriters, without
charge, one signed copy of the Registration Statement as originally filed with
the Commission and of each amendment and supplement thereto, including financial
statements and all exhibits thereto, and will also furnish to the Underwriters,
without charge, such number of conformed copies of the Registration Statement as
originally filed and of each amendment thereto, but without exhibits, as the
Underwriters may request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment to the Prospectus or any amendment
to any of the documents incorporated by reference in the Prospectus or amend or
supplement the prospectus supplement utilized in connection with this offering
of which the Underwriters shall not previously have been advised or to which the
Underwriters shall object after being so advised or (ii) so long as, in the
written opinion of counsel for the Underwriters, a prospectus is required to be
delivered in connection with sales by any Underwriter or dealer, file any
information, documents or reports pursuant to the Exchange Act, without
delivering a copy of such information, documents or reports to the Underwriters,
prior to or concurrently with such filing.
(e) As soon after the execution and delivery of this
Underwriting Agreement as possible and thereafter from time to time for such
period as in the written opinion of counsel for the Underwriters a prospectus is
required by the Act to be delivered in connection with sales by any Underwriters
or dealer, the Company will expeditiously deliver to the Underwriters and each
dealer, without charge, as many copies of the Prospectus as the Underwriters may
request. The Company consents to the use of the Prospectus in accordance with
the provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with sales by the Underwriters
or any dealer. If during such period of time any event shall occur that in the
judgment of the Company or in the opinion of counsel for the Underwriters is
required to be set forth in the Prospectus or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus to comply with the Act or any other law, the Company will
forthwith prepare and, subject to the provisions of paragraph (d) above, file
with the Commission an appropriate supplement or amendment thereto and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof.
(f) The Company will cooperate with the Underwriters and with
counsel for the Underwriters in connection with the registration or
qualification of the Shares for offering and sale by the Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as the
Underwriters may designate and will file such consents to service of process or
other documents necessary or appropriate in order to effect such registration or
qualification; 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 which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject.
(g) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(h) During the period of five years after the date of this
Underwriting Agreement, the Company will (i) make generally available a copy of
each report of the Company mailed to stockholders or filed with the Commission
or the Nasdaq National Market and will promptly notify the Underwriters of such
mailing or filing and (ii) furnish to the Underwriters from time to time such
other information concerning the Company and its subsidiaries as the
Underwriters may request.
(i) If this Underwriting Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than by
notice given by the Underwriters terminating this Underwriting Agreement
pursuant to Section 10 or Section 12 hereof) or if this Underwriting Agreement
shall be terminated by the Underwriters 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 Underwriting Agreement, the Company agrees to negotiate in good faith
regarding the reimbursement to the Underwriters for out-of-pocket expenses
(including fees and expenses of counsel for the Underwriters) incurred by the
Underwriters in connection herewith.
(j) The Company will apply the net proceeds from the sale of
the Shares substantially in accordance with the description set forth in the
Prospectus.
(k) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and will advise
the Underwriters of the time and manner of such filing.
(l) The Company will use its best efforts to have the Shares
listed, subject to notice of issuance, on the Nasdaq National Market as of the
Closing Date.
(m) For a period of 90 days after the date hereof (the
"Lock-up Period"), the Company will not, without the prior written consent of
Salomon Smith Barney Inc., offer, sell, contract to sell or otherwise dispose of
any shares of common stock of the Company (or any securities convertible into or
exercisable or exchangeable for common stock of the Company) or grant any
options or warrants to purchase common stock of the Company, or announce any
intention to do any of the foregoing, except for agreements, transactions or
activities in connection with (i) sales to the Underwriters pursuant to this
Agreement; (ii) the issuance of options or grants of shares under the Company's
employee benefit, stock option or stock plans in existence on the date hereof or
in existence from time to time; (iii) the issuance of any shares pursuant to any
existing agreements; (iv) the issuance of shares of Class A Common Stock
pursuant to a conversion of any Class B common stock or convertible preferred
stock outstanding on the date hereof; (v) the issuance of capital stock of the
Company to the persons or entities named on Schedule II hereto; (vi) any private
placement of capital stock of the Company; provided that such capital stock
shall remain "restricted securities" (as defined in Rule 144(a)(3) of the Act)
for any remaining portion of the Lock-up Period; and (vii) any issuance of
shares in connection with a bona fide acquisition of telecommunications assets
or an entity in the telecommunications business.
(n) The Company will furnish to the Underwriters "lock-up"
letters, in form and substance satisfactory to the Underwriters, duly signed by
the persons or entities set forth on Schedule II hereto.
(o) Except as stated in this Underwriting Agreement and the
Prospectus, the Company has not taken, nor will it take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of the Class A Common Stock to
facilitate the sale or resale of the Shares.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement in the form in which it became
or becomes effective and also in such form as it may be when any post-effective
amendment thereto has or shall become effective and the Prospectus and any
supplement or amendment thereto when filed with the Commission under Rule 424(b)
under the Act, complied or will comply in all material respects with the
provisions of the Act and did not or will not at any such times 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;
except that this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus made in reliance
upon and in conformity with information relating to any Underwriter furnished to
the Company in writing by an Underwriter expressly for use therein.
(b) Neither the Company nor any of the Acquired Companies has
sustained since December 31, 1998 any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the Prospectus,
there has not been any reduction in the consolidated stockholders' equity or
change in the capital stock, as applicable (other than reductions in the
ordinary course of business consistent with prior periods), material increase in
the total amount of short-term debt (excluding trade payables) and long-term
debt of the Company or any of its material subsidiaries (the "Subsidiaries,"
which term shall be deemed to include all of the Acquired Companies and each of
their material subsidiaries for purposes of this Section 6) or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
partners' equity, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(c) (i) Each of the Subsidiaries that is a partnership has
been duly formed and is validly existing as a partnership in good standing under
the laws of its state of formation, with full power and authority (partnership
and other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign partnership for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such jurisdiction
except where the failure to so qualify would not have a material adverse effect
on the business, general affairs, management, financial position, partners
equity or shareholders' equity (other than reductions in the ordinary course of
business consistent with prior periods), results of operations or prospects of
the Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect"); and (ii) each of the Company and the Subsidiaries that are
corporations has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its state of incorporation, with full power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction except where the failure to so qualify would not have a
Material Adverse Effect.
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Underwriting Agreement and the Direct Offering Agreement, dated as of the date
hereof and as in effect on the date hereof, between the Company and Highland
Holdings (together with all of the financing and other ancillary agreements
thereto dated as of or prior to the Closing Date, the "Direct Offering
Agreement"), pursuant to which the Company will issue 2,500,000 shares of the
Company's Class B common stock (the "Direct Offering Shares") to Highland
Holdings, and to consummate the transactions contemplated hereby and thereby,
including, without limitation, the corporate power and authority to issue, sell
and deliver the Shares as provided herein.
(e) Each of this Underwriting Agreement and the Direct
Offering 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.
(f) All the outstanding shares of capital 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; the Shares have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms hereof, will be validly issued, fully paid
and nonassessable and free of any preemptive or similar rights; and the capital
stock of the Company conforms to the description thereof in the Registration
Statement and the Prospectus.
(g) Each of the Company's Subsidiaries has the ownership or
authorized capitalizations, as the case may be, as set forth in the Prospectus,
and all of the partnership interests of the Subsidiaries that are partnerships
and all of the issued shares of capital stock of its Subsidiaries that are
corporations have been duly and validly authorized and issued and with respect
to shares of capital stock are fully paid and nonassessable; and all of the
partnership interests of the Subsidiaries disclosed in the Prospectus as being
owned directly or indirectly by the Company and all of the issued shares of
capital stock of the Subsidiaries that are corporations disclosed in the
Prospectus as being owned directly or indirectly by the Company have been duly
and validly authorized and issued are fully paid and non-assessable and are
owned directly or indirectly by the Company free and clear of all liens,
encumbrances, equities or claims (other than liens to secure indebtedness under
credit facilities disclosed in the Prospectus); and descriptions of the
ownership of the various interests and shares of the Company and its
Subsidiaries in the Prospectus are true and complete in all material respects;
(h) Except as disclosed, contemplated or referenced in the
Prospectus, there are not currently, and will not be as a result of the
transactions contemplated hereby, any material 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 or any Subsidiary.
(i) Other than as set forth in the Prospectus (including those
matters referred to therein relating to general rulemakings and similar matters
relating generally to the cable television industry), there are no legal or
governmental proceedings pending to which the Company or any of its Subsidiaries
is a party or of which any property of the Company or any of its Subsidiaries is
the subject which, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or by others; and except
with respect to general rulemakings and similar matters relating generally to
the cable television industry, during the time the Systems (as defined below)
have been owned by the Company or a Subsidiary (i) there has been no adverse
judgment, order, or decree issued by the United States Federal Communications
Commission (the "FCC") relating to any of the Systems that has not been
disclosed in the Prospectus that would be required to be disclosed in the
Prospectus or the Registration Statement; (ii) there are no actions, suits,
proceedings, inquiries or investigations by the FCC pending or threatened in
writing against or affecting the Company, any of its Subsidiaries or any System;
and (iii) to the Company's knowledge, after due inquiry, there is no reasonable
basis for any such action, suit, proceeding or investigation.
(j) Except for matters covered by paragraph (w) below or with
respect to matters that would not individually or in the aggregate have a
Material Adverse Effect, (i) the Company and its Subsidiaries have made all
filings, recordings and registrations with, and possess all validations or
exemptions, approvals, orders, authorizations, consents, licenses, certificates
and permits from, the FCC, applicable public utilities and other federal, state
and local regulatory or governmental bodies and authorities or any subdivision
thereof, including, without limitation, cable television franchises, pole
attachment agreements, and cable antenna relay service, broadcast auxiliary,
earth station, business radio, microwave or special safety radio service
licenses issued by the FCC (collectively, the "Authorizations") necessary or
appropriate to own, operate and construct the cable communication systems owned
by them (the "Systems") or otherwise for the operation of their businesses and
are not in violation thereof; (ii) all such Authorizations are in full force and
effect, and no event has occurred that permits, or after notice or lapse of time
could permit, the revocation, termination or modification of any Authorization
which is necessary or appropriate to own, operate and construct the Systems or
otherwise for the operation of any such business; (iii) none of the Company or
any of its Subsidiaries is in violation of any duty or obligation required by
the United States Communications Act of 1934, as amended (the "Communications
Act"), or any FCC rule or regulation applicable to the operation of any portion
of any of the Systems; (iv) none of the Company or any of its Subsidiaries is in
violation of any duty or obligation required by state or local laws, or local
rules or regulations applicable to the operation of any portion of any of the
Systems; (v) there is not pending or, to the best knowledge of the Company or
any of its Subsidiaries, threatened, any action by the FCC or state or local
regulatory authority to modify, revoke, cancel, suspend or refuse to renew any
Authorization; (vi) other than as described in the Prospectus, there is not now
issued or outstanding or, to the best knowledge of the Company or any of its
Subsidiaries, threatened, any notice of any hearing, material violation or
material complaint against the Company or any of its Subsidiaries with respect
to the operation of any portion of the Systems and none of the Company or its
Subsidiaries has any knowledge that any person intends to contest renewal of any
material Authorization.
(k) (i) (A) The Company and its Subsidiaries have entered
into, or have rights under, all required programming agreements (including,
without limitation, all non-broadcast affiliation agreements under which the
Company and its Subsidiaries are accorded retransmission rights relating to
programming that the Systems provide to their customers) that are material to
the conduct of their business as described in the Prospectus; and (B) all such
material agreements are in full force and effect and none of the Company, any of
its Subsidiaries or any of its affiliates has received any written notice of
revocation or material modifications of such material agreements; and (ii) (A)
either the Company or its Subsidiaries has entered into agreements with the
television stations that have notified the Company or its Subsidiaries that such
station's respective consent is required to carry such stations on the Systems
or has ceased carrying such stations; (B) all such agreements grant the Company
or one of its Subsidiaries retransmission consent in exchange for various
non-cash consideration; and (C) all such agreements are in full force and effect
and are not subject to revocation (except in the case of material breach by the
Company or its Subsidiaries) or material modifications, and no event has
occurred that permits, or after notice or lapse of time could permit, the
revocation, termination or material modification of any such agreement, except
where the failure of such agreements to be in full force and effect or such
revocation would not, in either case, individually or in the aggregate have a
Material Adverse Effect.
(l) Except for matters that would not individually or in the
aggregate have a Material Adverse Effect, (i) all registration statements and
all other documents (including but not limited to annual reports) required by
the FCC in connection with the operation of the Systems have been filed with the
FCC; (ii) all frequencies within the restricted aeronautical and navigational
bands (i.e., 108-136 MHz and 225-400 MHz) which are currently being used in
connection with the operation of the Systems have been authorized for such use
by the FCC; (iii) each of the Systems subject to Equal Employment Opportunity
Commission ("EEO") compliance certification by the FCC has been certified by the
FCC for annual EEO compliance during the time such Systems have been owned by
the Company or its Subsidiaries; and (iv) all towers associated with the Systems
are in compliance with the rules and regulations of the United States Federal
Aviation Administration.
(m) Except for matters that would not individually or in the
aggregate have a Material Adverse Effect, none of the Company or any of its
Subsidiaries is in breach or violation of, or in default under, any of the
terms, conditions or provisions of the Communications Act or the rules,
regulations or policies of the FCC thereunder.
(n) (i) Except for matters that would not individually or in
the aggregate have a Material Adverse Effect, all statements of accounts and any
other filings that are required under Section 111 of the United States Copyright
Act of 1976, as amended, in connection with the retransmission of any broadcast
television and radio signals on the Systems have been timely filed with the
United States Copyright Office and indicated royalty payments have been made for
each System for each accounting period during which such Systems have been owned
by the Company or its Subsidiaries; (ii) none of the Company, any of its
Subsidiaries or any System has received any inquiry or request from the United
States Copyright Office or from any other party challenging or questioning any
such statements of account or royalty payments; and (iii) no claim of copyright
infringement has been made or threatened in writing against the Company, any of
its Subsidiaries or any System.
(o) Neither the execution and delivery of this Underwriting
Agreement or the Direct Offering Agreement, nor the consummation of the
transactions contemplated hereby and thereby or by the Prospectus under "Use of
Proceeds," nor compliance with the terms, conditions and provisions hereof and
thereof by the Company, will conflict with the Communications Act or the rules,
regulations or policies of the FCC thereunder, or will cause any suspension,
revocation, impairment, forfeiture, nonrenewal or termination of any material
license, permit, franchise, certificate, consent, authorization, designation,
declaration, filing, registration or qualification.
(p) Neither the execution and delivery of this Underwriting
Agreement or the Direct Offering Agreement, nor the consummation of the
transactions contemplated hereby or thereby nor compliance with the terms,
conditions and provisions hereof and thereof by the Company, requires any
license, permit, franchise, certificate, consent, authorization, designation,
declaration, filing, registration or qualification by or with the FCC.
(q) None of the Company or the Subsidiaries is and, after
giving effect to the transactions contemplated hereby 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 and the rules and regulations of the FCC and
environmental laws, statutes, ordinances, rules, regulations, judgments or court
decrees) applicable to the Company or any Subsidiary 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.
(r) Neither the issuance and sale of the Shares or the Direct
Offering Shares, the execution, delivery or performance by the Company of this
Underwriting Agreement or the Direct Offering Agreement by the Company, or the
consummation by the Company of the transactions contemplated hereby and thereby
violate, conflict with or constitute a breach of any of the terms or provisions
of, or a default under (or an event that with notice or the lapse of time, or
both, would constitute a default), or require consent under, or result in the
imposition of a lien or encumbrance on any properties of the Company or any
Subsidiary or an acceleration of any indebtedness of the Company, any Subsidiary
pursuant to, (i) the charter or bylaws of the Company or any Subsidiary or the
partnership agreement or operating agreement governing any of their material
joint ventures, (ii) any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which the Company, any Subsidiary or
any of their material joint ventures 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
Communications Act and the rules and regulations of the FCC and environmental
laws, statutes, ordinances, rules or regulations) applicable to the Company, any
Subsidiary, any of their material joint ventures 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, the
Subsidiaries, any of their material joint ventures or any of their assets or
properties, except in the case of clauses (ii), (iii) and (iv) for such
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 Prospectus, 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
Underwriting Agreement or the Direct Offering Agreement or (2) the issuance and
sale of the Shares or the Direct Offering Shares and the transactions
contemplated hereby and thereby, except (x) such as have been obtained and made
under the Act 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.
(s) The accountants who have certified or shall certify the
financial statements included in the Registration Statement and the Prospectus
are independent public accountants as required by the Act. The historical
financial statements of the Company and each of the Subsidiaries comply as to
form in all material respects with the requirements applicable to registration
statements on Form S-3 under the Act and present fairly in all material respects
the financial position and results of operations of the Company and each of its
Subsidiaries, at the respective dates and for the respective periods indicated.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods presented. The other financial information and data included in the
Registration Statement and Prospectus, historical and pro forma, are accurately
presented in all material respects and prepared on a basis consistent with the
financial statements, historical and pro forma, included in the Prospectus and
the books and records of the Company and each of its Subsidiaries. The
statistical information and data included in the Prospectus are accurately
presented in all material respects.
(t) The financial statements, together with related schedules
and notes, included in the Registration Statement and the Prospectus, present
fairly the consolidated financial position, results of operations and changes in
financial position of the Company and the Subsidiaries on the basis stated in
the Registration Statement 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
in the Registration Statement and the Prospectus are accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company and the Subsidiaries.
(u) 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
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prospectus or other materials, if any, permitted by the Act.
(v) There is (i) no unfair labor practice complaint pending
against the Company or any Subsidiary or threatened, 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 so
pending or threatened against the Company or any Subsidiary, (ii) no significant
strike, labor dispute, slowdown or stoppage pending against the Company or any
Subsidiary or threatened against the Company or any Subsidiary and (iii) no
union representation question existing with respect to the employees of the
Company or any Subsidiary 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 or the Subsidiaries. None of the
Company or any Subsidiary 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.
(w) None of the Company or any Subsidiary 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 is violating any term or
condition of such permit, license or approval which could reasonably be expected
to, either individually or in the aggregate, have a Material Adverse Effect.
(x) Each of the Company and the Subsidiaries has (i) good and
marketable title to all of the properties and assets described in the Prospectus
as owned by it, free and clear of all liens, charges, encumbrances and
restrictions, except such as are described in the Prospectus or as would not
have a Material Adverse Effect and (ii) peaceful and undisturbed possession
under all leases to which any of them is a party as lessee. All leases to which
the Company and the Subsidiaries are a party are valid and binding and no
default by the Company or any Subsidiary 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.
(y) Each of the Company and the Subsidiaries 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, 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 and its Subsidiaries in connection
with the businesses now operated by it or which are proposed to be operated by
the Company or its Subsidiaries 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 and
any Subsidiary has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing except as
described in the Prospectus 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 and the Subsidiaries does not
infringe on the rights of any person, except as would not have a Material
Adverse Effect.
(z) None of the Company, any Subsidiary, or any of their
respective officers, directors, partners, employees, agents or affiliates or any
other person acting on behalf of the Company or any Subsidiary, 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 or any Subsidiary (or assist the Company or any Subsidiary in connection
with any actual or proposed transaction) which (i) might subject the Company or
any Subsidiary, 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 or any Subsidiary or (iii) if not continued in the future, could
reasonably be expected to have a Material Adverse Effect.
(aa) All tax returns required to be filed by the Company and
each of the Subsidiaries in all jurisdictions have been so filed. All taxes,
including 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, or the assets or property of the Company or any
Subsidiary.
(bb) None of the Company or the Subsidiaries is now, and after
sale of the Shares and the Direct Offering Shares to be sold by the Company and
application of the net proceeds from such sale as described in the Prospectus
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 of 1940, as amended (the "Investment Company Act"), or
(ii) a "registered holding company" or a "subsidiary company" or an "affiliate"
of a registered holding company within the meaning of the Public Utility Holding
Company Act of 1935, as amended (the "PUC Act").
(cc) Except as disclosed in the Prospectus, there are no
holders of securities of the Company or the Subsidiaries who, by reason of the
filing of the Registration Statement or consummation of the transactions
contemplated by this Underwriting Agreement or the Direct Offering Agreement,
have the right to request or demand that the Company, any of the Subsidiaries or
any of their joint ventures register any of its securities (including, without
limitation, Class A Common Stock and Class B common stock) under the Act. Except
as described in the Prospectus, no such rights with respect to any shares of
Class A Common Stock have been exercised as of the date hereof.
(dd) Each of the Company and the Subsidiaries 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.
(ee) Each of the Company and the Subsidiaries 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 and the Subsidiaries and
their respective businesses. None of the Company or any Subsidiary 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.
(ff) None of the Company or any of the Subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares, (ii)
since the date of the Prospectus, (A) sold, bid for, purchased or paid any
person any compensation for soliciting purchases of the Common Stock or (B) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(gg) The execution and delivery of this Underwriting Agreement
and the Direct Offering Agreement and the issuance and sale of the Shares and
the Direct Offering Shares 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.
(hh) None of (A) the execution, delivery and performance of
this Underwriting Agreement or the Direct Offering Agreement, (B) the issuance
and sale of the Shares and the Direct Offering Shares, (C) the application of
the proceeds from the issuance and sale of the Shares and the Direct Offering
Shares or (D) the consummation of the transactions contemplated in connection
with any of the foregoing as set forth in the Prospectus, will violate
Regulations T, U or X promulgated by the Board of Governors of the Federal
Reserve System or analogous foreign laws and regulations.
(ii) Except pursuant to this Underwriting Agreement, there are
no contracts, agreements or understandings between the Company, any of its
Subsidiaries or any of their joint ventures and any other person that would give
rise to a valid claim against the Company or any of the Underwriters for a
brokerage commission, finder's fee or like payment in connection with the
issuance, purchase and sale of the Shares.
(jj) During the past twenty-four months, 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.
(kk) Each of the Company and the Subsidiaries has complied
with all provisions of Section 517.075, Florida Statutes, relating to doing
business with the Government of Cuba or with any affiliate located in Cuba.
(ll) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be disclosed
therein pursuant to Item 404 of Regulation S-K of the Commission.
The Company acknowledges that the Underwriters and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
8(e), (f), (g) and (i) hereof, counsel to the Company and counsel to the
Underwriters, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
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 in any amendment thereof,
or in 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 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 therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the 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 Underwriter, but only
with reference to written information relating to such Underwriter furnished to
the Company, through the Representative, by or on behalf of such Underwriter
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 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 7, 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.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
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 Underwriters 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 Underwriters on the other from the offering of the Shares;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Shares) be responsible for any amount in excess of the underwriting discount or
commission applicable to the Shares purchased by such Underwriter hereunder. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the Underwriters severally 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 Underwriters 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 Underwriters shall be deemed to be equal to the total underwriting discounts
and commissions, in each case as set forth on the cover page of the Prospectus.
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 Underwriters on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, 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).
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the following
conditions:
(a) All of the representations and warranties of the Company
contained in this Underwriting Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
(b) If, at the time this Underwriting Agreement is executed
and delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto (including pursuant to Rule 462(b)) to be
declared effective before the offering of the Shares may commence, the
Registration Statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by the
Underwriters, and all filings, if any, required by Rules 424 and 430A under the
Act shall have been timely made; no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceeding for that
purpose shall have been instituted or, to the knowledge of the Company or the
Underwriters, threatened by the Commission, and any request of the Commission
for additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the Underwriters'
satisfaction.
(c) Subsequent to the effective date of this Underwriting
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 and the Subsidiaries, taken as a whole, not contemplated by the
Prospectus, which in the Underwriters' opinion, would materially adversely
affect the market for the Shares, or (ii) any event or development relating to
or involving the Company, the Subsidiaries, or any officer or director of the
Company or the Subsidiaries which makes any statement made in the Prospectus
untrue or which, in the opinion of the Company and its counsel or the
Underwriters and its counsel, requires the making of any addition to or change
in the Prospectus in order to state a material fact required by the 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 Prospectus to reflect
such event or development would, in the Underwriters' opinion, materially
adversely affect the market for the Shares.
(d) The Underwriters shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by any two officers (for the
purpose of subsections (d) and (l) "officer" shall mean the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Assistant Treasurer, the Secretary or Assistant Secretary) in
form and substance reasonably satisfactory to the Underwriters, confirming, as
of the Closing Date, the matters set forth in paragraphs (a), (b), and (c) of
this Section 8, 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.
(e) The Underwriters shall have received on the Closing Date,
an opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters, of Buchanan Ingersoll Professional Corporation, counsel for the
Company, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the state of its formation, with full corporate power and authority to
own its properties and conduct its business as described in the
Prospectus.
(ii) This Underwriting Agreement and the Direct
Offering Agreement have been duly authorized, executed and delivered by
the Company.
(iii) All of the outstanding shares of capital stock
of the Company have been duly authorized, validly issued, and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights. The outstanding shares of capital stock
of the Company are as set forth in the Prospectus under the caption
"Capitalization." The authorized capital stock of the Company conforms
in all material respects as to legal matters to the description thereof
contained in the Prospectus under the caption "Description of Capital
Stock."
(iv) The Shares to be issued and sold to the
Underwriters by the Company under this Underwriting Agreement have been
duly authorized and when issued and delivered to the Underwriters
against payment therefor in accordance with the terms of this
Underwriting Agreement, will be validly issued, fully paid and
nonassessable and free of any (A) preemptive rights or (B) to the best
knowledge of such counsel after reasonable inquiry, similar rights that
entitle or will entitle any person to acquire any Class A Common Stock
upon the issuance thereof by the Company, other than as described in
the Prospectus.
(v) The Direct Offering Shares have been duly
authorized and when issued and delivered against payment therefor in
accordance with the terms of the Direct Offering Agreement, will be
validly issued, fully paid and nonassessable and free of (A) preemptive
rights or (B) to the best knowledge of such counsel after reasonable
inquiry, similar rights that entitle or will entitle any person to
acquire any shares of Class A Common Stock upon the issuance thereof by
the Company, other than as described in the Prospectus.
(vi) The form of certificates for the Shares conforms
to the requirements of the Nasdaq National Market and the Delaware
General Corporation Law.
(vii) The Registration Statement and all
post-effective amendments, if any, have become effective under the Act
and, to the best knowledge of such counsel after reasonable inquiry, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose are pending before
or contemplated by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) has been made in accordance with
Rule 424(b).
(viii) The Company has the corporate power and
authority to enter into this Underwriting Agreement and the Direct
Offering Agreement and to issue, sell and deliver the Shares and the
Direct Offering Shares as provided therein, and this Underwriting
Agreement has been duly authorized, executed and delivered by the
Company and is a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
that (A) such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium (whether general or
specific) or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally, (B) such enforceability may
be limited by the effects of general principles of equity and by the
discretion of the court before which any proceeding therefor may be
brought (whether such proceeding is at law or in equity or in a
bankruptcy proceeding) and (C) rights to contribution or
indemnification may be limited by the laws, rules or regulations of any
governmental authority or agency thereof or public policy and, if
applicable, (D) waivers as to usury, stay or extension laws may be
unenforceable.
(ix) The Registration Statement and the Prospectus,
as of their dates (except for the financial statements, including the
notes thereto, and supporting schedules and other financial,
statistical and accounting data included therein or omitted therefrom,
as to which no opinion is expressed), and each amendment or supplement
thereto, as of its date, comply as to form in all material respects
with the Act.
(x) Neither the issuance, sale or delivery of the
Shares and the Direct Offering Shares, nor the execution, delivery or
performance of this Underwriting Agreement or the Direct Offering
Agreement, or compliance by the Company with all provisions of this
Underwriting Agreement and the Direct Offering Agreement, nor
consummation by the Company of the transactions contemplated hereby or
by the Direct Offering Agreement violates, conflicts with or
constitutes a breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent under, or result in the
imposition of a lien or encumbrance on any properties of the Company or
any subsidiary, or an acceleration of any indebtedness of the Company
or any subsidiary pursuant to, (i) the charter or bylaws of the Company
or (ii) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or its assets
or properties known to such counsel, except in the case of clause (ii)
for such violations, conflicts, breaches, defaults, consents,
impositions of liens or accelerations that (x) would not, singly or in
the aggregate, have a Material Adverse Effect or (y) are disclosed in
the Prospectus.
(xi) None of the Company, its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act or (ii) a
"registered holding company" or a "subsidiary company" or an
"affiliate" of a registered holding company within the meaning of the
PUC Act.
(xii) Except as set forth in the Prospectus, there
are no holders of securities of the Company who, by reason of the
execution by the Company of this Underwriting Agreement or the Direct
Offering Agreement or the consummation by the Company of the
transactions contemplated thereby, have the right to request or demand
that the Company register under the Act securities held by them.
(xiii) None of (A) the execution, delivery and
performance of this Underwriting Agreement, (B) the execution and
delivery of the Direct Offering Agreement or (C) the issuance and sale
of the Shares and the application of the proceeds from the issuance and
sale of the Shares and the Direct Offering Shares will violate
Regulations T, U or X promulgated by the Board of Governors of the
Federal Reserve System.
(xiv) To the knowledge of such counsel, there is (i)
no action, suit, investigation 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 any of the
Company or any subsidiary is or may be a party or to which the business
or property of any of the Company or any subsidiary is or may be
subject, (ii) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency, or (iii) no
injunction, restraining order or order of any nature by a federal or
state court of competent jurisdiction to which any of the Company or
any subsidiary is or may be subject that has been issued that, in the
case of clauses (i), (ii) and (iii) above, (x) is required to be
disclosed in the Prospectus and that is not so disclosed and, (y) could
reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, it being understood that for
purposes of this opinion, such counsel need express no opinion with
respect to (i) actions, suits investigation or proceedings before the
FCC or any similar state or local regulatory commission or body, (ii)
statutes, rules, regulations or orders by any FCC or any similar state
or local regulatory commission or (iii) injunctions, restraining orders
or other orders by the FCC or any similar state or local regulatory
commission or body.
(xv) The statements set forth in the Prospectus under
the caption "Risk Factors -- Future Sales of Adelphia Common Stock
Could Adversely Affect Its Market Price," "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financing
Transactions," insofar as they purport to describe the Company's
Capital Stock or the debt instruments referred to therein are, when
taken together with the other information included in the Prospectus,
accurate in all material respects and the statements set forth in the
Prospectus under the caption "Certain United States Tax Consequences to
Non-United States Holders," insofar as they purport to express
conclusions of legal matters, are accurate, complete and fair in all
material respects.
In addition, such counsel shall also state that, during the
course of the preparation of the Registration Statement and Prospectus, such
counsel participated in conferences with officers and other representatives of
the Company, representatives of the certified public accountants of the Company,
the Underwriter's representatives and the Underwriters' counsel, at which
conferences the contents of the Registration Statement and the Prospectus
(including the documents incorporated by reference in the Prospectus) and
related matters were generally discussed and, although such counsel has not
undertaken, except as otherwise indicated in our opinion, to determine
independently, and such counsel is not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus has not made an
independent investigation of facts for the purpose of rendering this opinion,
such counsel advises the Underwriters that, on the basis of the foregoing
(relying as to materiality to the extent we deemed appropriate upon the
statements of officers and other representatives of the Company), no facts have
come to our attention which lead us to believe that the Registration Statement
at the time it became effective, or the Prospectus, as of their respective dates
and as of the Closing Date, in each case including the documents incorporated by
reference in the Prospectus, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated in the Prospectus or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Such counsel expresses no opinion as to
financial statements (including the schedules and notes thereto) or any other
financial or statistical data or calculations directly or indirectly contained
or referenced to in, or related to, or omitted from, the Prospectus.
The opinion of such counsel may be limited to the laws of the
State of New York, the General Corporation Law of the State of Delaware, the
Commonwealth of Pennsylvania and the federal laws of the United States.
(f) The Underwriters shall have received on the Closing Date,
an opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters, of Randall D. Fisher, Esq., General Counsel of the Company, to the
effect that:
(i) Except as set forth in the Prospectus, each of
the Company and its subsidiaries has all of the licenses, permits,
franchises and authorizations, if any, required by the relevant
governmental authorities of each of New York, Virginia, Pennsylvania,
Ohio, New Jersey, Massachusetts, New Hampshire, Vermont, Michigan and
Connecticut and/or its political subdivisions for the provision of
cable television service (as such counsel understands service to be
provided which may be based on a certificate of an officer of the
Company, provided that such counsel shall state that they believe that
both the Underwriters and he are justified in relying on such
certificate), where the failure to obtain or hold such license, permit,
franchise or authorization would have a Material Adverse Effect;
(ii) To the best of such counsel's knowledge after
due inquiry, each of the Company and its subsidiaries has made all
filings, reports, applications and submissions required by the laws and
ordinances relating to cable services of each of New York, Virginia,
Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire, Vermont,
Michigan and Connecticut, and the ordinances of the state's political
subdivisions relating thereto, and the rules and regulations
promulgated therewith.
(iii) Each of the Company and its subsidiaries has
the consents, approvals, authorizations, licenses, certificates,
permits, or orders of any governmental authorities of the each of New
York, Virginia, Pennsylvania, Ohio, New Jersey, Massachusetts, New
Hampshire, Vermont, Michigan and Connecticut, and its political
subdivisions, if any, required for the consummations of the
transactions contemplated in this Underwriting Agreement or the Direct
Offering Agreement where the failure to obtain the consents, approvals,
authorizations, licenses, certificates, permits or orders would have a
Material Adverse Effect.
(iv) There are no actions, suits or proceedings
pending or, to the best of such counsel's knowledge, threatened by or
before any court or governmental body each of New York, Virginia,
Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire, Vermont,
Michigan and Connecticut, against or affecting any of the Company or
its subsidiaries, or the business of the Company and its subsidiaries.
(v) The statements in the Prospectus under the
headings "Risk Factors -- Competition" and "Risk Factors -- We Are
Subject to Extensive Regulation" insofar as they relate to the
Company's and its Subsidiaries' operations in each of New York,
Virginia, Pennsylvania, Ohio, New Jersey, Massachusetts, New Hampshire,
Vermont, Michigan and Connecticut, and purport to describe the
provisions of the laws and documents referred to therein, are accurate,
complete and fair in all material respects.
(vi) Neither the execution and delivery of this
Underwriting Agreement or the Direct Offering Agreement nor the
offering of the Shares or the Direct Offering Shares contemplated
hereby or thereby will conflict with or result in a violation of any
order or regulation of each of New York, Virginia, Pennsylvania, Ohio,
New Jersey, Massachusetts, New Hampshire, Vermont, Michigan and
Connecticut, or its political subdivisions applicable to the Company
and its subsidiaries, the conflict with or the violation of which would
have a Material Adverse Effect.
(g) The Underwriters shall have received on the Closing Date,
an opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters, of Colin H. Higgin, Deputy General Counsel of the Company, to the
effect that:
(i) None of the Company or its subsidiaries is in
violation of its certificate of incorporation, by-laws, certificate of
limited partnership or partnership agreement, as applicable, or in
default in the performance or observance of any material obligation,
covenant or condition contained in any partnership agreement,
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound.
(ii) Each of the Company and its subsidiaries has
been duly qualified as a foreign corporation or partnership, as the
case may be, for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction,
except where the failure to so qualify would not have a Material
Adverse Effect (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided
that such counsel shall state that he believes that both the
Underwriters and he are justified in relying upon such opinions and
certificates).
(iii) Each subsidiary of the Company is owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (other than liens to secure
indebtedness under credit facilities disclosed in the Prospectus) (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that he believes that both the
Underwriters and he are justified in relying upon such opinions and
certificates).
(iv) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, shareholder's equity, partners'
equity, or results of operations of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(v) Neither the issuance and sale of the Shares and
the Direct Offering Shares, the execution, delivery or performance by
the Company of this Underwriting Agreement or the Direct Offering
Agreement, or the consummation by the Company of the transactions
herein and therein contemplated will, to the best of my knowledge after
due inquiry, conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under any material
indenture, mortgage, deed of trust, sale/leaseback transaction, loan
agreement or other similar financing agreement, or instrument or other
agreement or instrument (including, without limitation, any license or
franchise granted to the Company or a subsidiary by a local franchising
governmental body) to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the certificate of incorporation, by-laws, the
certificate of limited partnership or the partnership agreements of the
Company and its subsidiaries, as appropriate, or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties.
(vi) No consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
Direct Offering Shares, the execution, delivery or performance by the
Company of this Underwriting Agreement or the Direct Offering Agreement
or the consummation by the Company of the transactions contemplated
herein or therein, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and resale
of the Shares by the Underwriters.
(vii) Except as described in the Prospectus or in
this Underwriting Agreement, all of the outstanding capital stock of
each subsidiary is owned by the Company, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance
(other than liens to secure indebtedness under credit facilities
disclosed in the Prospectus). There are not, to my knowledge, other
than as set forth, contemplated or referenced in the Prospectus,
currently, and will not be immediately following the issuance and sale
of the Shares, any material 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 or any subsidiary.
(viii) The Consummation of the transactions
contemplated in connection with any of the foregoing as set forth in
the Prospectus, will not violate Regulations T, U or X promulgated by
the Board of Governors of the Federal Reserve System.
In addition, such counsel shall also state that,
although we have not undertaken, except as otherwise indicated in our
opinion, to determine independently, and do not assume any
responsibility for, the accuracy, completeness or fairness of the
statements in the Registration Statement, we have participated in the
preparation of the Registration Statement and the Prospectus, including
general review and discussion of the contents thereof but have made no
independent check or verification thereof, and no facts have come to
our attention that would lead us to believe that the Registration
Statement at the time the Registration Statement became effective, or
the Prospectus, as of their respective dates and as of the Closing
Date, in each case including the documents incorporated by reference in
the Prospectus, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
in the Prospectus or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
or that any amendment or supplement to the Prospectus, as of their
respective dates, and as of the Closing Date, as the case may be,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated in the Prospectus or necessary in
order to make the statements in the Prospectus, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to
the financial statements, schedules, pro forma financial statements and
the notes thereto and other financial data included in the Registration
Statement and the Prospectus).
(h) The Underwriters shall have received on the Closing Date,
an opinion of Fleischman & Walsh, L.L.P., special regulatory counsel for the
Company and its subsidiaries, dated the Closing Date, in form and substance
satisfactory to the Underwriters, to the effect that:
(i) The communities listed in Section A of Attachment
1 to the opinion have been registered with the FCC in connection with
the operation of the Systems. The filing of a registration statement
constitutes initial FCC authorization for the commencement of cable
television operations in the community registered.
(ii) The subsidiaries hold certain FCC licenses, as
that term is defined below ("FCC Licenses"). All FCC Licenses and
receive-only earth station registrations held by the subsidiaries in
connection with the operation of the Cable Systems are listed on
Attachment 1 to the Opinion. To the best of our knowledge, all such FCC
Licenses have been validly issued or assigned to the present licensee
and are currently in full force and effect. We have no knowledge of any
event which would allow, or after notice or lapse of time which would
allow, revocation or termination of any FCC License held by the
subsidiaries or would result in any other material impairment of the
rights of the holder of such license. To the best of our knowledge, no
other FCC Licenses are required in connection with the operation of the
Cable Systems by the subsidiaries in the manner we have advised they
are presently being operated. For the purposes of this opinion, an FCC
License is defined as an authorization, or renewal thereof, issued by
the FCC authorizing the transmission of radio energy through the
airways.
(iii) Other than proceedings affecting the cable
television industry generally, there is no action, suit or proceeding
pending before or, to the best of our knowledge, threatened by the FCC
which is reasonably likely to have a materially adverse impact upon the
cable television operations of the Company and its subsidiaries taken
as a whole.
(iv) To the best of our knowledge after due inquiry,
the Company and the subsidiaries have filed all current and routine
filings, reports, applications and submissions required under the
Communications Act, as amended, and under the rules and regulations of
the FCC.
(v) The subsidiaries hold all authorizations and/or
have filed all notifications required by the FCC in connection with
their operation on all frequencies in the 108-137 MHz and 225-400 MHz
bands which we have been advised are currently being utilized on the
Cable Systems. The geographic and technical parameters with respect to
the authorized use of these frequencies are listed on Attachment 1
hereto.
(vi) The employment units covered by the Cable
Systems and operated by the subsidiaries have been certified, where
required, by the FCC for compliance with equal employment opportunity
("EEO") requirements in each of calendar years 1992 through 1996 in
which such Cable Systems have been owned and operated by the Company or
the Subsidiaries. Employment certification records for the years prior
to 1992 have been purged from the FCC's database and are therefore
outside the scope of this opinion.
(vii) Statements of Account required by Section 111
of the Copyright Act of 1976, as amended have been filed, together with
royalty payments accompanying said Statements of Account, with the U.S.
Copyright Office for the Cable Systems covering each of the accounting
periods beginning with January 1 through June 30, 1994 accounting
period and ending with the July 1 through December 31, 1996 accounting
period during which such Cable Systems have been operated by the
subsidiaries. We have not received the information or calculations
contained in these Statements, and express no opinion with respect to
the accuracy thereof. To the best of our knowledge, there are no
currently outstanding inquiries received from the U.S. Copyright Office
or any other party which question the copyright filings or payments
made by the Company or the subsidiaries with respect to the Cable
Systems. It is possible that there may be matters pending before the
U.S. Copyright Office relating to the Cable Systems, the Company or the
subsidiaries of which we do not have knowledge because such matters
have not yet been incorporated into the available public files of the
U.S. Copyright Office. However, we are not aware of the pending or
threatened claim, action or demand for copyright infringement or for
non-payment of royalties with respect to the Statements of Account or
related royalty payments filed by the Company and the subsidiaries for
the Cable Systems.
(viii) The Company has obtained all consents,
approvals and authorizations of the FCC, if any, required for the
consummation of the transactions contemplated in this Underwriting
Agreement or the Direct Offering Agreement where the failure to obtain
the consents, approval, authorizations, licenses, certificates, permits
or orders would reasonably be expected to have a materially adverse
impact on the Company or the Subsidiaries.
(ix) Neither the execution and delivery of the this
Underwriting Agreement or the Direct Offering Agreement nor the
offering of the Class A Common Stock or the Class B common stock
contemplated thereby will conflict with or result in a violation of any
order or regulation of the FCC applicable to the Company and the
Subsidiaries, the conflict with or the violation of which would
reasonably be expected to have a materially adverse impact on the
Company or the Subsidiaries. However, we call the Underwriters'
attention to the following.
(x) Under the Act as now in effect, the sale or other
disposition of certain pledged collateral and the exercise of certain
other rights and remedies conferred upon the Underwriters by any
agreement or by applicable law might constitute an assignment of an FCC
licensee, or transfer of control of an FCC license, requiring for its
consummation the prior consent of the FCC granted upon an appropriate
application thereof.
(xi) Under the Act as now in effect, and as now
interpreted by the FCC, no valid security interest may be granted in an
FCC license. To the extent that this Underwriting Agreement or the
Direct Offering Agreement and/or related financing documents purport to
grant to the Underwriters a security interest in any FCC licenses, such
security interest may not be legally enforceable.
(xii) In the course of our representation of the
Company and its subsidiaries, no matters have come to our attention,
other than matters affecting the cable television industry generally,
which would reasonable be expected to have a materially adverse impact
upon the cable television operations of the Company and the
Subsidiaries taken as a whole.
(xiii) In our opinion, the statements in the
Prospectus under the headings "Risk Factors -- Competition" and "Risk
Factors -- We Subject to Extensive Regulation" and the statements
incorporated by reference in the Prospectus by reference to the
Company's Transition Report on Form 10-K for the transition period from
April 1, 1998 to December 31, 1998 and the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999
under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Regulatory and Competitive
Matters," insofar as they purport to describe the provisions of the law
referred to therein, are accurate, complete and fair in all material
respects.
(i) The Underwriters shall have received on the Closing Date,
an opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters, of Cole, Raywid & Braverman, L.L.P., communications counsel to
Century Communications Corp. ("Century"), with respect to the status of the FCC
licenses of Century and such other related matters as the Underwriters may
request.
(j) The Underwriters shall have received on the Closing Date,
an opinion, dated the Closing Date, in form and substance satisfactory to the
Underwriters, of Hogan & Hartson LLP, special regulatory counsel to Harron
Communications Corp. ("Harron"), with respect to the status of the FCC licenses
of Harron and such other related matters as the Underwriters may request.
(k) The Underwriters shall have received on the Closing Date,
reliance letters, dated as of October 1, 1999, in form and substance
satisfactory to the Underwriters, of Dow Lohnes & Albertson PLC, special
regulatory counsel to FrontierVision and Coaxial with respect to their opinions
to the Company, dated as of October 1, 1999.
(l) The Underwriters shall have received a certificate, dated
the Closing Date, in form and substance reasonably satisfactory to the
Underwriters, signed on behalf of the Company by any two officers, with respect
to FrontierVision Partners, L.P. ("FrontierVision") and Coaxial Communications
of Southern Ohio, Inc. ("Coaxial," together with FrontierVision, the "Acquired
Entities"), to the effect that, between October 1, 1999 and the Closing Date,
each of the FCC licenses and receive-only earth station registrations in
connection with the Acquired Companies remain in full force and effect and that
except with respect to general rulemaking proceedings and similar matters
relating generally to the cable television industry, to their knowledge: (1)
there has not been any adverse judgment, decree or order which has been issued
specifically against the Acquired Companies; (2) there is no FCC action,
proceeding, complaint or investigation pending or threatened by the FCC against
the Acquired Companies, that, if adversely determined would have a material
adverse effect on each of the Acquired Companies' operations taken as a whole.
(m) The Underwriters shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Underwriters,
of Latham & Watkins, counsel to the Underwriters, covering such matters as are
customarily covered in such opinions.
(n) The Company shall have furnished to the Underwriters
letters from each of Deloitte & Touche LLP and KPMG LLP, addressed to the
Underwriters and dated as of the date of this Underwriting Agreement and of the
Closing Date, respectively, covering the matters previously requested by Latham
& Watkins, in form and substance satisfactory to Salomon Smith Barney Inc. and
their counsel in their sole discretion.
(o) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) 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
Registration Statement or the Prospectus; (iii) there shall not have been, since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as may otherwise be stated in the
Registration Statement 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; (iv) there
shall not have been any announcement by either Moody's Investors Service, Inc.
or Standard & Poor's that (a) it is downgrading its rating assigned to any class
of securities of the Company or any of its subsidiaries, or (b) it is reviewing
its ratings assigned to any class of securities of the Company or any of its
subsidiaries with a view to possible downgrading, or with negative implications
and (v) 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 Registration Statement or the
Prospectus.
(p) 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.
(q) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably require
for the purpose of enabling them to review or pass upon the matters referred to
in this Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations, warranties
or conditions herein contained.
(r) The Shares shall have been listed or approved for
listing upon notice of issuance on the Nasdaq National Market.
(s) The Company shall have furnish to the Underwriters
"lock-up" letters, in form and substance satisfactory to the Underwriters, duly
signed by the persons or entities set forth on Schedule II hereto.
(t) The Rigas Family, through Highland Holdings, shall have
entered into the Direct Offering Agreement and in connection therewith shall
have agreed to "lock-up" their shares of Class B common stock, subject to
certain exceptions, for a period of 180 days from the closing of the purchase of
the Direct Offering Shares, but not to exceed a year from the Closing Date.
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 the Underwriters and the Underwriters' counsel.
Any certificate or document signed by any officer of the
Company and delivered to the Underwriters or to counsel for the Underwriters,
shall be deemed a representation and warranty by the Company to the Underwriters
as to the statements made therein.
The respective obligations of the several Underwriters to
purchase and pay for any Additional Shares shall be subject, in their
discretion, to each of the foregoing conditions to purchase the Firm Shares,
except that all references to the Firm Shares and the Closing Date shall be
deemed to refer to such Additional Shares and the Option Closing Date,
respectively.
9. 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, and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), the Prospectus, 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 Registration Statement, the Prospectus, 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 Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this
Underwriting Agreement, the Blue Sky Memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) the registration of the Class A Common Stock under the
Exchange Act and the listing of the Shares on the Nasdaq National Market; (vi)
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(f)
hereof (including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing or reproduction, and
delivery of the Blue Sky Memorandum and such registration and qualification);
(vii) the filing fees and the fees and expenses of counsel for the Underwriters
in connection with any filings required to be made with the National Association
of Securities Dealers, Inc.; (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; (ix) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
10. Effective Date of Agreement. This Underwriting Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Underwriting Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Shares may
commence, when notification of the effectiveness of the Registration Statement
or such post-effective amendment has been released by the Commission. Until such
time as this Underwriting Agreement shall have become effective, it may be
terminated by the Company, by notifying the Underwriters, or by the
Underwriters, by notifying the Company.
Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
11. Default by an Underwriter. If any one or more of the Underwriters
shall fail or refuse to purchase Shares which it or they are obligated to
purchase hereunder, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase on such
date is not more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on such date, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number of
Shares set forth opposite its name in Schedule I hereto bears to the aggregate
number of Shares set forth opposite the names of all non-defaulting Underwriters
or in such other proportion as you may specify in accordance with the Master
Agreement Among Underwriters of Salomon Smith Barney Inc., to purchase the
Shares which such defaulting Underwriter or Underwriters are obligated, but fail
or refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase and the
aggregate number of Shares with respect to which such default occurs is more
than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on such date and arrangements satisfactory to you and the
Company for the purchase of such Shares by one or more non-defaulting
Underwriter or Underwriters or other party or parties approved by you and the
Company are not made within 36 hours after such default, this Underwriting
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company. In any such case which does not result in
termination of this Underwriting Agreement, either you or the Company shall have
the right to postpone the Closing Date or Option Closing Date, as the case may
be, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and the Prospectus or any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
such default of any such Underwriter under this Underwriting Agreement. The term
"Underwriter" as used in this Underwriting Agreement includes, for all purposes
of this Underwriting Agreement, any party not listed in Schedule I hereto who,
with your approval and the approval of the Company, purchases Shares which a
defaulting Underwriter is obligated, but fails or refuses, to purchase.
12. Termination of Agreement. This Underwriting Agreement shall be
subject to termination in the Underwriters' absolute discretion, without
liability on the part of the Underwriters to the Company, by notice to the
Company, if prior to the Closing Date or any Option Closing Date (if different
from the Closing Date and then only as to the Additional Shares), as the case
may be, (i) trading in securities of the Company on the Nasdaq National Market
or in securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
or Philadelphia shall have been declared by either federal or state authorities,
or (iii) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in the Underwriters' judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
13. Information Furnished by the Underwriters. The statements set forth
in the statements in the third, ninth, tenth and thirteenth paragraphs under the
caption "Underwriting" in the Prospectus, constitute the only information
furnished by or on behalf of the Underwriters as such information is referred to
in Sections 6(a) and 7 hereof.
14. Miscellaneous. Except as otherwise provided in Sections 5, 10 and
12 hereof, notice given pursuant to any provision of this Underwriting Agreement
shall be in writing and shall be delivered (i) if to the Company, at the office
of the Company at Adelphia Communications Corporation, Main at Water Street,
Coudersport, Pennsylvania 16915, Attention: Chief Financial Officer; or (ii) if
to the Underwriters, care of Salomon Smith Barney Inc., 388 Greenwich Street,
New York, New York 10013, Attention:
Registration Department.
This Underwriting Agreement has been and is made solely for
the benefit of the Underwriters, the Company, its directors and officers, and
the other controlling persons referred to in Section 7 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 Underwriting
Agreement. Neither the term "successor" nor the term "successors and assigns" as
used in this Underwriting Agreement shall include a purchaser from the
Underwriters of any of the Shares in his status as such purchaser.
15. Applicable Law; Counterparts. This Underwriting 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.
This Underwriting Agreement may be signed in various
counterparts which together constitute one and the same instrument. If signed in
counterparts, this Underwriting Agreement shall not become effective unless at
least one counterpart hereof shall have been executed and delivered on behalf of
each party hereto.
[signature pages follow]
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
ADELPHIA COMMUNICATIONS CORPORATION
By: /S/ James Brown
Name: James Brown
Title: Vice-President
Confirmed as of the date first above mentioned.
SALOMON SMITH BARNEY INC.,
as Representative
on behalf of itself and the other
Underwriters listed on Schedule I hereto
/s/ Christopher L. Clipper
Name: Christopher L. Clipper
Title: Vice President
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE i
Number of Additional Shares to be
Purchased if Maximum Option is
Name of Underwriter Total Number of Firm Shares Exercised
------------------- --------------------------- ---------
<S> <C> <C>
Salomon Smith Barney Inc. 600,000 90,000
Credit Suisse First Boston Corporation 600,000 90,000
Goldman, Sachs & Co. 600,000 90,000
Banc of America Securities, LLC 600,000 90,000
Donaldson, Lufkin & Jenrette Securities Corporation 600,000 90,000
Lehman Brothers Inc. 600,000 90,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 600,000 90,000
Morgan Stanley & Co. Incorporated 600,000 90,000
CIBC World Markets Corp. 300,000 45,000
Credit Lyonnais Securities (USA) Inc. 300,000 45,000
First Union Securities, Inc. 300,000 45,000
SG Cowen Securities Corporation 300,000 45,000
------- ------
Total 6,000,000 900,000
</TABLE>
<PAGE>
SCHEDULE iI
Persons Or Entities Subject To Lock-Ups
John J. Rigas
Timothy J. Rigas
Michael J. Rigas
James P. Rigas
Dorellenic
Eleni Acquisition, Inc.
Doris Holdings, L.P.
Highland Holdings
Highland Holdings II
EXHIBIT 3.01
CERTIFICATE
FIRST: The name of the corporation is Adelphia Communications
Corporation.
SECOND: The address of the corporation's registered office in the State
of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County
of Kent. The name of its registered agent at such address is the Prentice-Hall
Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The aggregate number of shares of capital stock which the
Corporation shall have the authority to issue shall be 1,550,000,000 shares
which shall be classified into three classes as follows:
50,000,000 shares of Preferred Stock, $.01 par value per share (the
"Preferred Stock");
1,200,000,000 shares of Class A Common Stock, par value $.01 per share;
and
300,000,000 shares of Class B Common Stock, par value $.01 per share.
The Class A Common Stock and the Class B Common Stock are sometimes together
referred to as the "Common Stock."
A description of each class of shares and a statement of the
designations and the powers, preferences, and rights and the qualifications,
limitation, or restrictions thereof and of the authority vested in the Board of
Directors to establish series of the Preferred Stock and to fix the variations
in the relative rights and preferences as between the series of such class are
as follows:
1. The Preferred Stock.
The Board of Directors is authorized, subject to limitations prescribed
by law, to provide for the issuance of the Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designations and the powers, preferences and rights of
the shares of each such series and the qualifications, limitations, or
restrictions thereof.
The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or
<PAGE>
dates, and the relative rights of priority, if any, of payment
of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
(d) Whether that series shall have conversion privileges, and, if
so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events
as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable,
and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions
and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, and the relative rights of priority, if
any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of that
series.
Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment before any dividends shall be paid or
declared and set apart for payment on the Common Stock with respect to the same
dividend period.
If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to holders
of shares of Preferred Stock of all series shall be insufficient to pay such
holders the full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all series of Preferred
Stock in accordance with the respective preferential amounts (including unpaid
cumulative dividends, if any) payable with respect thereto.
2. The Common Stock.
a. Voting Rights
(i) The holders of Class A Common Stock shall be entitled by
class vote, exclusive of all other stockholders, to elect one director of the
entire Board of Directors of the Corporation at any annual meeting of the
stockholders for the election of directors. If during the interval between
annual meetings of stockholders for the election of directors, the number of
directors who have been elected by the holders of Class A Common Stock shall, by
reason of resignation, death, disqualification or removal, be reduced, the
vacancy or vacancies in the directors so created may be filled by a majority
vote of the remaining directors then in office, even if less than a quorum, or
by a sole remaining director. Any director elected by the remaining directors
then in office to fill any vacancy in the directorship designated by the holders
of Class A Common Stock may be removed from office, with or without cause, by
<PAGE>
vote of the holders of or majority of the shares of Class A Common Stock voting
as a class.
(ii) Except as provided in Sub-paragraph (i) above, each
holder of Class A Common Stock shall be entitled to one vote for each share of
Class A Common Stock held by such stockholder in the election of directors and
on all other matters presented to the stockholders, and each holder of Class B
Common Stock shall be entitled to ten votes for each share of Class B Common
Stock held by such stockholder in the election of directors and on all other
matters presented to stockholders. The stockholders of the Corporation shall not
be entitled to cumulate their votes in any election of the directors of the
Corporation.
(iii) Except as provided in Sub-paragraph (i) above, the
holders of Class A Common Stock and Class B Common Stock (and any series or
class of Preferred Stock, if such series or class of Preferred Stock shall be
entitled to vote as a single class with the Common Stock, pursuant to the
designations, powers, preferences, privileges and rights of such class or
series) shall vote together as a single class, except as otherwise required by
the General Corporation Law of Delaware, provided further, however, that the
number of authorized shares of Class A Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, voting as a single class.
b. Conversion Rights
(i) Subject to and upon compliance with the provisions of this
Paragraph b, Class B Common Stock shall be convertible into fully paid and
nonassessable Class A Common Stock on the basis of one share of Class A Common
Stock for each share of Class B Common Stock surrendered for conversion. Any
holder of Class B Common Stock may, at the option of such holder, at any time
during normal business hours and from time to time convert any or all shares of
Class B Common Stock held by such holder into an equal number of shares of Class
A Common Stock by delivering to the principal executive offices of the
Corporation or any transfer agent for the Class A Common Stock (i) the
certificate or certificates representing the share or shares of Class B Common
Stock to be converted, duly endorsed, (ii) written notice to the Corporation
stating that such holder elects to convert such share or shares and stating the
name and addresses in which each certificate for the shares of Class A Common
Stock issued upon such conversion is to be issued, (iii) and any transfer tax
stamps or funds therefore required to be paid in connection with the transfer.
(ii) Conversion shall be deemed to have been effected at the
close of business on the date of the surrender of the certificate or
certificates representing shares of Class B Common Stock in the manner described
above and such date is referred to herein as the "Conversion Date." On the
Conversion Date or as promptly thereafter as practicable, the Corporation or its
transfer agent shall issue and deliver to the holder of the shares of Class B
Common Stock surrendered for conversion a certificate for the number of full
shares of Class A Common Stock issuable upon the conversion or transfer of such
shares of Class B Common Stock. The person in whose name the certificate is to
be issued shall be deemed to have become a holder of record of the shares of
Class A Common Stock on the Conversion Date. The Corporation hereby reserves and
shall at all times reserve and keep available, out of its authorized and
unissued Class A Common Stock, for the purposes of effecting conversions, such
number of duly authorized shares of Class A Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of Class B
Common Stock, provided, that nothing contained herein shall be construed to
preclude the Corporation from satisfying its obligations in respect of the
<PAGE>
conversion by delivery of purchased shares of Class A Common Stock which are
held in the treasury of the Corporation. The Corporation covenants that if any
Class A Common Stock required to be reserved for purposes of the conversion
hereunder require registration with or approval of any governmental authority
under any federal or state law before such Class A Common Stock may be issued
upon conversion, the Corporation will cause such shares to be duly registered or
approval, as the case may be. The Corporation covenants that all Class A Common
Stock which shall be issued upon conversion of the Class B Common Stock will,
upon issue, be fully paid and nonassessable and not subject to any preemptive
rights.
(iii) No adjustments in respect to dividends shall be made
upon the conversion of any share of Class B Common Stock, provided, however,
that if a share shall be converted subsequent to the record date for the payment
of a dividend or other distribution on Class B Common Stock but prior to such
payment, the registered holder of such share at the close of business on such
record date shall be entitled to receive the dividend or other distribution
payable on such share on the date set for payment of such dividend or other
distribution notwithstanding the conversion thereof hereunder or the
Corporation's default in payment of the dividend due on such date.
c. Dividends
(i) After there shall have been paid or declared and set apart
for payment full cumulative dividends for all past dividend periods and the then
current dividend period on any class or series of Preferred Stock as provided
for in the terms and provisions of any such class or series of Preferred Stock
(with any interest required to be paid thereon), and after there shall have been
set apart a sum or sums sufficient to provide for all past and then current
sinking fund installments for the Preferred Stock as provided in the terms and
provisions, if any, of any class or series of any Preferred Stock (with any
interest required to be paid thereon), then out of any funds lawfully available
therefor dividends may be paid upon the Common Stock and upon any class of
shares ranking as to dividends or distribution of assets subordinate to the
Preferred Stock if, when and as declared by the Board of Directors in its
discretion, and shares of any outstanding class of share of the Corporation
ranking as to dividends or distribution of assets subordinate to the Preferred
Stock may be purchased, acquired, redeemed or otherwise retired by the
Corporation.
(ii) Except as hereinafter in this Paragraph c provided and
except with respect to a "stock dividend" as hereinafter defined, no dividend
may be declared or paid in cash on Class B Common Stock unless concurrently
therewith a dividend in the amount per share of one hundred five percent (105%)
of the amount per share of the dividend declared and paid in cash on the Class B
Common Stock is declared and paid on the Class A Common Stock; and no dividend
may be declared or paid in property on either class of Common Stock unless
concurrently therewith a dividend of the same value per share is declared and
paid on the other class of Common Stock. If at any time a dividend is to be paid
in Class A Common Stock or Class B Common Stock (a "stock dividend"), such stock
dividend may be declared and paid only as follows: (i) so long as no share of
Class A Common Stock has been issued and is outstanding, shares of Class A
Common Stock may be paid to holders of Class B Common stock and (ii) if shares
of both Class A Common Stock and Class B Common Stock are issued and
outstanding, shares of Class A Common Stock may be paid only to holders of Class
A Common Stock and shares of Class B Common Stock may be paid only to holders of
Class B Common Stock, and whenever a stock dividend is paid, the same number of
shares of stock shall be paid in respect of each outstanding share of Class A
Common Stock and each outstanding share of Class B Common Stock.
<PAGE>
d. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Corporation, or any reduction of its capital, resulting in a
distribution of its assets to its stockholders, whether voluntary or
involuntary, after there shall have been paid or set apart for the holders of
the Preferred Stock the full preferential amount to which they are respectively
entitled pursuant to the terms and provisions of all outstanding series and
classes of Preferred Stock, there shall be paid to holders of shares of Class A
Common Stock the sum of $1.00 per share and the amount of all unpaid declared
dividends thereon before any sums shall be paid or any assets distributed among
the holders of shares of Class B Common Stock (and if the assets of the
Corporation shall be insufficient to pay the holders of shares of Class A Common
Stock the full amount thus distributable, then such assets shall be distributed
ratably among the holders of the shares of Class A Common Stock); then and
thereafter there shall be paid to the holders of shares of Class B Common Stock
the sum of $1.00 per share and the amount of all unpaid declared dividends
thereon (and if the assets of the Corporation shall be insufficient to pay to
holders of shares of Class B Common Stock the full amount thus distributable,
then the entire remaining assets of the Corporation shall be distributed ratably
among the holders of the shares of Class B Common Stock); and after the
foregoing payments to the holders of the shares of Class A Common Stock and the
shares of Class B Common Stock, then the remaining funds shall be distributed
among and paid to the holders of the shares of Class A Common Stock and the
shares of Class B Common Stock, share and share alike, and in proportion to
their holdings.
e. Change in Class. Neither the shares of Class A Common Stock nor the
shares of Class B Common Stock may be subdivided, consolidated, reclassified or
otherwise changed unless concurrently the shares of the other class of Common
Stock is subdivided, consolidated, reclassified or otherwise changed in the same
proportion and the same manner.
f. General. Except as above provided, each share of Class A Common
Stock and each share of Class B Common Stock shall be identical and have the
same powers, preferences, rights, qualifications, limitations and restrictions
and rank equally, share ratably and be identical in all respects as to all
matters.
FIFTH: The name and mailing address of the incorporator is Daniel R.
Milliard, 5 West Third Street, Coudersport, Pennsylvania 16915.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal by-laws of the Corporation, but the
stockholders may adopt additional by-laws and may amend or repeal any by-law
whether adopted by them or otherwise.
EIGHTH: Elections of directors need not be by written ballot except
and to the extent provided in the by-laws of the Corporation.
NINTH: Any director or the entire board of directors may be removed,
with or without cause, by the requisite vote of the shares then entitled to vote
upon such removal.
TENTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director for any act or omission occurring on or after July 1, 1986;
provided, however, that the foregoing shall not eliminate or limit the liability
of a director (a) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (b) for any act or omission not in good faith
<PAGE>
or which involves intentional misconduct or a knowing violation of law, (c)
under Section 174 of the General Corporation Law of the State of Delaware , or
(d) for any transaction from which the director derived an improper personal
benefit.
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
13% SERIES A CUMULATIVE EXCHANGEABLE PREFERRED STOCK
AND
13% SERIES B CUMULATIVE EXCHANGEABLE PREFERRED STOCK
OF
ADELPHIA COMMUNICATIONS CORPORATION
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
ADELPHIA COMMUNICATIONS CORPORATION (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, certifies that pursuant to the authority contained in its
Certificate of Incorporation, as amended (the "Certificate of Incorporation")
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the 1997 Debt Offering Committee of the Board of
Directors of the Corporation by unanimous written consent dated July 2, 1997
duly approved and adopted the following resolution which resolution remains in
full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the 1997
Debt Offering Committee of the Board of Directors on June 22, 1997 and pursuant
to the authority vested in the Board of Directors by the Certificate of
Incorporation, the 1997 Debt Offering Committee of the Board of Directors does
hereby designate, create, authorize and provide for the issue of 13% Series A
Cumulative Exchangeable Preferred Stock (the "Series A Exchangeable Preferred
Stock"), par value $.01 per share, with a liquidation preference of $100.00 per
share, consisting of 1,500,000 shares and 13% Series B Cumulative Exchangeable
Preferred Stock, par value $.01 per share, with a liquidation preference of
$100.00 per share, consisting of 1,500,000 shares (the "Series B Exchangeable
Preferred Stock" and together with the Series A Exchangeable Preferred Stock,
the "Exchangeable Preferred Stock"), no shares of either of such series having
heretofore been issued by the Corporation, possessing the following voting
<PAGE>
powers, preferences and relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof as follows:
1. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this Section 1 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural):
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Corporation, (ii) which beneficially owns or holds 10%
or more of any class of the voting Capital Stock of the Corporation, or (iii) of
which 10% or more of the voting Capital Stock is beneficially owned or held by
the Corporation, a Restricted Subsidiary or an Unrestricted Subsidiary of the
Corporation. Without a limitation, an Affiliate also includes any director or
executive officer of the Corporation.
As used herein, "Affiliate" shall not include a Restricted Subsidiary.
"Aggregate Excess Restricted Investments" means for any fiscal
quarter the aggregate of Excess Restricted Investments with respect to the
Restricted Investments in all of the Unrestricted Subsidiaries and Affiliates of
the Corporation.
"Annualized Pro Forma EBITDA" means, with respect to any
Person, (i) such Person's Pro Forma EBITDA for the latest fiscal quarter
multiplied by four, minus (ii) in the case of the Corporation only, the
Corporation's Aggregate Excess Restricted Investments for such fiscal quarter.
"Applicable Redemption Price" means a price per share equal to
the following redemption prices (expressed as a percentage of the Liquidation
Preference thereof) during the twelve-month periods commencing on July 15 of the
years indicated:
2002........................................ 106.500%
2003........................................ 105.417%
2004........................................ 104.333%
2005........................................ 103.250%
2006........................................ 102.167%
2007........................................ 101.083%
2008 and thereafter......................... 100.000%
in each case, together with accrued and unpaid dividends and Liquidated Damages,
if any thereon to the Redemption Date; provided, that the Applicable Redemption
Price with respect to any redemption by the Corporation under Section 4(c) below
shall be the redemption price specified in Section 4(c) below.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Corporation or any of its Restricted Subsidiaries) in any
single transaction or series of related transactions of (a) any Capital Stock of
or other equity interest in any Restricted Subsidiary, (b) all or substantially
all of the assets of the Corporation or of any Restricted Subsidiary or (c) all
or substantially all of the assets of a Corporation system or part thereof
serving at least 5,000 basic subscribers, a division, line of business or
comparable business segment of the Corporation or any Restricted Subsidiary.
"Board of Directors" means the Board of Directors of the
Corporation or any committee authorized to act therefor.
<PAGE>
"Business Day" means a day other than a Saturday or a Sunday
or any federal of New York holiday.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right or other interest in the nature of
any equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capital Stock Sale Proceeds" means the aggregate net sale
proceeds (including the fair market value of property, other than cash, as
determined by an independent appraisal firm) received by the Corporation from
the issue or sale (other than to a Subsidiary) by the Corporation of any class
of its Capital Stock on or after January 1, 1993 (including Capital Stock of the
Corporation issued after January 1, 1993 upon conversion of or in exchange for
other securities of the Corporation but excluding the Exchangeable Preferred
Stock).
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Certificate of Designations" means this certificate of
Designations, Preferences and Relative, Participating, Optional and other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof of the 13% Series A Cumulative Exchangeable Preferred Stock
and the 13% Series B Cumulative Exchangeable Preferred Stock of Adelphia
Communications Corporation
"Change of Control" means such time as (i) (a) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than the Rigas Family and its Affiliates, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power required to elect or designate for election a majority of the
Corporation's Board of Directors and attaching to the then outstanding voting
Capital Stock of the Corporation and (b) the Rigas Family, together with its
Affiliates, is not at such time the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 35% of the total voting power required to
elect or designate for election a majority of the Corporation's Board of
Directors and attaching to the then outstanding voting Capital Stock of the
Corporation, or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Corporation's
Board of Directors (together with any new directors whose election by the
Corporation's Board of Directors or whose nomination for election by the
Corporation's stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved or approved by the Rigas Family and its Affiliates at a time when they
had the right or ability by voting right, contract or otherwise to elect or
designate for election a majority of the Corporation's Board of Directors) cease
for any reason to constitute a majority of the directors then in office.
"Change of Control Triggering Event" means the occurrence of
both a Change of Control and a Rating Decline.
"Class A Common Stock" means the Corporation's Class A Common
Stock, $.01 par value per share.
<PAGE>
"Class B Common Stock" means the Corporation's Class B Common
Stock, $.01 par value per share.
"Common Equity" means the Class A Common Stock and the Class B
Common Stock and any other stock of the Corporation, howsoever designated,
authorized after the date of this Certificate of Designations, that has the
right (subject always to prior rights of any class or series of preferred stock)
to participate in the distribution of the assets and earnings of the Corporation
without limit as to per share amount.
"Common Stock" means the Class A Common Stock and the Class B
Common Stock.
"Corporation" means the party named as such in the first
paragraph of this Certificate of Designations.
"Consolidated Fixed Charge Ratio" means, for any Person, for
any period, the ratio of (i) Annualized Pro Forma EBITDA to (ii) Consolidated
Interest Expense for such period multiplied by four.
"Consolidated Interest Expense" means, for any Person, for any
period, the amount of interest in respect of Indebtedness (including
amortization of original issue discount, amortization of debt issuance costs,
and non-cash interest payments on any Indebtedness and the interest portion of
any deferred payment obligation and after taking into account the effect of
elections made under any Interest Rate Agreement, however denominated, with
respect to such Indebtedness), the amount of Redeemable Dividends and the
interest component of rentals in respect of any Capitalized Lease Obligation
paid, accrued or scheduled to be paid or accrued by such Person during such
period, determined on a consolidated basis in accordance with GAAP. For purposes
of this definition, interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by such Person to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP consistently applied.
"Convertible Preferred Stock" means the 100,000 shares of
Series C Cumulative Convertible Preferred Stock purchased by certain Affiliates
of the Rigas Family and a Subsidiary of the FPL Group, Inc., each share of which
is convertible into 117.9245 shares of Class A Common Stock of the Corporation.
"Cumulative Credit" means the sum of (i) Capital Stock Sale
Proceeds plus (ii) cumulative EBITDA of the Corporation from and after January
1, 1993 to the end of the fiscal quarter immediately preceding the date of a
proposed Restricted Payment, or, if such cumulative EBITDA for such period is
negative, minus the amount by which such cumulative EBITDA is less than zero.
"Cumulative Interest Expense" means the aggregate amount of
Consolidated Interest Expense paid, accrued or scheduled to be paid or accrued
by the Corporation from January 1, 1993 to the end of the fiscal quarter
immediately preceding a proposed Restricted Payment, determined on a
consolidated basis in accordance with GAAP.
"Dividend Payment Date" has the meaning set forth in
Section 2(a) below.
"Dividend Period" means (i) with respect to the Series A
Exchangeable Preferred Stock, the period from, and including, the Initial Issue
Date to, but not including, the first Dividend Payment Date and thereafter, each
period from, and including, the preceding Dividend Payment Date to, but not
including the next Dividend Payment Date and (ii) with respect to the Series B
<PAGE>
Exchangeable Preferred Stock, the period from, and including, the date such
Series B Exchangeable Preferred Stock is first issued by the Corporation to, but
not including, the first Dividend Payment Date following such issuance and
thereafter, each period from, and including, the preceding Dividend Payment Date
to, but not including the next Dividend Payment Date.
"EBITDA" means, for any Person, for any period, an amount
equal to (A) the sum of (i) consolidated net income for such period (exclusive
of any gain or loss realized in such period upon an Asset Sale), plus (ii) the
provision for taxes for such period based on income or profits to the extent
such income or profits were included in computing consolidated net income and
any provision for taxes utilized in computing net loss under clause (i) hereof,
plus (iii) Consolidated Interest Expense for such period, plus (iv) depreciation
for such period on a consolidated basis, plus (v) amortization of intangibles
for such period on a consolidated basis, plus (vi) any other non-cash items
reducing consolidated net income for such period, minus (B) all non-cash items
increasing consolidated net income for such period, all for such Person and its
Subsidiaries determined in accordance with GAAP consistently applied, except
that with respect to the Corporation, each of the foregoing items shall be
determined on a consolidated basis with respect to the Corporation and its
Restricted Subsidiaries only.
"Excess Restricted Investment" means, with respect to any
particular Unrestricted Subsidiary or Affiliate of the Corporation for a fiscal
quarter, the lesser of the amounts described in the following clauses (i) and
(ii), or if such amounts are equal, such amount: (i) the aggregate amount of any
Restricted Investments (other than the Initial Investment) made by the
Corporation or any Restricted Subsidiary with respect to such Unrestricted
Subsidiary or Affiliate and during the twelve-month period ending on the last
day of such fiscal quarter; (ii) cash income received during such quarter by the
Corporation with respect to its Restricted Investments in such Unrestricted
Subsidiary or Affiliate multiplied by four; and provided that cash income from a
particular Restricted Investment shall be included only (x) if cash income has
been received by the Corporation with respect to such Restricted Investment
during each of the previous two fiscal quarters, or (y) if the cash income
derived from such Restricted Investment is attributable to Allowable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Date" has the meaning set forth in Section 5(b)
below.
"Exchange Debentures" means the Corporation's 13% Series A
Senior Subordinated Exchange Debentures due 2009 and the Corporation's 13%
Series B Senior Subordinated Exchange Debentures due 2009, both issuable in
exchange for the Corporation's Exchangeable Preferred Stock.
"Exchange Indenture" means that certain indenture under which
the Exchange Debentures would be issued and which shall be substantially in the
form attached as Annex A hereto.
"Exchange Offer" means the Exchange Offer as defined in the
Registration Rights Agreement.
"GAAP" means generally accepted accounting principles as in
effect in the United States from time to
time.
"Holder" means the Person in whose name Exchangeable Preferred
Stock is registered on the Transfer Agent's books.
<PAGE>
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness, secured or unsecured, contingent or otherwise,
which is for borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments or representing the balance
deferred and unpaid of the purchase price of any property (excluding, without
limitation, any balances that constitute subscriber advance payments and
deposits, accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included, (i) any Capitalized Lease Obligations, (ii) obligations
secured by a lien to which the property or assets owned or held by such Person
is subject, whether or not the obligation or obligations secured thereby shall
have been assumed, (iii) guaranties of items of other Persons which would be
included within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor), (iv) in the case of
the Corporation, Preferred Stock of its Restricted Subsidiaries and (v)
obligations of any such Person under any Interest Rate Agreement applicable to
any of the foregoing. Notwithstanding the foregoing, Indebtedness shall not
include any interest or accrued interest until due and payable.
"Initial Investment" means the Restricted Investment in a
Person made by the Corporation or a Restricted Subsidiary that first results in
such Person becoming an Unrestricted Subsidiary or Affiliate of the Corporation,
except that in the case of Olympus, "Initial Investment" shall mean any
Restricted Investment made in Olympus since February 22, 1994, but only to the
extent that such Restricted Investment when aggregated with the other Restricted
Investments made in Olympus since such date does not exceed $25,000,000.
"Initial Issue Date" means the date that shares of
Exchangeable Preferred Stock are first issued by the Corporation.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Junior Securities" means the Common Stock and any other class
or series of stock of the Corporation ranking junior to the Exchangeable
Preferred Stock in respect of the right to receive dividends and in respect of
the right to participate in any distribution upon liquidation, dissolution or
winding up of the affairs of the Corporation.
"Leverage Ratio" is defined as the ratio of (i) the
outstanding Indebtedness of a Person and its Subsidiaries (or in the case of the
Corporation, its Restricted Subsidiaries) divided by (ii) the Annualized Pro
Forma EBITDA of such Person.
"Liquidated Damages" has the meaning assigned to it in the
Registration Rights Agreement.
"Liquidation Preference" means $100.00 per share of
Exchangeable Preferred Stock.
"Mandatory Redemption Date" has the meaning set forth in
Section 4(a) below.
"Officer" means the Chairman of the Board, the President, any
<PAGE>
Vice President, the Chief Financial Officer, the Treasurer, the Secretary or any
Assistant Secretary of the Corporation.
"Officers' Certificate" means a certificate signed on behalf
of the Corporation by two officers of the Corporation, one of whom must be the
Chief Executive Officer, the Chief Financial Officer, the Treasurer or the
principal accounting officer of the Corporation that meets the requirements of
Section 10 hereof.
"Olympus" means Olympus Communications, L.P., a Delaware
limited partnership.
"Parity Securities" means the Convertible Preferred Stock and
any other class or series of stock of the Corporation authorized after the
Initial Issue Date that is entitled to receive payment of dividends and to
receive distributions upon liquidation, dissolution or winding up of the affairs
of the Corporation on a parity with the Exchangeable Preferred Stock.
"Permitted Investments" means, for any Person, Restricted
Investments made on or after February 22, 1994 consisting of (i) advances for
less than one year issued in the ordinary course of business for working capital
purposes or for the purchase of property, plant and equipment in an amount not
to exceed $5,000,000 in the aggregate outstanding, (ii) with respect to a
Restricted Investment in Olympus, $25,000,000 plus the aggregate amount of cash
income received by the Corporation from Olympus, minus the aggregate amount of
all Restricted Investments made since February 22, 1994 with respect to Olympus,
(iii) $20,000,000 plus the cash proceeds from the sale or redemption of, or
income from, any Restricted Investments made on or after January 1, 1993, minus
the aggregate amount of all Restricted Investments (excluding Restricted
Investments made with respect to Olympus) since January 1, 1993, (iv) non-cash
Restricted Investments made with the non-cash proceeds from the sale or
redemption of, or income from, any Restricted Investments, or (v) an amount
which, at the time of such Restricted Investment, does not exceed the amount of
Restricted Payments that could then be made by the Corporation and its
Restricted Subsidiaries under Section 8(a); provided further that no Restricted
Investments may be made under (ii), (iii), (iv) or (v) unless pro forma for such
Restricted Investment the Corporation could incur $1 of debt under the first
paragraph of Section 8(b).
"Permitted Refinancing Indebtedness" means any renewals,
extensions, substitutions, refinancings or replacements of any Indebtedness,
including any successive extensions, renewals, substitutions, refinancings or
replacements so long as (i) the aggregate amount of Indebtedness represented
thereby is not increased by such renewal, extension, substitution, refinancing
or replacement, (ii) in the case of Indebtedness of the Corporation, the average
life and the date such Indebtedness is scheduled to mature is not shortened and
(iii) in the case of Indebtedness of the Corporation, the new Indebtedness shall
not be senior in right of payment to the Indebtedness that is being extended,
renewed, substituted, refinanced or replaced.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Pro Forma EBITDA" means for any Person, for any period, the
<PAGE>
EBITDA of such Person, as determined on a consolidated basis in accordance with
GAAP consistently applied after giving effect to the following: (i) if, during
or after such period, such Person or any of its Subsidiaries shall have made any
Asset Sale, Pro Forma EBITDA of such Person and its Subsidiaries for such period
shall be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset Sale for
the period or increased by an amount equal to the Pro Forma EBITDA (if negative)
directly attributable thereto for such period and (ii) if, during or after such
period, such Person or any of its Subsidiaries completes an acquisition of any
Person or business which immediately after such acquisition is a Subsidiary of
such Person or whose assets are held directly by such Person or a Subsidiary of
such Person, Pro Forma EBITDA shall be computed so as to give pro forma effect
to the acquisition of such Person or business; and provided further that with
respect to the Corporation, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or
"Restricted Subsidiaries" of the Corporation.
"Rating Date" means the date which is 90 days prior to the
earlier of (i) a Change of Control and (ii) public notice of the occurrence of a
Change of Control or of the intention of the Corporation to effect a Change of
Control.
"Rating Decline" means the occurrence of the following on, or
within 90 days after, the date of public notice of the occurrence of a Change of
Control or of the intention by the Corporation to effect a Change of Control
(which period shall be extended so long as the rating of the Exchangeable
Preferred Stock is under publicly announced consideration for possible downgrade
by Moody's or Standard & Poor's Corporation): (a) in the event the Exchangeable
Preferred Stock is rated by either Moody's or Standard & Poor's on the Rating
Date as investment grade Preferred Stock, the rating of the Exchangeable
Preferred Stock by both Moody's and Standard & Poor's shall be below investment
grade Preferred Stock; or (b) in the event the Exchangeable Preferred Stock is
rated below investment grade Preferred Stock by both Moody's and Standard &
Poor's on the Rating Date, the rating of the Exchangeable Preferred Stock by
either Moody's or Standard & Poor's shall be decreased by one or more gradations
(including gradations within rating categories as well as between rating
categories).
"Record Date" has the meaning set forth in Section 2(a) below.
"Redeemable Dividend" means, for any dividend with regard to
Redeemable Stock, the quotient of the dividend divided by the difference between
one and the maximum statutory federal income tax rate (expressed as a decimal
number between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means with respect to any Person, any
Capital Stock that by its terms or otherwise is required to be redeemed or is
redeemable at the option of the holder at any time prior to July 15, 2009.
"Redemption Date" has the meaning set forth in Section 4(e)
below.
"Registration Rights Agreement" means the Exchangeable
Preferred Stock Registration Rights Agreement, dated as of July 7, 1997, by and
among the Corporation, the Initial Purchasers (as defined in such Registration
Rights Agreement) and Highland Holdings, which shall be substantially in the
form attached hereto as Annex B.
"Restricted Investment" means any advance, loan, account
receivable (other than an account receivable arising in the ordinary course of
<PAGE>
business), or other extension of credit (excluding, however, accrued and unpaid
interest in respect of any advance, loan or other extension of credit) or any
capital contribution to (by means of transfers of property to others, payments
for property or services for the account or use of others, or otherwise), any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership or
joint venture) of, or any bank accounts with or guarantee of any Indebtedness or
other obligations of, any Unrestricted Subsidiary or Affiliate of the
Corporation.
"Restricted Payment" means (i) any dividend or distribution
(whether made in cash, property or securities), on or with respect to any Junior
Securities of the Corporation, or (ii) any redemption, repurchase, retirement or
other direct or indirect acquisition of (a) Junior Securities, or (b) any
warrants, rights or options to directly or indirectly purchase or acquire any
such Junior Securities or any securities exchangeable for or convertible into
any such Junior Securities, other than options issued or shares purchased or
granted under the Corporation's Stock Option Plan of 1986 or the Corporation's
Restricted Stock Bonus Plan, from any employee of the Corporation or any of its
Subsidiaries who, together with any Person that, directly or indirectly,
controls (other than by virtue of being directly or indirectly the employer of
such employee), is controlled by or is under common control with such employee,
owns less than 1% of the outstanding Capital Stock of the Corporation, except
for the purchase, redemption, retirement or other acquisition of any shares of
its Junior Securities by exchange for, or out of the proceeds of the
substantially concurrent sale of, other shares of its Junior Securities other
than any Junior Securities which, by their terms (or by the terms of any
security into which they are convertible or for which they are exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or redeemable at the option of the
holder thereof, in whole or in part, on or prior to July 15, 2009.
"Restricted Subsidiary" means (a) any Subsidiary of the
Corporation, whether existing on or after the date of this Certificate of
Designations, unless such Subsidiary is an Unrestricted Subsidiary or shall have
been classified as an Unrestricted Subsidiary by a resolution adopted by the
Board of Directors of the Corporation and (b) an Unrestricted Subsidiary which
is reclassified as a Restricted Subsidiary by a resolution adopted by the Board
of Directors of the Corporation, provided that on and after the date of such
reclassification such Unrestricted Subsidiary shall not incur Indebtedness other
than that permitted to be incurred by a Restricted Subsidiary under the
provisions of this Certificate of Designations.
"Rigas Family" means collectively John J. Rigas and members of
his immediate family, any of their respective spouses, estates, lineal
descendants, heirs, executors, personal representatives, administrators, trusts
for any of their benefit and charitable foundations to which shares of the
Corporation's Capital Stock beneficially owned by any of the foregoing have been
transferred.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Securities" means any class or series of stock of the
Corporation authorized after the Initial Issue Date ranking senior to the
Exchangeable Preferred Stock in respect of the right to receive dividends and in
respect of the right to participate in any distribution upon liquidation,
dissolution or winding up of the affairs of the Corporation.
<PAGE>
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise if in accordance
with GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"Transfer Agent" means American Stock Transfer and Trust Co.
or any other entity designated from time to time by the Corporation to act as
the registrar and transfer agent for the Exchangeable Preferred Stock.
"Transfer Restricted Security" has the meaning set forth in
the Registration Rights Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary, (b) any Subsidiary of the Corporation which is
classified after the date of this Certificate of Designations as an Unrestricted
Subsidiary by a resolution adopted by the Board of Directors of the Corporation
and (c) any subsidiary which as of the date of this Certificate of Designations
has been declared an Unrestricted Subsidiary by a resolution adopted by the
Board of Directors of the Corporation (such Unrestricted Subsidiaries being
Hyperion Telecommunications, Inc., Global Cablevision, Inc., Orchard Park
Cablevision, Inc. and Global Acquisition Partners, L.P. on the date hereof);
provided that a Subsidiary organized or acquired after the date of this
Certificate of Designations may be so classified as an Unrestricted Subsidiary
only if immediately after the date of such classification, any investment by the
Corporation and its Restricted Subsidiaries in any such Subsidiary made at the
time of the organization or acquisition of such Subsidiary would be a Restricted
Investment permissible under this Certificate of Designations. The Transfer
Agent shall be given prompt notice by the Corporation of each resolution adopted
by its Board of Directors under this provision, together with a copy of each
such resolution adopted.
"Voting Rights Triggering Event" has the meaning set forth in
Section 6(b) below.
"Voting Stock" means with respect to any specified Person,
Capital Stock with voting power, under ordinary circumstances and without regard
to the occurrence of any contingency, to elect the directors or other managers
or trustees of such Person.
2. Dividends.
(a) The Holders of the Exchangeable Preferred Stock will be
entitled to receive, when, as and if dividends are declared by the Board of
Directors out of funds of the Corporation legally available therefor, cumulative
preferential dividends from the issue date of the applicable series of
Exchangeable Preferred Stock accruing at the rate per share of $13.00 per annum,
payable semi-annually in arrears on January 15 and July 15 in each year or, if
any such date is not a Business Day, on the next succeeding Business Day (each,
a "Dividend Payment Date"), to the Holders of record as of the next preceding
<PAGE>
January 1 and July 1 (each, a "Record Date"). Dividends will be payable in cash.
The first dividend payment will be payable on January 15, 1998. Dividends
payable on the Exchangeable Preferred Stock will be computed on the basis of a
360-day year of twelve 30-day months and will be deemed to accrue on a daily
basis.
(b) Dividends on the Exchangeable Preferred Stock will accrue
whether or not the Corporation has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared. Dividends will accumulate to the extent they are not
paid on the Dividend Payment Date for the period to which they relate.
Accumulated unpaid dividends will bear interest at the rate of 13% per annum.
The Corporation will take all actions required or permitted under Delaware law
(including, but not limited to, conducting a fair market appraisal of its
assets) to permit the payment of dividends on the Exchangeable Preferred Stock.
(c) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding
Exchangeable Preferred Stock with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid upon,
or declared and a sufficient sum set apart for the payment of such dividends
upon, all outstanding shares of Exchangeable Preferred Stock. If dividends on
the Exchangeable Preferred Stock with respect to any dividend period are not
paid in full, the Exchangeable Preferred Stock will share any partial dividends
paid on Parity Securities on a pro rata basis. Unless full cumulative dividends
on all outstanding shares of Exchangeable Preferred Stock due for all past
dividend periods shall have been declared and paid, or declared and a sufficient
sum for the payment thereof set apart, then: (i) no dividend (other than a
dividend payable solely in shares of Junior Securities) shall be declared or
paid upon, or any sum set apart for the payment of dividends upon, any shares of
Junior Securities; (ii) no other distribution shall be declared or made upon, or
any sum set apart for the payment of any distribution upon, any shares of Junior
Securities; (iii) no shares of Junior Securities shall be purchased, redeemed or
otherwise acquired or retired for value (excluding an exchange for shares of
other Junior Securities) by the Corporation or any of its Subsidiaries; and (iv)
no monies shall be paid into or set apart or made available for a sinking or
other like fund for the purchase, redemption or other acquisition or retirement
for value of any shares of Junior Securities by the Corporation or any of its
Subsidiaries. Holders of the Exchangeable Preferred Stock will not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
full cumulative dividends as herein described.
3. Distributions Upon Liquidation, Dissolution or
Winding Up.
Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, each Holder of the Exchangeable
Preferred Stock will be entitled to payment out of the assets of the Corporation
available for distribution of an amount equal to the Liquidation Preference per
share of Exchangeable Preferred Stock held by such Holder, plus accrued and
unpaid dividends and Liquidated Damages, if any, to the date fixed for
liquidation, dissolution, or winding up, before any distribution is made on any
Junior Securities, including, without limitation, any Common Equity of the
Corporation. If, upon any voluntary or involuntary liquidation, dissolution of
winding-up of the Corporation, the amounts payable with respect to the
Exchangeable Preferred Stock and all other Parity Securities are not paid in
full, the holders of the Exchangeable Preferred Stock and all Parity Securities
will share equally and ratably in any distribution of assets of the Corporation.
After payment in full of the Liquidation Preference and all accrued dividends
and Liquidated Damages, if any, to which Holders of Exchangeable Preferred Stock
<PAGE>
are entitled, such Holders will not be entitled to any further participation in
any distribution of assets of the Corporation. However, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation or merger of the Corporation with or into
one or more corporations will be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, unless such sale,
conveyance, exchange or transfer shall be in connection with a liquidation,
dissolution or winding up of the business of the Corporation.
4. Redemption by the Corporation.
(a) On July 15, 2009 (the "Mandatory Redemption Date"), the
Corporation shall redeem (subject to the legal availability of funds therefor)
all outstanding shares of Exchangeable Preferred Stock at a price in cash equal
to the Liquidation Preference thereof, plus accrued and unpaid dividends and
Liquidated Damages, if any, to the date of redemption.
(b) Except as set forth in paragraph (c) below, the
Exchangeable Preferred Stock may not be redeemed at the option of the
Corporation on or prior to July 15, 2002. The Exchangeable Preferred Stock may
be redeemed, in whole or in part, at the option of the Corporation on or after
July 15, 2002 at the Applicable Redemption Price.
(c) In addition, prior to July 15, 2000 the Corporation may,
at its option, redeem up to 33% of the aggregate of (i) the Liquidation
Preference of the Exchangeable Preferred Stock issued less the Liquidation
Preference of Exchangeable Preferred Stock exchanged for Exchange Debentures and
(ii) the principal amount of Exchange Debentures issued, with the net proceeds
of one or more common equity offerings received on or after the date of original
issuance of the Exchangeable Preferred Stock at a redemption price of 113% of
the Liquidation Preference or principal amount, as the case may be, plus
accumulated and unpaid dividends and Liquidated Damages, if any, in the case of
Exchangeable Preferred Stock and accrued and unpaid interest and Liquidated
Damages, if any, in the case of Exchange Debentures; provided, that after any
such redemption, at least 67% of the aggregate of (i) the Liquidation Preference
of the Exchangeable Preferred Stock issued less the Liquidation Preference of
Exchangeable Preferred Stock exchanged for Exchange Debentures and (ii) the
principal amount of Exchange Debentures issued remain outstanding; and provided
further, that any such redemption shall occur within 75 days of the date of
closing of such offerings of common equity of the Corporation.
(d) In case of redemption of less than all of the shares of
Exchangeable Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected pro rata or by lot as determined by the Corporation in its
sole discretion.
(e) Notice of any redemption shall be sent by or on behalf of
the Corporation not more than 60 days nor less than 30 days prior to the date
specified for redemption in such notice (including the Mandatory Redemption
Date, the "Redemption Date"), by first class mail, postage prepaid, to all
Holders of record of the Exchangeable Preferred Stock at their respective last
addresses as they shall appear on the books of the Corporation; provided,
however, that no failure to give such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any shares of Exchangeable Preferred Stock except as to the Holder to whom
the Corporation has failed to give notice or except as to the Holder to whom
notice was defective. In addition to any information required by law or by the
applicable rules of any exchange upon which Exchangeable Preferred Stock may be
listed or admitted to trading, such notice shall state: (i) whether such
<PAGE>
redemption is being made pursuant to the optional or the mandatory redemption
provisions hereof; (ii) the Redemption Date; (iii) the Applicable Redemption
Price; (iv) the number of shares of Exchangeable Preferred to be redeemed and,
if less than all shares held by such Holder are to be redeemed, the number of
such shares to be redeemed; (v) the place or places where certificates for such
shares are to be surrendered for payment of the Applicable Redemption Price,
including any procedures applicable to redemptions to be accomplished through
book-entry transfers; and (vi) that dividends on the shares to be redeemed will
cease to accrue on the Redemption Date. Upon the mailing of any such notice of
redemption, the Corporation shall become obligated to redeem at the time of
redemption specified therein all shares called for redemption.
(f) If notice has been mailed in accordance with Section 4(e)
above and, provided that on or before the Redemption Date specified in such
notice, all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds in trust for the pro rata
benefit of the Holders of the shares so called for redemption, so as to be, and
to continue to be available therefor, then, from and after the Redemption Date,
dividends on the shares of the Exchangeable Preferred Stock so called for
redemption shall cease to accrue, and said shares shall no longer be deemed to
be outstanding and shall not have the status of shares of Exchangeable Preferred
Stock, and all rights of the Holders thereof as stockholders of the Corporation
(except the right to receive from the Corporation the Applicable Redemption
Price) shall cease. Upon surrender, in accordance with said notice, of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the Applicable Redemption
Price. In case fewer than all the shares represented by any such certificate are
redeemed, a new certificate or certificates shall be issued representing the
unredeemed shares without cost to the Holder thereof.
(g) Any funds deposited with a bank or trust company for the
purpose of redeeming Exchangeable Preferred Stock shall be irrevocable except
that:
(i) the Corporation shall be entitled to receive from
such bank or trust company the interest or other earnings, if any,
earned on any money so deposited in trust, and the Holders of any
shares redeemed shall have no claim to such interest or other earnings;
and
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the Holders of the Exchangeable Preferred
Stock entitled thereto at the expiration of two years from the
applicable Redemption Date shall be repaid, together with any interest
or other earnings earned thereon, to the Corporation, and after any
such repayment, the Holders of the shares entitled to the funds so
repaid to the Corporation shall look only to the Corporation for
payment without interest or other earnings.
(h) No Exchangeable Preferred Stock may be redeemed except
with funds legally available for the purpose. The Corporation will take all
actions required or permitted under Delaware law (including, but not limited to,
conducting a fair market appraisal of its assets) to permit the redemption of
the Exchangeable Preferred Stock.
(i) Notwithstanding the foregoing provisions of this Section
4, unless the full cumulative dividends on all outstanding shares of
Exchangeable Preferred Stock shall have been paid or contemporaneously are
declared and paid for all past dividend periods, none of the shares of
<PAGE>
Exchangeable Preferred Stock shall be redeemed unless all outstanding shares of
Exchangeable Preferred Stock are simultaneously redeemed.
(j) All shares of Exchangeable Preferred Stock redeemed
pursuant to this Section 4 shall be restored to the status of authorized and
unissued shares of Preferred Stock, without designation as to series and may
thereafter be reissued as shares of any series of preferred stock but not as
shares of Exchangeable Preferred Stock.
5. Exchange.
(a) The Corporation may, at its option on any Dividend Payment
Date, exchange, in whole or in part, on a pro rata basis, the then-outstanding
shares of Exchangeable Preferred Stock for Exchange Debentures; provided that
immediately after giving effect to any partial exchange, there shall be
outstanding Exchangeable Preferred Stock with an aggregate Liquidation
Preference of not less than $75.0 million and not less than $75.0 million in
aggregate principal amount of Exchange Debentures; and, provided further, that
(i) on the date of such exchange there are no accumulated and unpaid dividends
or Liquidated Damages on the Exchangeable Preferred Stock (including the
dividend payable on such date) or other contractual impediments to such
exchange; (ii) immediately after giving effect to such exchange, no Default or
Event of Default (each as defined in the Exchange Indenture) would exist under
the Exchange Indenture, or any other material instrument governing Indebtedness
outstanding at the time of such exchange; (iii) the Exchange Indenture has been
qualified under the Trust Indenture Act, if such qualification is required at
the time of exchange; and (iv) the Corporation shall have delivered a written
opinion to the trustee under the Exchange Indenture to the effect that all
conditions to be satisfied prior to such exchange have been satisfied.
(b) The Exchange Debentures shall be issuable in all
appropriate denominations. Notice of the intention to exchange will be sent by
or on behalf of the Corporation not more than 60 days nor less than 30 days
prior to the date fixed for exchange (the "Exchange Date"), by first class mail,
postage prepaid, to each Holder of record of Exchangeable Preferred Stock at its
registered address; provided, however, that no failure to give such notice or
any defect therein or in the mailing thereof shall affect the validity of the
proceedings for the exchange of any shares of Exchangeable Preferred Stock
except as to the Holder to whom the Corporation has failed to give notice or
except as to the Holder to whom notice was defective. In addition to any
information required by law or by the applicable rules of any exchange upon
which Exchangeable Preferred Stock may be listed or admitted to trading, such
notice will state: (i) the Exchange Date; (ii) the place or places where
certificates for such shares are to be surrendered for exchange, including any
procedures applicable to exchanges to be accomplished through book-entry
transfers; and (iii) that dividends and Liquidated Damages on the Exchangeable
Preferred Stock to be exchanged will cease to accrue on the Exchange Date. Prior
to giving the notice of intention to exchange, the Corporation shall execute and
deliver with a bank or trust company, with capital, surplus and undivided
profits of not less than $100,000,000, selected by the Corporation, and qualify
under the Trust Indenture Act, the Exchange Indenture with such changes as would
not adversely affect any of the voting powers, preferences and relative,
participating, optional and other special rights of any holders of Exchangeable
Preferred Stock as may be required by law or usage.
(c) A Holder delivering Exchangeable Preferred Stock for
exchange will not be required to pay any taxes or duties in respect of the issue
or delivery of Exchange Debentures on exchange but will be required to pay any
tax or duty that may be payable in respect of any transfer involved in the issue
or delivery of the Exchange Debentures in a name other than that of the Holder
<PAGE>
of the Exchangeable Preferred Stock. Certificates representing Exchange
Debentures will not be issued or delivered unless all taxes and duties, if any,
payable by the Holder have been paid.
(d) If notice of any exchange has been properly given, and if
on or before the Exchange Date the Exchange Debentures have been duly executed
and authenticated and an amount in cash equal to all accrued and unpaid
dividends thereon to the Exchange Date has been deposited with the Transfer
Agent, then on or after the close of business on the Exchange Date, Exchangeable
Preferred to be exchanged will no longer be deemed to be outstanding and may
thereafter be issued in the same manner as the other authorized but unissued
preferred stock, but not as Exchangeable Preferred Stock, and all rights of the
Holders thereof as stockholders of the Corporation will cease, except the right
of the Holders to receive upon surrender of their certificates the Exchange
Debentures and all accrued and unpaid dividends and Liquidated Damages, if any,
thereon to the Exchange Date.
(e) As a condition to the exercise of the exchange rights
described in this Section 5, the Corporation shall deliver an opinion to the
Trustee as to the due authorization, execution, delivery and enforceability of
both the Exchange Debentures and the Exchange Indenture.
6. Voting Rights.
(a) The Holders of record of shares of Exchangeable Preferred
Stock shall not be entitled to any voting rights except as hereinafter provided
in this Section 6 or as otherwise provided by law.
(b) If and upon:
(i) the accumulation of accrued and unpaid dividends
on the outstanding Exchangeable Preferred Stock in an amount equal to
three (3) full semi-annual dividends (whether or not consecutive);
(ii) the failure of the Corporation to satisfy any
mandatory redemption or repurchase obligation (including, without
limitation, pursuant to any required Change of Control Offer) with
respect to the Exchangeable Preferred Stock;
(iii) the failure of the Corporation to make a Change
of Control Offer on the terms and in accordance with the provisions
described below in Section 7 hereof;
(iv) the failure of the Corporation to comply with
any of the other covenants or agreements set forth in this Certificate
of Designations and the continuance of such failure for 60 consecutive
days or more after written notice by the Transfer Agent or Holders of
25% or more of the aggregate Liquidation Preference of the Exchangeable
Preferred Stock; or
(v) the failure of the Corporation to pay when due
principal, interest or premium aggregating $10,000,000 or more with
respect to any Indebtedness of the Corporation or any Restricted
Subsidiary in the principal amount of $100,000,000 or more or the
acceleration of any such Indebtedness which default shall not be cured
or waived, or such acceleration shall not be rescinded or annulled,
within ten days after written notice by the Transfer Agent or Holders
of 25% or more of the aggregate Liquidation Preference of the
Exchangeable Preferred Stock (each of the events described in clauses
6(b)(i) through (v) being referred to herein as a "Voting Rights
<PAGE>
Triggering Event").
then the authorized number of members of the Corporation's Board of Directors
will be immediately and automatically increased by two, and the Holders of a
majority of the outstanding shares of Exchangeable Preferred Stock, voting as a
separate class, shall be entitled to elect two directors of the Corporation.
(c) Whenever such voting right shall have vested, such right
may be exercised initially either at a special meeting of the Holders of
Exchangeable Preferred Stock, called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings or by the written consent of the Holders of
Exchangeable Preferred Stock. Such right of the Holders of Exchangeable
Preferred Stock to elect directors may be exercised until (i) all dividends in
arrears shall have been paid in full and (ii) all other Voting Rights Triggering
Events have been cured or waived, at which time the right of the Holders of
Exchangeable Preferred Stock to elect such number of directors shall cease, the
term of such directors previously elected shall thereupon terminate, and the
authorized number of directors of the Corporation shall thereupon return to the
number of authorized directors otherwise in effect, but subject always to the
same provisions for the renewal and divestment of such special voting rights in
the case of any such future Voting Rights Triggering Event.
(d) At any time when such voting right shall have vested in
the Holders of Exchangeable Preferred Stock and if such right shall not already
have been initially exercised, a proper officer of the Corporation shall, upon
the written request of Holders of record of 10% or more of the shares of
Exchangeable Preferred Stock then outstanding, addressed to the Secretary of the
Corporation, call a special meeting of Holders of Exchangeable Preferred Stock.
Such meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation or, if none, at a place designated
by the Secretary of the Corporation. If such meeting shall not be called by the
proper officers of the Corporation within 30 days after the personal service of
such written request upon the Secretary of the Corporation, or within 30 days
after mailing the same within the United States, by registered mail, addressed
to the Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
Holders of record of 10% of the shares of Exchangeable Preferred Stock then
outstanding may designate in writing a Holder of Exchangeable Preferred Stock to
call such meeting at the expense of the Corporation, and such meeting may be
called by such person so designated upon the notice required for annual meetings
of stockholders and shall be held at the place for holding annual meetings of
the Corporation or, if none, at a place designated by such Holder. Any Holder of
Exchangeable Preferred Stock that would be entitled to vote at such meeting
shall have access to the stock books of the Corporation for the purpose of
causing a meeting of stockholders to be called pursuant to the provisions of
this Section. Notwithstanding the provisions of this paragraph, however, no such
special meeting shall be called if any such request is received less than 90
days before the date fixed for the next ensuing annual or special meeting of
stockholders.
(e) If a director so elected by the Holders of Exchangeable
Preferred Stock shall cease to serve as a director before his term shall expire,
the Holders of Exchangeable Preferred Stock then outstanding may, at a special
meeting of the Holders called as provided above, elect a successor to hold
office for the unexpired term of the director whose place shall be vacant.
(f) Subject to the provisions in Section 6(h) below, the
Corporation shall not, without the affirmative vote or consent of the Holders of
<PAGE>
a majority of the then outstanding shares of Exchangeable Preferred Stock (with
shares held by the Corporation not being considered to be outstanding for this
purpose) amend or otherwise alter its Certificate of Incorporation (including
this Certificate of Designations) in any manner that adversely affects the
rights of Holders of Exchangeable Preferred Stock.
(g) Without the consent of each Holder affected, an amendment
or waiver may not (with respect to any shares of Exchangeable Preferred Stock
held by a non-consenting Holder):
(i) alter the voting rights with respect to the
Exchangeable Preferred Stock or reduce the number of shares of
Exchangeable Preferred Stock whose Holders must consent to an
amendment, supplement or waiver;
(ii) reduce the Liquidation Preference of or change
the Mandatory Redemption Date of any share of Exchangeable Preferred
Stock or alter the provisions with respect to the redemption of the
Exchangeable Preferred Stock;
(iii) reduce the rate of or change the time for
payment of dividends on any share of
Exchangeable Preferred Stock;
(iv) waive a default or event of default in the
payment of dividends on the Exchangeable
Preferred Stock;
(v) make any share of Exchangeable Preferred Stock
payable in any form other than that
stated in this Certificate of Designations;
(vi) make any change in the provisions of this
Certificate of Designations relating to waivers of the rights of
Holders of Exchangeable Preferred Stock to receive the Liquidation
Preference or dividends on the Exchangeable Preferred Stock;
(vii) waive a redemption payment with respect to any
share of Exchangeable Preferred Stock; or
(viii) make any change in the foregoing amendment and
waiver provisions.
(h) The Corporation may not, without the consent of the
Holders of at least a majority of the then outstanding shares of Exchangeable
Preferred Stock, authorize, create (by way of reclassification or otherwise) or
issue any class or series of Parity Securities (other than Convertible Preferred
Stock) or any obligation or security convertible or exchangeable into or
evidencing a right to purchase, shares of any class or series of Parity
Securities (provided, that no such consent with respect to the issuance of
Parity Securities shall be required unless such Parity Securities mature or have
a mandatory redemption date prior to July 15, 2009) and the Corporation may not,
without the consent of the Holders of at least two-thirds of the then
outstanding shares of Exchangeable Preferred Stock, authorize, create (by way of
reclassification or otherwise) or issue any class or series of Senior Securities
or any obligation or security convertible or exchangeable into or evidencing a
right to purchase, shares of any class or series of Senior Securities.
(i) The Corporation in its sole discretion may without the
vote or consent of any Holders of the Exchangeable Preferred Stock amend this
Certificate of Designations:
<PAGE>
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to provide for uncertificated Exchangeable
Preferred Stock in addition to or in place of certificated Exchangeable
Preferred Stock;
(iii) to make any change that would provide any
additional rights or benefits to the Holders of the Exchangeable
Preferred Stock or that does not materially and adversely affect the
legal rights or benefits under this Certificate of Designations of any
such Holder;
(iv) in the event, and to the extent, that the
Exchange Offer is not permissible under applicable law or SEC policy,
to redesignate the unissued shares of Series B Exchangeable Preferred
Stock as any series of preferred stock other than Exchangeable
Preferred Stock; or
(v) upon consummation of the Exchange Offer, to
redesignate any shares of Series A Exchangeable Preferred Stock
acquired by the Corporation in the Exchange Offer as any series of
preferred stock other than Exchangeable Preferred Stock.
7. Change of Control Offer.
(a) Within 50 days of (i) the proposed occurrence of a Change
of Control or (ii) the occurrence of a Change of Control Triggering Event, the
Corporation shall notify the Holders in writing of such proposed occurrence or
occurrence, as the case may be, and shall make an offer to purchase (the "Change
of Control Offer") the shares of Exchangeable Preferred Stock at a purchase
price equal to 100% of the aggregate Liquidation Preference thereof plus any
accrued and unpaid dividends and Liquidated Damages thereon to the Change of
Control Payment Date (as hereinafter defined) (the "Change of Control Purchase
Price") in accordance with the procedures set forth in this Section 7.
(b) Within 50 days of (i) the proposed occurrence of a Change
of Control or (ii) the occurrence of a Change of Control Triggering Event, the
Corporation also shall (a) cause a notice of the Change of Control Offer to be
sent at least once to the Dow Jones News Service or similar business news
service in the United States and (b) send by first-class mail, postage prepaid,
to each Holder, at his address appearing in the register of the Exchangeable
Preferred Stock maintained by the registrar, a notice stating:
(i) that the Change of Control Offer is being made
pursuant to this covenant and that all Exchangeable Preferred Stock
tendered will be accepted for payment, provide that a Change of Control
Triggering Event has occurred and otherwise subject to the terms and
conditions set forth herein;
(ii) the Change of Control Purchase Price and the
purchase date (which shall be a Business Day no earlier than 50 days
from the date such notice is mailed and no later than 15 days after the
date of the corresponding Change of Control Triggering Event) (the
"Change of Control Payment Date");
(iii) that any Exchangeable Preferred Stock not
tendered will continue to accrue dividends;
(iv) that, unless the Corporation defaults in the
<PAGE>
payment of the Change of Control Purchase Price, any Exchangeable
Preferred Stock accepted for payment pursuant to the Change of Control
Offer shall cease to accrue dividends after the Change of Control
Payment Date;
(v) that Holders accepting the offer to have their
Exchangeable Preferred Stock purchased pursuant to a Change of Control
Offer will be required to surrender the Exchangeable Preferred Stock to
the paying agent at the address specified in the notice prior to the
close of business on the Business Day preceding the Change of Control
Payment Date;
(vi) that Holders will be entitled to withdraw their
acceptance if the paying agent receives, not later than the close of
business on the third Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the Liquidation Preference of the
Exchangeable Preferred Stock delivered for purchase, and a statement
that such Holder is withdrawing his election to have such Exchangeable
Preferred Stock purchased;
(vii) that Holders whose Exchangeable Preferred Stock
is being purchased only in part will be issued new Exchangeable
Preferred Stock certificates equal in Liquidation Preference to the
unpurchased portion of the Exchangeable Preferred Stock surrendered;
and
(viii) any other procedures that a holder must follow
to accept a Change of Control Offer or effect withdrawal of such
acceptance.
Notwithstanding any other provision of this Section 7, in the
case of a notice of a Change of Control Offer that is being furnished by the
Corporation with respect to a proposed Change of Control that has not yet
actually occurred, the Corporation may specify in such notice that Holders of
the Exchangeable Preferred Stock shall be required to notify the Corporation, by
a date not earlier than the date (the "Proposed Change of Control Response
Date") which is 30 days from the date of such notice, as to whether such Holders
will tender their Exchangeable Preferred Stock for payment pursuant to the
Change of Control Offer and to notify the Corporation of the Liquidation
Preference of such Exchangeable Preferred Stock to be so tendered (with the
failure of any holder to so notify the Corporation within such 30-day period to
be deemed an election of such Holder not to accept such Change of Control
Offer). In such event, the Corporation shall have the option, to be exercised by
a subsequent written notice to be sent, no later than 15 days after the Proposed
Change of Control Response Date, to the same Persons to whom the original notice
of the Change of Control Offer was sent, to cancel or otherwise effect the
termination of the proposed Change of Control and to rescind the related Change
of Control Offer, in which case the then outstanding Change of Control Offer
shall be deemed to be null and void and of no further effect.
On the Change of Control Payment Date, the Corporation shall
(a) accept for payment Exchangeable Preferred Stock or portions thereof tendered
pursuant to the Change of Control Offer, (b) deposit with the paying agent money
sufficient to pay the purchase price of all Exchangeable Preferred Stock or
portions thereof so tendered and (c) deliver or cause to be delivered to the
Transfer Agent Exchangeable Preferred Stock so accepted together with an
Officers' Certificate stating the Exchangeable Preferred Stock or portions
thereof tendered to the Corporation. The paying agent shall promptly mail to
each holder of Exchangeable Preferred Stock so accepted payment in an amount
<PAGE>
equal to the purchase price for such Exchangeable Preferred Stock, and the
Transfer Agent shall promptly authenticate and mail to such holder new
Exchangeable Preferred Stock certificates equal in Liquidation Preference to any
unpurchased portion of the Exchangeable Preferred Stock surrendered.
There shall be no purchase of any Exchangeable Preferred Stock
pursuant to this covenant if there has occurred (prior to, on or after, as the
case may be, the tender of such Exchangeable Preferred Stock pursuant to the
Change of Control Offer, by the Holders of such Exchangeable Preferred Stock)
and is continuing a Voting Rights Triggering Event. The paying agent will
promptly return to the respective Holders thereof any Exchangeable Preferred
Stock (a) the tender of which has been withdrawn in compliance with this
certificate or (b) held by it during the continuance of a Voting Rights
Triggering Event (other than any such event arising from a default in the
payment of the Change of Control Purchase Price with respect to such
Exchangeable Preferred Stock).
In the event that the Corporation is required to make a Change
of Control Offer, the Corporation will comply with all applicable tender offer
rules including Rule 14e-1 under the Exchange Act, to the extent applicable.
8. Certain Covenants.
(a) Restricted Payments. So long as any of the shares of
Exchangeable Preferred Stock remain outstanding, the Corporation shall not make,
and shall not permit any Restricted Subsidiary to make, any Restricted Payment
if (a) at the time of such proposed Restricted Payment, a Voting Rights
Triggering Event shall have occurred and be continuing or shall occur as a
consequence of such Restricted Payment, or (b) immediately after giving effect
to any such Restricted Payment, the aggregate of all Restricted Payments which
shall have been made on or after January 1, 1993 (the amount of any Restricted
Payment, if other than cash, to be based upon fair market value as determined in
good faith by the Corporation's Board of Directors whose determination shall be
conclusive) would exceed an amount equal to the greater of (i) the sum of
$5,000,000 or (ii) the difference between (a) the Cumulative Credit and (b) the
sum of the aggregate amount of all Restricted Payments, and all Permitted
Investments made pursuant to clause (v) of the definition of "Permitted
Investments," made on or after January 1, 1993 plus 1.2 times Cumulative
Interest Expense.
(b) Limitation on Indebtedness. The Corporation shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, issue, assume or become liable for, contingently or otherwise
(collectively an "incurrence"), any Indebtedness (other than Exchange Debentures
issued under the Exchange Indenture) unless, after giving effect to such
incurrence on a pro forma basis, Indebtedness of the Corporation and its
Restricted Subsidiaries, on a consolidated basis, shall not be more than the
product of the Annualized Pro Forma EBITDA for the latest fiscal quarter
preceding such incurrence for which financial statements are available,
multiplied by 8.75.
Notwithstanding the above, this provision will not limit the
incurrence of Indebtedness which is incurred by the Corporation or its
Restricted Subsidiaries for working capital purposes or capital expenditures
with respect to plant, property and equipment of the Corporation and its
Restricted Subsidiaries in an aggregate amount not to exceed $50,000,000.
Further, this provision will not limit Permitted Refinancing Indebtedness,
subject to the provisions of Section 8(a).
(c) Merger and Consolidation. The Corporation may not
<PAGE>
consolidate with, merge with or into, or transfer all or substantially all of
its assets (as an entirety or substantially as an entirety in one transaction or
a series of related transactions), to any Person unless: (i) the Corporation
shall be the continuing Person, or the Person (if other than the Corporation)
formed by such consolidation or into which the Corporation is merged or to which
the properties and assets of the Corporation are transferred shall be a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia and the Exchangeable Preferred Stock
shall be converted into or exchanged for and shall become shares of such
successor, transferee or resulting Person, having in respect of such successor,
transferee or resulting Person the same powers, preferences and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon, that the Exchangeable Preferred Stock had
immediately prior to such transaction; (ii) immediately before and immediately
after giving effect to such transaction, no Voting Rights Triggering Event shall
have occurred and be continuing; and (iii) immediately after giving effect to
such transaction on a pro forma basis for the most recent quarter, the pro forma
Consolidated Fixed Charge Ratio of the surviving entity shall be at least 1:1;
provided that, if the Consolidated Fixed Charge Ratio of the Corporation for the
most recent quarter preceding such transaction is within the range set forth in
Column A below, then the pro forma Consolidated Fixed Charge Ratio of the
surviving entity after giving effect to such transaction shall be at least equal
to the greater of the percentage of the Consolidated Fixed Charge Ratio of the
Corporation for the most recent quarter preceding such transaction set forth in
Column B or the ratio set forth in Column C below:
A B C
1.1111:1 to 1.4999:1 90% 1.00:1
--------------------------------------
1.5 and higher 80% 1.35:1
and provided, further, that if the pro forma Consolidated Fixed Charge Ratio of
the surviving entity is 2:1 or more, the calculation in the preceding proviso
shall be inapplicable and such transaction shall be deemed to have complied with
the requirements of such proviso.
In connection with any consolidation, merger or transfer
contemplated by this provision, the Corporation shall deliver, or cause to be
delivered, to the Transfer Agent, in form and substance reasonably satisfactory
to the Transfer Agent, an Officers' Certificate and an opinion of counsel, each
stating that such consolidation, merger or transfer comply with this provision
and that all conditions precedent herein provided for relating to such
transaction or transactions have been complied with.
(d) Transactions with Affiliates. The Corporation shall not,
and shall not permit any Restricted Subsidiary to, engage in any transaction
with any Affiliate upon terms which would be any less favorable than those
obtainable by the Corporation or a Restricted Subsidiary in a comparable
arm's-length transaction with a person which is not an affiliate. The
Corporation will not, and will not permit any Restricted Subsidiary to, engage
in any transaction (or series of related transactions) involving in the
aggregate $1,000,000 or more with any Affiliate, except for (i) the making of
any Restricted Payment, (ii) any transaction or series of transactions between
the Corporation and one or more of its Restricted Subsidiaries or between two or
more of its Restricted Subsidiaries (provided, that no more than 5% of the
equity interest in any of its Restricted Subsidiaries is owned by an Affiliate),
and (iii) the payment of compensation (including, without limitation, amounts
paid pursuant to employee benefit plans) for the personal services of officers,
directors and employees of the Corporation or any of its Restricted
Subsidiaries, so long as the Board of Directors of the Corporation in good faith
<PAGE>
shall have approved the terms thereof and deemed the services theretofore or
thereafter to be performed for such compensation or fees to be fair
consideration therefor; and provided further that for any Asset Sale, or a sale,
transfer or other disposition (other than to the Corporation or any of its
Restricted Subsidiaries) of an interest in a Restricted Investment, involving an
amount greater than $25,000,000, such Asset Sale or transfer of interest in a
Restricted Investment is for fair value as determined by an opinion of a
nationally recognized investment banking firm filed with the Transfer Agent.
Notwithstanding the foregoing, nothing prohibits any such transaction which is
determined by the independent members of the Board of Directors of the
Corporation, in their reasonable, good faith judgment (as evidenced by a Board
Resolution filed with the Transfer Agent) to be (a) in the best interests of the
Corporation or such Restricted Subsidiary, and (b) upon terms which would be
obtainable by the Corporation or a Restricted Subsidiary in a comparable
arm's-length transaction with a Person which is not an Affiliate.
(e) Limitation on Investment in Affiliates and Unrestricted
Subsidiaries. After the date of this Certificate of Designations, the
Corporation may not, nor will the Corporation allow any Restricted Subsidiary
to, make a Restricted Investment other than by way of Permitted Investments
unless pro forma for such Restricted Investment the Leverage Ratio of the
Corporation does not exceed 7.75:1.
(f) Reports to Holders. The Corporation will send to the
Transfer Agent and Holders, within 15 days after the filing thereof with the
SEC, copies of its annual reports on Form 10-K, its Quarterly Reports on Form
10-Q and its Current Reports on Form 8-K; provided, however, that
notwithstanding any event which results in the Corporation being relieved of its
obligation to file information, document and reports with the SEC pursuant to
Sections 13 or 15(d) of the Exchange Act, the Corporation shall nevertheless
continue, so long as any Exchangeable Preferred Stock remains outstanding and
unpaid, (i) to file with the SEC (at such time as it would be required to file
such reports under the Exchange Act), and to send to the Transfer Agent and
Holders (within 15 days thereafter), quarterly and annual reports and
information, documents and other reports substantially equivalent to those it
would have been obligated to file if it had remained subject to such sections of
the Exchange Act, and (ii) so long as the Exchangeable Preferred Stock has not
been registered pursuant to the Registration Rights Agreement, upon the request
of a Holder, to provide information required to be delivered under Rule
144A(d)(4) under the Securities Act to such Holder and its prospective
purchasers designated by such Holder.
(g) Conflicts with By-laws. If any provisions of the
Corporation's By-laws conflict in any way with this Certificate of Designations,
the Corporation shall, so long as any of the shares of Exchangeable Preferred
Stock are outstanding, take all necessary actions to amend such By-laws and
thereby resolve the conflict.
(h) Compliance Certificate. The Corporation shall deliver to
the Transfer Agent on or before 105 days after the end of its fiscal year and on
or before 50 days after the end of its second fiscal quarter in each year an
Officers' Certificate stating whether or not the signers know of any Voting
Rights Triggering Event. If they do know of such a Voting Rights Triggering
Event, the certificate shall describe such Voting Rights Triggering Event and
the efforts to remedy or obtain a waiver of the same. The certificate must
comply with Section 10 hereof.
9. Payment.
(a) All amounts payable with respect to the Exchangeable
<PAGE>
Preferred Stock shall be payable in United States dollars at the office or
agency of the Corporation maintained for such purpose within the City and State
of New York or, at the option of the Corporation, payment of dividends may be
made by check mailed to the Holders of the Exchangeable Preferred Stock at their
respective addresses set forth in the register of Holders of Exchangeable
Preferred Stock maintained by the Transfer Agent, provided that all payments
with respect to the Global Shares (as defined below in Section 14) and shares of
Exchangeable Preferred Stock the Holders of which hold at least 10 shares and
have given wire transfer instructions to the Corporation will be required to be
made by wire transfer of immediately available funds to the accounts specified
by the Holders thereof. Unless otherwise designated by the Corporation, the
Corporation's office or agency in New York shall be the office of the paying
agent maintained for such purpose.
(b) Any payment on the Exchangeable Preferred Stock due on any
day that is not a Business Day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such due date.
(c) The Corporation has initially appointed the Transfer Agent
to act as the paying agent. The Corporation may at any time terminate the
appointment of any paying agent and appoint additional or other paying agents,
provided that until the Exchangeable Preferred Stock has been delivered to the
Corporation for cancellation, or moneys sufficient to pay the Liquidation
Preference and accrued dividends and Liquidated Damages on the Exchangeable
Preferred Stock have been made available for payment and either paid or returned
to the Corporation as provided in this Certificate of Designations, it shall
maintain an office or agency in the Borough of Manhattan, The City of New York
for surrender of Exchangeable Preferred Stock.
(d) Dividends payable on the Exchangeable Preferred Stock on
any redemption date or repurchase date that is a Dividend Payment Date will be
paid to the Holders of record as of the immediately preceding Record Date.
(e) All moneys deposited with any paying agent or then held by
the Corporation in trust for the payment of the Liquidation Preference and
dividends and Liquidated Damages on any shares of Exchangeable Preferred Stock
which remain unclaimed at the end of two years after such payment has become due
and payable will be repaid to the Corporation, and the Holder of such shares of
Exchangeable Preferred Stock will thereafter look only to Corporation for
payment thereof.
10. Officers' Certificate.
Each Officers' Certificate provided for in this Certificate of
Designations shall include:
(a) a statement that the officer making such certificate
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 contained in such
certificate are based;
(c) a statement that, in the opinion of such officer, 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
<PAGE>
such officer, such condition or covenant has been satisfied.
11. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of
Exchangeable Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than those
specifically set forth in this Certificate of Designations (as such Certificate
of Designations may be amended from time to time) and in the Certificate of
Incorporation. The shares of Exchangeable Preferred Stock shall have no
preemptive or subscription rights.
12. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
13. Severability of Provisions.
If any voting powers, preferences and relative, participating,
optional and other special rights of the Exchangeable Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as such resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Exchangeable Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Exchangeable Preferred Stock
and qualifications, limitations and restrictions thereof shall, nevertheless,
remain in full force and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Exchangeable Preferred Stock
and qualifications, limitations and restrictions thereof herein set forth shall
be deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Exchangeable Preferred Stock
and qualifications, limitations and restrictions thereof unless so expressed
herein.
14. Form of Securities.
(a) The Exchangeable Preferred Stock shall initially be issued
in the form of one or more Global Preferred Shares (the "Global Shares"), unless
a holder requests initial issuance and delivery of Certificated Securities as
described in Section 14(d) below. The Global Shares shall be deposited on the
Initial Issue Date with, or on behalf of, The Depository Trust Company (the
"Depository") and registered in the name of Cede & Co., as nominee of the
Depository (such nominee being referred to as the "Global Share Holder").
(b) So long as the Global Share Holder is the registered owner
of any Exchangeable Preferred Stock, the Global Share Holder will be considered
the sole Holder under this Certificate of Designations of any shares of
Exchangeable Preferred Stock evidenced by the Global Shares. Beneficial owners
of shares of Exchangeable Preferred Stock evidenced by the Global Shares shall
not be considered the owners or Holders thereof under this Certificate of
Designations for any purpose. The Corporation shall not have any responsibility
or liability for any aspect of the records of the Depository relating to the
Exchangeable Preferred Stock.
<PAGE>
(c) Payments in respect of the Liquidation Preference,
dividends on any Exchangeable Preferred Stock registered in the name of the
Global Share Holder on the applicable record date shall be payable by the
Corporation to or at the direction of the Global Share Holder in its capacity as
the registered Holder under this Certificate of Designations. The Corporation
may treat the persons in whose names shares of Exchangeable Preferred Stock,
including the Global Shares, are registered as the owners thereof for the
purpose of receiving such payments. The Corporation does not have nor will it
have any responsibility or liability for the payments of such amounts to
beneficial holders of Exchangeable Preferred Stock.
(d) Any person having a beneficial interest in a Global Share
may, upon request to the Corporation, exchange such beneficial interest for
Exchangeable Preferred Stock in the form of registered definitive certificates
("Certificated Securities"). Upon any such issuance, the Corporation shall
register such Certificated Securities in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof). If (i) the
Corporation notifies the Holders in writing that the Depository is no longer
willing or able to act as a depository and the Corporation is unable to locate a
qualified successor within 90 days or (ii) the Corporation, at its option,
notifies the Holders in writing that it elects to cause the issuance of
Exchangeable Preferred Stock in the form of Certificated Securities, then, upon
surrender by the Global Share Holder of its Global Shares, Exchangeable
Preferred Stock in such form will be issued to each person that the Global Share
Holder and the Depository identify as being the beneficial owner of the related
Exchangeable Preferred Stock.
15. Legends.
(a) Except as permitted by the following paragraphs (b) and
(c), each share certificate evidencing the Global Shares and Certificated
Securities (and all securities issued in exchange therefor or substitution
thereof) shall bear legends in substantially the following form: THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (4) TO INSTITUTIONAL
ACCREDITED INVESTORS IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS
(b) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by the Global
Shares) pursuant to Rule 144 under the Securities Act ("Rule 144") or pursuant
to an effective registration statement under the Securities Act:
(i) in the case of any Transfer Restricted Security
that is a Certificated Security, the registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Certificated Security that does not bear the legend set forth in (a)
above and rescind any restriction on the transfer of such Transfer
Restricted Security upon receipt of a certification from the
transferring Holder that such transfer is being made pursuant to Rule
144, and;
<PAGE>
(ii) in the case of any Transfer Restricted Security
represented by the Global Shares, such Transfer Restricted Security
shall not be required to bear the legend set forth in (a) above;
provided, however, that with respect to any request for an exchange of
a Transfer Restricted Security that is represented by the Global Shares
for a Certificated Security that does not bear the legend set forth in
(a) above, which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the registrar that such request is
being made pursuant to Rule 144.
(c) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by the Global
Shares) in reliance on any exemption from the registration requirements of the
Securities Act (other than exemptions pursuant to Rule 144A or Rule 144 under
the Securities Act) in which the Holder or the transferee provides an opinion of
counsel to the Corporation and the registrar in form and substance reasonably
acceptable to the Corporation and the registrar (which opinion of counsel shall
also state that the transfer restrictions contained in the legend are no longer
applicable):
(i) in the case of any Transfer Restricted Security
that is a Certificated Security, the registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Certificated Security that does not bear the legend set forth in (a)
above and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(ii) in the case of any Transfer Restricted Security
represented by the Global Shares, such Transfer Restricted Security
shall not be required to bear the legend set forth in (a) above.
(d) Notwithstanding the foregoing, upon consummation of the
Exchange Offer in accordance with the Registration Rights Agreement, the
Corporation shall issue Series B Exchangeable Preferred Stock in exchange for
Series A Exchangeable Preferred Stock accepted for exchange in the Exchange
Offer, which Series B Exchangeable Preferred Stock shall not bear the legend set
forth in (a) above, and the Transfer Agent shall rescind any restriction on the
transfer of such Series B Exchangeable Preferred Stock, in each case unless the
Holder of such Series A Exchangeable Preferred Stock is either (i) a
broker-dealer, (ii) a Person participating in the distribution of the Series A
Exchangeable Preferred Stock or (iii) a Person who is an affiliate (as defined
in Rule 144A) of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be duly executed by Timothy J. Rigas, Executive Vice President
and Chief Financial Officer, and attested by Colin Higgin, its Assistant
Secretary, this 2nd day of July, 1997.
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Timothy J. Rigas
Timothy J. Rigas
Executive Vice President and Chief Financial Officer
ATTEST:
<PAGE>
By: /s/ Colin Higgin
Colin Higgin
Assistant Secretary
<PAGE>
ANNEX A
EXCHANGE INDENTURE
<PAGE>
ANNEX B
REGISTRATION RIGHTS AGREEMENT
<PAGE>
Annex A
ADELPHIA COMMUNICATIONS CORPORATION
13% Senior Subordinated Exchange Debentures Due 2009
INDENTURE
Dated as of _________, ____
BANK OF MONTREAL TRUST COMPANY,
Trustee
<PAGE>
<TABLE>
<CAPTION>
- vi -
CROSS-REFERENCE TABLE
TIA Indenture
SectionSection
<S> <C>
310(a)(1).............................................................................................7.10
(a)(2).......................................................................................7.10
(a)(3).......................................................................................N.A.
(a)(4).......................................................................................N.A.
(b)...............................................................................7.08;7.10;12.02
(b)(1).......................................................................................7.10
(b)(9).......................................................................................7.10
(c)..........................................................................................N.A.
311(a) 7.11
(b)..........................................................................................7.11
(c)..........................................................................................N.A.
312(a) 2.05
(b).........................................................................................12.03
(c).........................................................................................12.03
313(a) 7.06
(b)(1).......................................................................................7.06
(b)(2).......................................................................................7.06
(c)...................................................................................7.06, 12.02
(d)..........................................................................................7.06
314(a) 4.02;12.02
(b)..........................................................................................N.A.
(c)(1)................................................................................12.04;12.05
(c)(2)................................................................................12.04;12.05
(c)(3).......................................................................................N.A.
(d)..........................................................................................N.A.
(e).........................................................................................12.05
(f)..........................................................................................N.A.
315(a) 7.01;7.02
(b)....................................................................................7.05;12.02
(c)..........................................................................................7.01
(d)................................................................................6.05;7.01;7.02
(e)..........................................................................................6.11
316(a) (last sentence)...............................................................................12.06
(a)(1)(A)....................................................................................6.05
(a)(1)(B)....................................................................................6.04
(a)(2).......................................................................................8.02
(b)..........................................................................................6.07
317(a)(1).............................................................................................6.08
(a)(2).......................................................................................6.09
(b)..........................................................................................2.04
318(a) 12.01
<FN>
N.A. means Not Applicable
</FN>
</TABLE>
<PAGE>
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C>
Section 1.01. Definitions.................................................................................1
Section 1.02. Other Definitions..........................................................................10
Section 1.03. Incorporation by Reference of Trust Indenture..............................................10
Section 1.04. Rules of Construction......................................................................11
Section 1.05. Acts of Holders............................................................................11
ARTICLE 2
THE EXCHANGE DEBENTURES
Section 2.01. Form And Dating............................................................................12
Section 2.02. Execution and Authentication...............................................................13
Section 2.03. Registrar and Paying Agent.................................................................13
Section 2.04. Paying Agent to Hold Money in Trust........................................................14
Section 2.05. Holder Lists...............................................................................14
Section 2.06. Transfer and Exchange......................................................................14
Section 2.07. Replacement Exchange Debentures............................................................21
Section 2.08. Outstanding Exchange Debentures............................................................21
Section 2.09. Treasury Exchange Debentures...............................................................21
Section 2.10. Temporary Exchange Debentures..............................................................21
Section 2.11. Cancellation...............................................................................22
Section 2.12. Defaulted Interest.........................................................................22
ARTICLE 3
CHANGE OF CONTROL OFFER
ARTICLE 4
COVENANTS
Section 4.01. Payment of Exchange Debentures.............................................................24
Section 4.02. SEC Reports................................................................................25
Section 4.03. Waiver of Stay, Extension or Usury Laws....................................................25
Section 4.04. Limitation on Transactions with Affiliates.................................................25
Section 4.05. Limitation on Indebtedness.................................................................26
Section 4.06. Limitation on Restricted Payments..........................................................26
Section 4.07. Reports to Holders.........................................................................26
Section 4.08. Notice of Defaults Or Events of Default....................................................27
Section 4.09. Compliance Certificates....................................................................27
Section 4.10. Covenant to Secure Exchange Debentures Equally.............................................27
Section 4.11. Limitation on Investment in Affiliates and Unrestricted Subsidiaries.......................27
Section 4.12. Limitation on Sale of Assets...............................................................27
Section 4.13. No Senior Subordinated Debt................................................................28
ARTICLE 5
SUCCESSOR CORPORATION
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.01. Mergers and Consolidations.................................................................28
Section 5.02. Successor Person Substituted...............................................................29
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default..........................................................................29
Section 6.02. Acceleration...............................................................................31
Section 6.03. Other Remedies.............................................................................31
Section 6.04. Waiver of Past Defaults and Events of Default..............................................31
Section 6.05. Control by Majority........................................................................32
Section 6.06. Limitation on Suits........................................................................32
Section 6.07. Rights of Holders to Receive Payment.......................................................32
Section 6.08. Collection Suit by Trustee.................................................................33
Section 6.09. Trustee May File Proofs of Claim...........................................................33
Section 6.10. Priorities.................................................................................33
Section 6.11. Undertaking for Costs......................................................................34
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee..........................................................................34
Section 7.02. Rights of Trustee..........................................................................35
Section 7.03. Individual Rights of Trustee...............................................................36
Section 7.04. Trustee's Disclaimer.......................................................................36
Section 7.05. Notice of Defaults.........................................................................36
Section 7.06. Reports by Trustee to Holders..............................................................36
Section 7.07. Compensation and Indemnity.................................................................37
Section 7.08. Replacement of Trustee.....................................................................37
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion...................................38
Section 7.10. Eligibility; Disqualification..............................................................38
Section 7.11. Preferential Collection of Claims Against Company..........................................38
Section 7.12. Paying Agents..............................................................................38
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.................................................................39
Section 8.02. With Consent of Holders....................................................................40
Section 8.03. Compliance with Trust Indenture Act........................................................41
Section 8.04. Revocation and Effect of Consents..........................................................41
Section 8.05. Notation on or Exchange of Exchange Debentures.............................................41
Section 8.06. Trustee to Sign Amendments, etc............................................................42
ARTICLE 9
SATISFACTION AND DISCHARGE OF
INDENTURE: UNCLAIMED MONEYS
Section 9.01. Satisfaction and Discharge of Indenture....................................................42
Section 9.02. Funds Deposited for Payment of Exchange Debentures.........................................43
Section 9.03. Moneys Held by Paying Agent................................................................43
Section 9.04. Moneys Held by Trustee.....................................................................43
Section 9.05. Reinstatement..............................................................................44
ARTICLE 10
DEFEASANCE AND COVENANT DEFEASANCE
Section 10.01. Applicability of Article; Company Option to Effect Defeasance..............................44
Section 10.02. Defeasance and Discharge...................................................................44
Section 10.03. Covenant Defeasance........................................................................45
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 10.04. Conditions to Defeasance or Covenant Defeasance............................................45
Section 10.05. Deposited Money and U.S. Government Obligations to be Held in Trust; Other
Miscellaneous Provisions...................................................................46
Section 10.06 Reinstatement..............................................................................47
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate...................................................................47
Section 11.02. Certain Definitions........................................................................47
Section 11.03. Liquidation; Dissolution; Bankruptcy.......................................................48
Section 11.04. Default on Designated Senior Debt..........................................................48
Section 11.05. Acceleration of Securities.................................................................49
Section 11.06. When Distribution Must Be Paid Over........................................................49
Section 11.07. Notice by Company..........................................................................50
Section 11.08. Subrogation................................................................................50
Section 11.09. Relative Rights............................................................................50
Section 11.10. Subordination May Not Be Impaired by Company...............................................51
Section 11.11. Distribution or Notice to Representatives..................................................51
Section 11.12. Rights of Trustee and Paying Agent.........................................................51
Section 11.13. Authorization to Effect Subordination......................................................51
Section 11.14. Amendments.................................................................................52
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls...............................................................52
Section 12.02. Notices....................................................................................52
Section 12.03. Communications by Holders with Other Holders...............................................53
Section 12.04. Certificate and Opinion as to Conditions...................................................53
Section 12.05. Statements Required in Certificate and Opinion.............................................53
Section 12.06. When Treasury Exchange Debentures Disregarded..............................................54
Section 12.07. Rules by Trustee and Agents................................................................54
Section 12.08. Business Days; Legal Holidays..............................................................54
Section 12.09. Governing Law..............................................................................54
Section 12.10. No Adverse Interpretation of Other Agreements..............................................55
Section 12.11. No Recourse against Others.................................................................55
Section 12.12. Successors.................................................................................55
Section 12.13. Multiple Counterparts......................................................................55
Section 12.14. Table of Contents, Headings, etc...........................................................55
Section 12.15. Separability...............................................................................55
ARTICLE 13
REDEMPTION
Section 13.01. Notices to Trustee.........................................................................57
Section 13.02. Selection of Exchange Debentures to Be Redeemed............................................57
Section 13.03. Notice of Redemption.......................................................................57
Section 13.04. Effect of Notice of Redemption.............................................................58
Section 13.05. Deposit of Redemption Price................................................................58
Section 13.06. Exchange Debentures Redeemed in Part.......................................................59
Section 13.07. Optional Redemption........................................................................59
Section 13.08. Mandatory Redemption.......................................................................59
</TABLE>
<PAGE>
EXHIBITS
Exhibit A FORM OF EXCHANGE DEBENTURE
Exhibit B-1 FORM OF CERTIFICATE FOR EXCHANGE
Exhibit B-2 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM GLOBAL EXCHANGE DEBENTURE TO DEFINITIVE EXCHANGE
DEBENTURE
Exhibit B-3 FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM DEFINITIVE EXCHANGE DEBENTURE TO GLOBAL EXCHANGE
DEBENTURE
<PAGE>
THIS INDENTURE, dated as of _______________, _____, is by and
between ADELPHIA COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Company"), and BANK OF MONTREAL TRUST COMPANY, a trust company organized under
the laws of the State of New York (the "Trustee").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.05 hereof.
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company, (ii) which beneficially owns or holds 10% or
more of any class of the voting Capital Stock of the Company, or (iii) of which
10% or more of the voting Capital Stock is beneficially owned or held by the
Company, a Restricted Subsidiary or an Unrestricted Subsidiary of the Company.
Without a limitation, an Affiliate also includes any director or executive
officer of the Company. As used herein, "Affiliate" shall not include a
Restricted Subsidiary.
"Agent" means any Registrar, Paying Agent, co-registrar or
agent for service of notices and demands. See Section 2.03 hereof.
"Agent Members" means members of, or participants in, the
Depository.
"Aggregate Excess Restricted Investments" means for any fiscal
quarter the aggregate of Excess Restricted Investments with respect to the
Restricted Investments in all of the Unrestricted Subsidiaries and Affiliates of
the Company.
"Allowable Securities" means (i) cash equivalents, (ii) common
or preferred Capital Stock in a Person which (x) has Investment Grade Senior
Debt or (y) whose ratio of Indebtedness plus Preferred Stock to Annualized Pro
Forma EBITDA is less than 7.75:1, or (iii) debt securities issued by a Person
which (x) has Investment Grade Senior Debt or (y) whose Leverage Ratio is less
than 7.75:1, provided that the securities in (ii)(y) and (iii)(y) above shall
only be deemed to be Allowable Securities if the principal business of the
Person is owning and operating cable television systems.
"Annualized Pro Forma EBITDA" means, with respect to any
Person, (i) such Person's Pro Forma EBITDA for the latest fiscal quarter
multiplied by four, minus (ii) in the case of the Company only, the Company's
Aggregate Excess Restricted Investments for such fiscal quarter.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions of (a) any Capital Stock of or
other equity interest in any Restricted Subsidiary, (b) all or substantially all
of the assets of the Company or of any Restricted Subsidiary or (c) all or
substantially all of the assets of a Company System or part thereof serving at
<PAGE>
least 5,000 basic subscribers, a division, line of business or comparable
business segment of the Company or any Restricted Subsidiary.
"Applicable Procedures" means the procedures of the
Depository.
"Board of Directors" means the Board of Directors of the
Company or any committee authorized to act
therefor.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors and to be in full force and effect, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right or other interest in the nature of
any equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capital Stock Sale Proceeds" means the aggregate net sale
proceeds (including the fair market value of property, other than cash, as
determined by an independent appraisal firm) received by the Company from the
issue or sale (other than to a Subsidiary) by the Company of any class of its
Capital Stock on or after January 1, 1993 (including Capital Stock of the
Company issued after January 1, 1993 upon conversion of or in exchange for other
securities of the Company but excluding the 13% Series A Cumulative Exchangeable
Preferred Stock of the Company).
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" means such time as (i) (a) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than the Rigas Family and its Affiliates, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power required to elect or designate for election a majority of the
Company's Board of Directors and attaching to the then outstanding voting
Capital Stock of the Company and (b) the Rigas Family, together with its
Affiliates, is not at such time the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 35% of the total voting power required to
elect or designate for election a majority of the Company's Board of Directors
and attaching to the then outstanding voting Capital Stock of the Company, or
(ii) during any period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Company's Board of Directors (together
with any new directors whose election by the Company's Board of Directors or
whose nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved or approved by the Rigas Family and its
Affiliates at a time when they had the right or ability by voting right,
contract or otherwise to elect or designate for election a majority of the
Company's Board of Directors) cease for any reason to constitute a majority of
the directors then in office.
"Change of Control Triggering Event" means the occurrence of
both a Change of Control and a Rating Decline.
<PAGE>
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5 of
this Indenture and thereafter means the successor and any other obligor on the
Exchange Debentures.
"Company Request" means any written request signed in the name
of the Company by the Chairman, the President or a Vice President of the Company
and attested to by a Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Company.
"Consolidated Fixed Charge Ratio" means, for any Person, for
any period, the ratio of (i) Annualized Pro Forma EBITDA to (ii) Consolidated
Interest Expense for such period multiplied by four.
"Consolidated Interest Expense" means, for any Person, for any
period, the amount of interest in respect of Indebtedness (including
amortization of original issue discount, amortization of debt issuance costs,
and non-cash interest payments on any Indebtedness and the interest portion of
any deferred payment obligation and after taking into account the effect of
elections made under any Interest Rate Agreement, however denominated, with
respect to such Indebtedness), the amount of Redeemable Dividends and the
interest component of rentals in respect of any Capitalized Lease Obligation
paid, accrued or scheduled to be paid or accrued by such Person during such
period, determined on a consolidated basis in accordance with GAAP. For purposes
of this definition, interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by such Person to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP consistently applied.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 77 Water Street, New York, New York 10005.
"Cumulative Credit" means the sum of (i) Capital Stock Sale
Proceeds plus (ii) cumulative EBITDA of the Company from and after January 1,
1993 to the end of the fiscal quarter immediately preceding the date of a
proposed Restricted Payment, or, if such cumulative EBITDA for such period is
negative, minus the amount by which such cumulative EBITDA is less than zero.
"Cumulative Interest Expense" means the aggregate amount of
Consolidated Interest Expense paid, accrued or scheduled to be paid or accrued
by the Company from January 1, 1993 to the end of the fiscal quarter immediately
preceding a proposed Restricted Payment, determined on a consolidated basis in
accordance with GAAP.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Definitive Exchange Debentures" means Exchange Debentures
that are in the form of the Exchange Debentures attached hereto as Exhibit A,
that do not include the information called for by footnotes 1 and 2 thereof.
"Depository" means The Depository Trust Company and its
successors.
"EBITDA" means, for any Person, for any period, an amount
equal to (A) the sum of (i) consolidated net income for such period (exclusive
of any gain or loss realized in such period upon an Asset Sale), plus (ii) the
provision for taxes for such period based on income or profits to the extent
<PAGE>
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, except
that with respect to the Company, each of the foregoing items shall be
determined on a consolidated basis with respect to the Company and its
Restricted Subsidiaries only.
"Excess Restricted Investment" means, with respect to any
particular Unrestricted Subsidiary or Affiliate of the Company for a fiscal
quarter, the lesser of the amounts described in the following clauses (i) and
(ii), or if such amounts are equal, such amount:
(i) the aggregate amount of any Restricted Investments
(other than the Initial Investment) made by the
Company or any Restricted Subsidiary with respect to
such Unrestricted Subsidiary or Affiliate and during
the twelve-month period ending on the last day of
such fiscal quarter;
(ii) cash income received during such quarter by the
Company with respect to its Restricted Investments in
such Unrestricted Subsidiary or Affiliate multiplied
by four;
and provided that cash income from a particular Restricted Investment shall be
included only (x) if cash income has been received by the Company with respect
to such Restricted Investment during each of the previous two fiscal quarters,
or (y) if the cash income derived from such Restricted Investment is
attributable to Allowable Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures" means the securities that are issued
under this Indenture, as amended or supplemented from time to time pursuant to
this Indenture.
"Exchange Offer" means the Exchange Offer as defined in the
Registration Rights Agreement.
"GAAP" means generally accepted accounting principles as in
effect in the United States from time to
time.
"Global Exchange Debenture" means a permanent global exchange
debenture that contains the paragraph referred to in footnote 1 and the
additional schedule referred to in footnote 2 to the form of the Exchange
Debenture attached hereto as Exhibit A, and that is deposited with and
registered in the name of the Depository.
"Holder" or "Exchange Debentureholder" means the Person in
whose name an Exchange Debenture is registered on the Registrar's books.
"Indebtedness" is defined to mean (without duplication), with
respect to any Person, any indebtedness, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
<PAGE>
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute subscriber
advance payments and deposits, accounts payable or trade payables, and other
accrued liabilities arising in the ordinary course of business) if and to the
extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and shall also
include, to the extent not otherwise included, (i) any Capitalized Lease
Obligations, (ii) obligations secured by a lien to which the property or assets
owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed, (iii) guaranties of items
of other Persons which would be included within this definition for such other
Persons (whether or not such items would appear upon the balance sheet of the
guarantor), (iv) in the case of the Company, Preferred Stock of its Restricted
Subsidiaries and (v) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing. Notwithstanding the foregoing,
Indebtedness shall not include any interest or accrued interest until due and
payable.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Initial Investment" means the Restricted Investment in a
Person made by the Company or a Restricted Subsidiary that first results in such
Person becoming an Unrestricted Subsidiary or Affiliate of the Company, except
that in the case of Olympus, "Initial Investment" shall mean any Restricted
Investment made in Olympus since February 22, 1994, but only to the extent that
such Restricted Investment when aggregated with the other Restricted Investments
made in Olympus since such date does not exceed $25,000,000.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Exchange Debentures.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Investment Grade Subordinated Debt" means, with respect to
any Person, subordinated indebtedness of such Person which has been rated with
an investment grade rating by Moody's or Standard & Poor's Corporation.
"Leverage Ratio" is defined as the ratio of (i) the
outstanding Indebtedness of a Person and its Subsidiaries (or in the case of the
Company, its Restricted Subsidiaries) divided by (ii) the Annualized Pro Forma
EBITDA of such Person.
"Lien" means with respect to any property or assets of the
Company (it being understood that for the purposes of this definition property
or assets of the Company do not include property or assets of any Subsidiary of
the Company) any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority, or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation, conditional
sale, or other title retention agreement having substantially the same economic
effect as any of the foregoing) except for (i) liens for taxes, assessments or
governmental charges or levies on property if the same shall not at the time be
<PAGE>
delinquent or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings; (ii) liens imposed by law such as
carriers', warehousemen's and mechanics' liens and other similar liens arising
in the ordinary course of business which secure payment of obligations not more
than sixty (60) days past due or are being contested in good faith and by
appropriate proceedings; (iii) other liens incidental to the conduct of its
business or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit
and which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business; (iv) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character; or (v) liens arising
upon entry of a confession of judgment in Pennsylvania courts in connection with
borrowings not in excess of $1,000,000 in the aggregate.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Chief Financial Officer, the Treasurer, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers. See Sections 12.04 and 12.05 hereof.
"Olympus" means Olympus Communications, L.P., a Delaware
limited partnership.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee. See Sections 12.04 and 12.05 hereof.
"Permitted Investments" means, for any Person, Restricted
Investments made on or after February 22, 1994 consisting of (i) advances for
less than one year issued in the ordinary course of business for working capital
purposes or for the purchase of property, plant and equipment in an amount not
to exceed $5,000,000 in the aggregate outstanding, (ii) with respect to a
Restricted Investment in Olympus, $25,000,000 plus the aggregate amount of cash
income received by the Company from Olympus, minus the aggregate amount of all
Restricted Investments made since February 22, 1994 with respect to Olympus,
(iii) $20,000,000 plus the cash proceeds from the sale or redemption of, or
income from, any Restricted Investments made on or after January 1, 1993, minus
the aggregate amount of all Restricted Investments (excluding Restricted
Investments made with respect to Olympus) since January 1, 1993, (iv) non-cash
Restricted Investments made with the non-cash proceeds from the sale or
redemption of, or income from, any Restricted Investments, or (v) an amount
which, at the time of such Restricted Investment, does not exceed the amount of
Restricted Payments that could then be made by the Company and its Restricted
Subsidiaries under Section 4.06; provided further that no Restricted Investments
may be made under (ii), (iii), (iv) or (v) unless pro forma for such Restricted
Investment the Company could incur $1 of debt under the first paragraph of
Section 4.05.
"Permitted Refinancing Indebtedness" means any renewals,
extensions, substitutions, refinancings or replacements of any Indebtedness,
including any successive extensions, renewals, substitutions, refinancings or
replacements so long as (i) the aggregate amount of Indebtedness represented
thereby is not increased by such renewal, extension, substitution, refinancing
or replacement, (ii) in the case of Indebtedness of the Company, the average
life and the date such Indebtedness is scheduled to mature is not shortened and
(iii) in the case of Indebtedness of the Company, the new Indebtedness shall not
be senior in right of payment to the Indebtedness that is being extended,
<PAGE>
renewed, substituted, refinanced or replaced.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Pro Forma EBITDA" means for any Person, for any period, the
EBITDA of such Person, as determined on a consolidated basis in accordance with
GAAP consistently applied after giving effect to the following: (i) if, during
or after such period, such Person or any of its Subsidiaries shall have made any
Asset Sale, Pro Forma EBITDA of such Person and its Subsidiaries for such period
shall be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset Sale for
the period or increased by an amount equal to the Pro Forma EBITDA (if negative)
directly attributable thereto for such period and (ii) if, during or after such
period, such Person or any of its Subsidiaries completes an acquisition of any
Person or business which immediately after such acquisition is a Subsidiary of
such Person or whose assets are held directly by such Person or a Subsidiary of
such Person, Pro Forma EBITDA shall be computed so as to give pro forma effect
to the acquisition of such Person or business; and provided further that with
respect to the Company, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or
"Restricted Subsidiaries" of the Company.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Rating Date" means the date which is 90 days prior to the
earlier of (i) a Change of Control and (ii) public notice of the occurrence of a
Change of Control or of the intention of the Company to effect a Change of
Control.
"Rating Decline" means the occurrence of the following on, or
within 90 days after, the date of public notice of the occurrence of a Change of
Control or of the intention by the Company to effect a Change of Control (which
period shall be extended so long as the rating of the Exchange Debentures is
under publicly announced consideration for possible downgrade by Moody's or
Standard & Poor's Corporation): (a) in the event the Exchange Debentures are
rated by either Moody's or Standard & Poor's on the Rating Date as Investment
Grade Subordinated Debt, the rating of the Exchange Debentures by both Moody's
and Standard & Poor's shall be below Investment Grade Subordinated Debt; in the
event the Exchange Debentures are rated below Investment Grade Subordinated Debt
by both Moody's and Standard & Poor's on the Rating Date, the rating of the
Exchange Debentures by either Moody's or Standard & Poor's shall be decreased by
one or more gradations (including gradations within rating categories as well as
between rating categories).
"Redeemable Dividend" means, for any dividend with regard to
Redeemable Stock, the quotient of the dividend divided by the difference between
one and the maximum statutory federal income tax rate (expressed as a decimal
number between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means with respect to any Person, any
Capital Stock that by its terms or otherwise is required to be redeemed or is
redeemable at the option of the holder at any time prior to the maturity of the
<PAGE>
Exchange Debentures.
"Registration Rights Agreement" means the Exchangeable
Preferred Stock Registration Rights Agreement, dated as of July 7, 1997, by and
between the Company, Smith Barney Inc., Bear, Stearns & Co., Inc., NationsBanc
Capital Markets, Inc., TD Securities (USA) Inc. and Highland Holdings.
"Restricted Investment" means any advance, loan, account
receivable (other than an account receivable arising in the ordinary course of
business), or other extension of credit (excluding, however, accrued and unpaid
interest in respect of any advance, loan or other extension of credit) or any
capital contribution to (by means of transfers of property to others, payments
for property or services for the account or use of others, or otherwise), any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership or
joint venture) of, or any bank accounts with or guarantee of any Indebtedness or
other obligations of, any Unrestricted Subsidiary or Affiliate of the Company.
"Restricted Payment" means (i) any dividend or distribution
(whether made in cash, property or securities), on or with respect to any shares
of Capital Stock of the Company or Capital Stock of any Subsidiary which is
consolidated with the Company in accordance with GAAP consistently applied,
except for any dividend or distribution which is made solely to the Company or
another Subsidiary or dividends or distributions payable solely in shares of
Common Stock of the Company, or (ii) any redemption, repurchase, retirement or
other direct or indirect acquisition of (a) Indebtedness of the Company which is
pari passu with or subordinate in right of payment to the Exchange Debentures,
except by exchange for or out of the proceeds of the substantially concurrent
issuance of Permitted Refinancing Indebtedness or from proceeds of a sale of
Capital Stock by the Company, or (b) shares of Capital Stock of the Company or
any warrants, rights or options to directly or indirectly purchase or acquire
any such Capital Stock of the Company or any securities exchangeable for or
convertible into any such shares, other than options issued or shares purchased
or granted under the Company's Stock Option Plan of 1986 or the Company's
Restricted Stock Bonus Plan, from any employee of the Company or any of its
Subsidiaries who, together with any Person that, directly or indirectly,
controls (other than by virtue of being directly or indirectly the employer of
such employee), is controlled by or is under common control with such employee,
owns less than 1% of the outstanding Capital Stock of the Company, except for
the purchase, redemption, retirement or other acquisition of any shares of the
Company's Capital Stock by exchange for, or out of the proceeds of the
substantially concurrent sale of, other shares of its Capital Stock other than
any capital stock which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to July 15, 2009.
"Restricted Subsidiary" means (a) any Subsidiary of the
Company, whether existing on or after the date of this Indenture, unless such
Subsidiary is an Unrestricted Subsidiary or shall have been classified as an
Unrestricted Subsidiary by a resolution adopted by the Board of Directors of the
Company and (b) an Unrestricted Subsidiary which is reclassified as a Restricted
Subsidiary by a resolution adopted by the Board of Directors of the Company,
provided that on and after the date of such reclassification such Unrestricted
Subsidiary shall not incur Indebtedness other than that permitted to be incurred
by a Restricted Subsidiary under the provisions of this Indenture.
"Rigas Family" means collectively John J. Rigas and members
of his immediate family, any of their respective spouses, estates, lineal
<PAGE>
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.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Exchange Debentures" and "Series B Exchange
Debentures" mean the Exchange Debentures as described and in the forms
contemplated herein, and as authenticated and issued under this Indenture.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise if in accordance
with GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
SS-SS- 77aaa-77bbbb) as in effect on the date of this Indenture (except as
provided in Section 8.03 hereof).
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee.
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the holder of such depository receipt; provided, that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or a specific payment of
principal or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt.
<PAGE>
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary, (b) any Subsidiary of the Company which is classified
after the date of this Indenture as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of the Company and (c) any subsidiary which as
of the date of the Indenture has been declared an Unrestricted Subsidiary by a
resolution adopted by the Board of Directors of the Company (such Unrestricted
Subsidiaries being Hyperion Telecommunications, Inc., Global Cablevision, Inc.,
Orchard Park Cablevision, Inc. and Global Acquisition Partners, L.P. on the date
hereof); provided that a Subsidiary organized or acquired after the date of this
Indenture may be so classified as an Unrestricted Subsidiary only if immediately
after the date of such classification, any investment by the Company and its
Restricted Subsidiaries in any such Subsidiary made at the time of the
organization or acquisition of such Subsidiary would be a Restricted Investment
permissible under this Indenture. The Trustee shall be given prompt notice by
the Company of each resolution adopted by its Board of Directors under this
provision, together with a copy of each such resolution adopted. Section 1.02.
Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
<S> <C>
"Act".......................................................... 1.05
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"Bankruptcy Law"............................................... 6.01
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"Business Day"................................................. 12.08
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"Certificated Exchange Debentures"............................. 2.01
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"Change of Control Offer"...................................... 3.00
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"Change of Control Purchase Price"............................. 3.00
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"Covenant Defeasance".......................................... 10.03
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"Designated Senior Debt"....................................... 11.02
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"Custodian".................................................... 6.01
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"Defeasance"................................................... 10.02
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"DTC".......................................................... 2.03
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"Event of Default"............................................. 6.01
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"Legal Holiday"................................................ 12.08
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"Paying Agent"................................................. 2.03
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"Proposed Change of Control Response Date"..................... 3.00
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"Reclassification"............................................. 4.12
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"Registrar".................................................... 2.03
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</TABLE>
<PAGE>
<TABLE>
<S> <C>
"Representative"............................................... 11.02
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"Senior Debt".................................................. 11.02
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the SEC.
"indenture securities" means the Exchange Debentures.
"indenture debentureholder" means a Debentureholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" means the Company or any other obligor on the
indenture exchange securities.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it
herein, whether defined expressly or by reference;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural,
and in the plural include the singular; and
(5) words used herein implying any gender shall apply
to every gender.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
<PAGE>
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing an agent therefor shall be sufficient for any purpose of
this Indenture and (subject to Section 7.01 hereof) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument may be proved by the affidavit of a witness of such execution or
by a certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
(c) The ownership of Exchange Debentures shall be proved by
the register of Exchange Debentures maintained by the Registrar pursuant to
Section 2.03 hereof.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Exchange Debenture shall bind
every future Holder of the same Exchange Debenture and the Holder of every
Exchange Debenture issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Exchange Debenture.
ARTICLE 2
THE EXCHANGE DEBENTURES
Section 2.01. Form And Dating.
The Exchange Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A attached hereto.
The Exchange Debentures may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Exchange Debenture shall be dated the
date of its authentication. The Exchange Debentures shall be in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Exchange Debentures
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.
(a) Global Exchange Debenture. Exchange Debentures shall be
issued initially in the form of the Global Exchange Debenture (provided, that
any Holder may request Definitive Exchange Debentures in accordance with Section
2.01(c)), which shall be deposited on behalf of the owners of beneficial
interests in the Exchange Debentures represented thereby with the Depository at
its New York office, and registered in the name of the Depository or a nominee
of the Depository, duly executed by the Company and authenticated by the Trustee
as hereinafter provided. The aggregate principal amount of the Global Exchange
Debenture may from time to time be increased or decreased by adjustments made on
the records of the Trustee and the Depository or its nominee as hereinafter
provided.
The Global Exchange Debenture shall represent such of the
outstanding Exchange Debentures as shall be specified therein and shall provide
<PAGE>
that it shall represent the aggregate amount of outstanding Exchange Debentures
from time to time endorsed thereon and that the aggregate amount of outstanding
Exchange Debentures represented thereby may from time to time be reduced or
increased, as appropriate, to reflect issuances, exchanges and redemptions. Any
endorsement of the Global Exchange Debenture to reflect the amount of any
increase or decrease in the amount of outstanding Exchange Debentures
represented thereby shall be made by the Trustee or the Exchange Debenture
Custodian (as hereinafter defined), at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.
Except as set forth in Section 2.06 hereof, the Global
Exchange Debenture may be transferred, in whole and not in part, only to another
nominee of the Depository or to a successor of the Depository or its nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply
only to the Global Exchange Debenture deposited with or on behalf of the
Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(b), authenticate and deliver the Global Exchange
Debenture that (i) shall be registered in the name of the Depository or the
nominee of the Depository and (ii) shall be delivered by the Trustee to the
Depository or pursuant to the Depository's instructions or held by the Exchange
Debenture Custodian.
Agent Members shall have no rights either under this Indenture
with respect to any Global Exchange Debenture held on their behalf by the
Depository or by the Exchange Debenture Custodian or under such Global Exchange
Debenture, and the Depository may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of such Global
Exchange Debenture for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices of such
Depository governing the exercise of the rights of an owner of a beneficial
interest in the Global Exchange Debenture.
(c) Definitive Exchange Debentures. Exchange Debentures issued
in certificated form shall be substantially in the form of Exhibit A attached
hereto (but without including the text referred to in footnotes 1 and 2
thereto). Except as provided in Section 2.06, owners of beneficial interests in
the Global Exchange Debenture will not be entitled to receive physical delivery
of certificated Securities.
Section 2.02. Execution and Authentication.
An Officer shall sign the Exchange Debentures for the Company
by manual or facsimile signature. The Company's seal shall be reproduced on the
Exchange Debentures and may be in facsimile form. If an Officer whose signature
is on an Exchange Debenture no longer holds that office at the time an Exchange
Debenture is authenticated, the Exchange Debenture shall nevertheless be valid.
An Exchange Debenture shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Exchange Debenture has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by an Officer, authenticate Series A Exchange Debentures for original issue up
to the aggregate principal amount stated in paragraph 4 of the Exchange
<PAGE>
Debentures. The Trustee shall, upon a written order of the Company signed by an
Officer, authenticate Series B Exchange Debentures for original issue up to the
aggregate principal amount of Series A Exchange Debentures exchanged in the
Exchange Offer or otherwise exchanged for Series A Exchange Debentures pursuant
to the terms of the Registration Rights Agreement. The aggregate principal
amount of Exchange Debentures outstanding at any time may not exceed such
amounts except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Exchange Debentures. An authenticating agent may
authenticate Exchange Debentures whenever the Trustee may do so. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal with
the Company or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Exchange
Debentures may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Exchange Debentures may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the
Exchange Debentures 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 Depository with respect to the Global Exchange Debenture.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent respect to the Global Exchange Debenture.
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
Exchange Debentures, 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 Exchange Debentures.
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 SS- 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
<PAGE>
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
Exchange Debentures and the Company shall otherwise comply with TIA SS- 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Exchange Debenture. The
transfer and exchange of beneficial interests in the Global Exchange Debenture
shall be effected through the Depository, in accordance with this Indenture and
the procedures of the Depository therefor, which shall include restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Beneficial interests in the Global Exchange Debenture may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the Global Exchange Debenture in accordance with the transfer
restrictions set forth in the legend in subsection (g) of this Section 2.06.
(b) Transfer and Exchange of Definitive Exchange Debentures.
When Definitive Exchange Debentures are presented by a Holder to the Registrar
with a request:
(x) to register the transfer of the Definitive
Exchange Debentures; or
(y) to exchange such Definitive Exchange
Debentures for an equal principal amount of
Definitive Exchange Debentures of other
authorized denominations, the Registrar
shall register the transfer or make the
exchange as requested if its requirements
for such transactions are met; provided,
however, that the Definitive Exchange
Debentures presented or surrendered for
register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instruction of transfer in form
satisfactory to the Registrar duly executed
by such Holder or by his attorney, duly
authorized in writing; and
(ii) in the case of a Definitive Exchange
Debenture that is a Transfer Restricted
Security, such request shall be accompanied
by the following additional information and
documents, as applicable: (A) if such
Transfer Restricted Security
is being delivered to the Registrar
by a Holder for registration in the
name of such Holder, without
transfer, a certification to that
effect from such Holder (in
substantially the form of Exhibit
B-1 hereto);
(B) if such Transfer Restricted Security
is being transferred to a QIB in
accordance with Rule 144A under the
Securities Act or pursuant to an
<PAGE>
exemption from registration in
accordance with Rule 144 under the
Securities Act or pursuant to an
effective registration statement
under the Securities Act, a
certification to that effect from
such Holder (in substantially the
form of Exhibit B-1 hereto); or
(C) if such Transfer Restricted Security
is being transferred in reliance on
another exemption from the
registration requirements of the
Securities Act, a certification to
that effect from such Holder (in
substantially the form of Exhibit
B-1 hereto) and an Opinion of
Counsel from such Holder or the
transferee reasonably acceptable to
the Company and to the Registrar to
the effect that such transfer is in
compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in the Global
Exchange Debenture for a Definitive Exchange Debenture.
(i) Any Person having a beneficial interest in
the Global Exchange Debenture may upon
request, subject to the Applicable
Procedures, exchange such beneficial
interest for a Definitive Exchange
Debenture. Upon receipt by the Trustee of
written instructions or such other form of
instructions as is customary for the
Depository, from the Depository or its
nominee on behalf of any Person having a
beneficial interest in the Global Exchange
Debenture, and, in the case of a Transfer
Restricted Security, the following
additional information and documents (all of
which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated
by the Depository as being the
beneficial owner, a certification to
that effect from such Person (in
substantially the form of Exhibit
B-2 hereto);
(B) if such beneficial interest is being
transferred to a QIB in accordance
with Rule 144A under the Securities
Act or pursuant to an exemption from
registration in accordance with Rule
144 under the Securities Act or
pursuant to an effective
registration statement under the
Securities Act, a certification to
that effect from the transferor (in
<PAGE>
substantially the form of Exhibit
B-2 hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that
effect from the transferor (in substantially
the form of Exhibit B-2 hereto) and an
Opinion of Counsel from the transferee or
transferor reasonably acceptable to the
Company and to the Registrar to the effect
that such transfer is in compliance with the
Securities Act, the Company shall execute
and, the Trustee shall authenticate and
deliver to the transferee a Definitive
Exchange Debenture in the appropriate
principal amount.
(ii) Definitive Exchange Debentures issued in
exchange for a beneficial interest in the
Global Exchange Debenture pursuant to this
Section 2.06(c) shall be registered in such
names and in such authorized denominations
as the Depository, pursuant to instructions
from its direct or indirect participants or
otherwise, shall instruct the Trustee. The
Trustee shall deliver such Definitive
Exchange Debentures to the Persons in whose
names such Exchange Debentures are so
registered.
(d) Restrictions on Transfer and Exchange of Global Exchange
Debenture. Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), the Global
Exchange Debenture may not be transferred as a whole except by the Depository to
a nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee to
a successor Depository or a nominee of such successor Depository.
(e) Transfer and Exchange of a Definitive Exchange Debenture
for a Beneficial Interest in the Global Exchange Debenture. A Definitive
Exchange Debenture may not be exchanged for a beneficial interest in the Global
Exchange Debenture except, subject to the Applicable Procedures, upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Exchange Debenture, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, and, in the case
of a Transfer Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
(i) if such beneficial interest is being
transferred to the Person designated by the
Depository as being the beneficial owner, a
certification to that effect from such
Person (in substantially the form of Exhibit
B-3 hereto);
(ii) if such beneficial interest is being
transferred to a QIB in accordance with Rule
144A under the Securities Act or pursuant to
<PAGE>
an exemption from registration in accordance
with Rule 144 under the Securities Act or
pursuant to an effective registration
statement under the Securities Act, a
certification to that effect from the
transferor (in substantially the form of
Exhibit B-3 hereto); or
(iii) if such beneficial interest is being
transferred in reliance on any other
exemption from the registration requirements
of the Securities Act, a certification to
that effect from the transferor (in
substantially the form of Exhibit B-3
hereto) and an Opinion of Counsel from the
transferee or the transferor reasonably
acceptable to the Company and to the
Registrar to the effect that such transfer
is in compliance with the Securities Act,
the Trustee shall cancel such Definitive
Exchange Debenture in accordance with
Section 2.11 hereof and cause, or direct the
Exchange Debenture Custodian to cause, in
accordance with the standing instructions
and procedures existing between the
Depository and the Exchange Debenture
Custodian, the aggregate principal amount of
Exchange Debentures represented by the
Global Exchange Debenture to be increased
accordingly. If no part of the Global
Exchange Debenture is then outstanding, the
Company shall execute and the Trustee shall
authenticate a new Global Exchange Debenture
in the appropriate principal amount.
(f) Authentication of Definitive Exchange Debentures in
Absence of Depository. If at any time:
(i) the Depository for the Exchange Debentures
notifies the Company that the Depository is
unwilling or unable to continue as
Depository for the Global Exchange Debenture
and a successor Depository for the Global
Exchange Debenture is not appointed by the
Company within 90 days after delivery of
such notice; or
(ii) the Company at its sole discretion, notifies
the Trustee in writing that it elects to
cause the issuance of Definitive Exchange
Debentures under this Indenture,
then the Company shall execute, and the
Trustee shall, upon receipt of an
authentication order in accordance with
Section 2.02 hereof, authenticate and
deliver, Definitive Exchange Debentures in
an aggregate principal amount equal to the
principal amount of the Global Exchange
Debenture in exchange for such Global
Exchange Debenture.
(g) Legends.
(i) Except as permitted by the following
paragraphs (ii) and (iii), each Exchange
Debenture certificate evidencing the Global
Exchange Debenture and Definitive Exchange
Debentures (and all Exchange Debentures
<PAGE>
issued in exchange therefor or substitution
thereof) shall bear legends in substantially
the following form:
THE DEBENTURES EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3)
PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (4) TO
INSTITUTIONAL ACCREDITED INVESTORS IN A
TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, IN EACH
CASE IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED
STATES AND OTHER JURISDICTIONS.
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer
Restricted Security represented by the
Global Exchange Debenture) pursuant to Rule
144 under the Securities Act or pursuant to
an effective registration statement under
the Securities Act:
(A) in the case of any Transfer
Restricted Security that is a
Definitive Exchange Debenture, the
Registrar shall permit the Holder
thereof to exchange such Transfer
Restricted Security for a Definitive
Exchange Debenture that does not
bear the legend set forth in (i)
above and rescind any restriction on
the transfer of such Transfer
Restricted Security upon receipt of
a certification from the
transferring holder substantially in
the form of Exhibit B-1 hereto, and;
(B) in the case of any Transfer
Restricted Security represented by
the Global Exchange Debenture, such
Transfer Restricted Security shall
not be required to bear the legend
set forth in (i) above, but shall
continue to be subject to the
provisions of Section 2.06(a) and
<PAGE>
(b) hereof; provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that is represented by
the Global Exchange Debenture for a Definitive Exchange Debenture that does not
bear the legend set forth in (i) above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B-2 hereto).
(iii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer
Restricted Security represented by the
Global Exchange Debenture) in reliance on
any exemption from the registration
requirements of the Securities Act (other
than exemptions pursuant to Rule 144A or
Rule 144 under the Securities Act) in which
the Holder or the transferee provides an
Opinion of Counsel to the Company and the
Registrar in form and substance reasonably
acceptable to the Company and the Registrar
(which Opinion of Counsel shall also state
that the transfer restrictions contained in
the legend are no longer applicable):
(A) in the case of any Transfer
Restricted Security that is a
Definitive Exchange Debenture, the
Registrar shall permit the Holder
thereof to exchange such Transfer
Restricted Security for a Definitive
Exchange Debenture that does not
bear the legend set forth in (i)
above and rescind any restriction on
the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer
Restricted Security represented by
the Global Exchange Debenture, such
Transfer Restricted Security shall
not be required to bear the legend
set forth in (i) above, but shall
continue to be subject to the
provisions of Section 2.06(a) and
(b) hereof.
(iv) Notwithstanding the foregoing, upon
consummation of the Exchange Offer in
accordance with the Registration Rights
Agreement, the Company shall issue and, upon
receipt of an authentication order in
<PAGE>
accordance with Section 2.02 hereof, the
Trustee shall authenticate Series B Exchange
Debentures in exchange for Series A Exchange
Debentures accepted for exchange in the
Exchange Offer, which Series B Exchange
Debentures shall not bear the legend set
forth in (i) above, and the Registrar shall
rescind any restriction on the transfer of
such Series B Exchange Debentures, in each
case unless the Holder of such Series A
Exchange Debentures is either (A) a
broker-dealer, (B) a Person participating in
the distribution of the Series A Exchange
Debentures or (C) a Person who is an
affiliate (as defined in Rule 144A) of the
Company.
(h) Cancellation and/or Adjustment of the Global Exchange
Debenture. At such time as all beneficial interests in the Global Exchange
Debenture have been exchanged for Definitive Exchange Debentures, redeemed,
repurchased or cancelled, the Global Exchange Debenture shall be returned to or
retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in the Global
Exchange Debenture is exchanged for Definitive Exchange Debentures, redeemed,
repurchased or cancelled, the principal amount of Exchange Debentures
represented by the Global Exchange Debenture shall be reduced accordingly and an
endorsement shall be made on the Global Exchange Debenture, by the Trustee or
the Exchange Debenture Custodian, at the direction of the Trustee, to reflect
such reduction.
(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 Definitive
Exchange Debentures and the Global Exchange
Debenture at the Registrar's request.
(ii) No service charge shall be made to a Holder
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 and 8.05
hereto).
(iii) All Definitive Exchange Debentures and the
Global Exchange Debenture issued upon any
registration of transfer or exchange of
Definitive Exchange Debentures or the Global
Exchange Debenture shall be the valid
obligations of the Company, evidencing the
same debt, and entitled to the same benefits
under this Indenture, as the Definitive
Exchange Debentures or the Global Exchange
Debenture surrendered upon such registration
<PAGE>
of transfer or exchange.
(iv) Prior to due presentment for the
registration of a transfer of any Exchange
Debenture, the Trustee, any Agent and the
Company may deem and treat the Person in
whose name any Exchange Debenture is
registered as the absolute owner of such
Exchange Debenture for the purpose of
receiving payment of principal of and
interest on such Exchange Debentures, and
neither the Trustee, any Agent nor the
Company shall be affected by notice to the
contrary.
(v) The Trustee shall authenticate Definitive
Exchange Debentures and the Global Exchange
Debenture in accordance with the provisions
of Section 2.02 hereof.
(vi) Neither the Company nor the Registrar shall
be required (i) to issue or register the
transfer or exchange of Exchange Debentures
during a period beginning at the opening of
business on a Business Day fifteen (15)
Business Days before the day of any
selection of Exchange Debentures for
redemption under Section 13.02 hereof and
ending at the close of business on the day
of selection, or (ii) to register the
transfer of or exchange any Exchange
Debentures so selected for redemption, in
whole or in part, except the unredeemed
portion of any Exchange Debenture being
redeemed in part.
Section 2.07. Replacement Exchange Debentures.
If any mutilated Exchange Debenture is surrendered to the
Trustee, or the Company and the Trustee receive evidence to their satisfaction
of the destruction, loss or theft of any Exchange Debenture, the Company shall
issue and the Trustee shall authenticate a replacement if the Trustee's
requirements are met. 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 an Exchange
Debenture is replaced. The Company may charge for any expenses in replacing an
Exchange Debenture.
Every replacement Exchange Debenture 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 Exchange Debentures duly
issued hereunder.
Section 2.08. Outstanding Exchange Debentures.
The Exchange Debentures outstanding at any time are all the
Exchange Debentures authenticated by the Trustee except for those cancelled by
it, those delivered to it for cancellation, and those described in this Section
as not outstanding. Except as set forth in Section 2.09 hereof, an Exchange
<PAGE>
Debenture does not cease to be outstanding because the Company or an Affiliate
of the Company holds the Exchange Debenture.
If an Exchange Debenture is replaced pursuant to Section 2.07
hereof, it ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Exchange Debenture is held by a bona fide
purchaser.
If the principal amount of any Exchange Debenture 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 Exchange Debentures payable on that date, then on and after
that date such Exchange Debentures shall be deemed to be no longer outstanding
and shall cease to accrue interest.
Section 2.09. Treasury Exchange Debentures.
In determining whether the Holders of the required principal
amount of Exchange Debentures have concurred in any direction, waiver or
consent, Exchange Debentures owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with 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 Exchange Debentures that
a Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Exchange Debentures.
Until definitive Exchange Debentures are ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Exchange
Debentures upon a written order of the Company signed by an Officer. Temporary
Exchange Debentures shall be substantially in the form of definitive Exchange
Debentures but may have variations that the Company considers appropriate for
temporary Exchange Debentures and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Exchange Debentures in exchange for temporary
Exchange Debentures.
Holders of temporary Exchange Debentures shall be entitled to
all of the benefits of this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Exchange Debentures to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Exchange Debentures surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Exchange Debentures surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall dispose of cancelled Exchange Debentures
(subject to the record retention requirement of the Exchange Act in accordance
with its standard disposition policies in effect from time to time).
Certification of the destruction of all cancelled Exchange Debentures shall be
delivered to the Company. The Company may not issue new Exchange Debentures to
replace Exchange Debentures that it has paid or that have been delivered to the
Trustee for cancellation.
Section 2.12. Defaulted Interest.
<PAGE>
If the Company defaults in a payment of interest on the
Exchange Debentures, 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 Exchange Debentures 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 Exchange Debenture 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
CHANGE OF CONTROL OFFER
Within 50 days of (i) the proposed occurrence of a Change of
Control or (ii) the occurrence of a Change of Control Triggering Event, the
Company shall notify the Trustee in writing of such proposed occurrence or
occurrence, as the case may be, and shall make an offer to purchase (the "Change
of Control Offer") the Exchange Debentures at a purchase price equal to 100% of
the principal amount thereof plus any accrued and unpaid interest thereon to the
Change of Control Payment Date (as hereinafter defined) (the "Change of Control
Purchase Price") in accordance with the procedures set forth in this covenant.
Within 50 days of (i) the proposed occurrence of a Change of
Control or (ii) the occurrence of a Change of Control Triggering Event, the
Company also shall (a) cause a notice of the Change of Control Offer to be sent
at least once to the Dow Jones News Service or similar business news service in
the United States and (b) send by first-class mail, postage prepaid, to the
Trustee and to each holder of the Exchange Debentures, at his address appearing
in the register of the Exchange Debentures maintained by the Registrar, a notice
stating:
(1) that the Change of Control Offer is being made
pursuant to this covenant and that all Exchange Debentures
tendered will be accepted for payment, provided that a Change
of Control Triggering Event has occurred and otherwise subject
to the terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the
purchase date (which shall be a Business Day no earlier than
50 days from the date such notice is mailed and no later than
15 days after the date of the corresponding Change of Control
Triggering Event) (the "Change of Control Payment Date");
(3) that any Exchange Debenture not tendered
will continue to accrue interest;
(4) that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any Exchange
Debentures accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(5) that holders accepting the offer to have their
Exchange Debentures purchased pursuant to a Change of Control
<PAGE>
Offer will be required to surrender the Exchange Debentures to
the Paying Agent at the address specified in the notice prior
to the close of business on the Business Day preceding the
Change of Control Payment Date;
(6) that holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than the
close of business on the third Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the holder,
the principal amount of the Exchange Debentures delivered for
purchase, and a statement that such holder is withdrawing his
election to have such Exchange Debentures purchased;
(7) that holders whose Exchange Debentures are being
purchased only in part will be issued new Exchange Debentures
equal in principal amount to the unpurchased portion of the
Exchange Debentures surrendered, provided that each Exchange
Debenture purchased and each such new Exchange Debenture
issued shall be in an original principal amount in
denominations of $1,000 and integral multiples thereof; and
(8) any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance.
Notwithstanding any other provision of this Article 3, in the
case of a notice of a Change of Control Offer that is being furnished by the
Company with respect to a proposed Change of Control that has not yet actually
occurred, the Company may specify in such notice that holders of the Exchange
Debentures shall be required to notify the Company, by a date not earlier than
the date (the "Proposed Change of Control Response Date") which is 30 days from
the date of such notice, as to whether such holders will tender their Exchange
Debentures for payment pursuant to the Change of Control Offer and to notify the
Company of the principal amount of such Exchange Debentures to be so tendered
(with the failure of any holder to so notify the Company within such 30-day
period to be deemed an election of such holder not to accept such Change of
Control Offer). In such event, the Company shall have the option, to be
exercised by a subsequent written notice to be sent, no later than 15 days after
the Proposed Change of Control Response Date, to the same Persons to whom the
original notice of the Change of Control Offer was sent, to cancel or otherwise
effect the termination of the proposed Change of Control and to rescind the
related Change of Control Offer, in which case the then outstanding Change of
Control Offer shall be deemed to be null and void and of no further effect.
On the Change of Control Payment Date, the Company shall (a)
accept for payment Exchange Debentures or portions thereof tendered pursuant to
the Change of Control Offer, (b) deposit with the Paying Agent money sufficient
to pay the purchase price of all Exchange Debentures or portions thereof so
tendered and (c) deliver or cause to be delivered to the Trustee Exchange
Debentures so accepted together with an Officers' Certificate stating the
Exchange Debentures or portions thereof tendered to the Company. The Paying
Agent shall promptly mail to each holder of Exchange Debentures so accepted
payment in an amount equal to the purchase price for such Exchange Debentures,
and the Trustee shall promptly authenticate and mail to such holder a new
Exchange Debenture equal in principal amount to any unpurchased portion of the
Exchange Debentures surrendered; provided that each such new Exchange Debenture
shall be issued in an original principal amount in denominations of $1,000 and
integral multiples thereof.
<PAGE>
There shall be no purchase of any Exchange Debentures pursuant
to this covenant if there has occurred (prior to, on or after, as the case may
be, the tender of such Exchange Debentures pursuant to the Change of Control
Offer, by the holders of such Exchange Debentures) and is continuing an Event of
Default. The Paying Agent will promptly return to the respective holders thereof
any Exchange Debentures (a) the tender of which has been withdrawn in compliance
with this Indenture or (b) held by it during the continuance of an Event of
Default (other than a default in the payment of the Change of Control Purchase
Price with respect to such Exchange Debentures).
In the event that the Company is required to make a Change of
Control Offer, the Company will comply with all applicable tender offer rules
including Rule 14e-1 under the Exchange Act, to the extent applicable.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Exchange Debentures.
The Company shall pay the principal of and all interest on the
Exchange Debentures on the dates and in the manner provided in the Exchange
Debentures and this Indenture. An installment of principal or interest shall be
considered paid on the date it is due if the Trustee or Paying Agent holds on
that date money designated for and sufficient to pay such installment.
The Company will pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law) and on overdue
interest, to the extent lawful, at the rate borne by the Exchange Debentures.
Section 4.02. SEC Reports.
The Company shall file with the Trustee, within 15 days after
it files with the SEC, copies of the annual reports and of the other
information, documents and reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe), if any, which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended. The Company shall also comply with
the other provisions of TIA SS- 314(a).
Section 4.03. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead (as a defense or
otherwise) or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of and/or
interest on the Exchange Debentures as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 4.04. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any transaction with any Affiliate upon terms which
would be any less favorable than those obtainable by the Company or a Restricted
Subsidiary in a comparable arm's-length transaction with a Person which is not
<PAGE>
an Affiliate. The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any transaction (or series of related transactions)
involving in the aggregate $1,000,000 or more with any Affiliate except for (i)
the making of any Restricted Payment, (ii) any transaction or series of
transactions between the Company and one or more of its Restricted Subsidiaries
or between two or more of its Restricted Subsidiaries (provided that no more
than 5% of the equity interest in any of its Restricted Subsidiaries is owned by
an Affiliate), and (iii) the payment of compensation (including, without
limitation, amounts paid pursuant to employee benefit plans) for the personal
services of officers, directors and employees of the Company or any of its
Restricted Subsidiaries, so long as the Board of Directors of the Company in
good faith shall have approved the terms thereof and deemed the services
theretofore or thereafter to be performed for such compensation or fees to be
fair consideration therefor; and provided further that for any Asset Sale, or a
sale, transfer or other disposition (other than to the Company or any of its
Restricted Subsidiaries) of an interest in a Restricted Investment, involving an
amount greater than $25,000,000, such Asset Sale or transfer of interest in a
Restricted Investment is for fair value as determined by an opinion of a
nationally recognized investment banking firm filed with the Trustee.
Notwithstanding the foregoing, this provision shall not prohibit any such
transaction which is determined by the independent members of the Board of
Directors of the Company, in their reasonable, good faith judgment (as evidenced
by a Board Resolution filed with the Trustee) to be (a) in the best interests of
the Company or such Restricted Subsidiary, and (b) upon terms which would be
obtainable by the Company or a Restricted Subsidiary in a comparable
arm's-length transaction with a Person which is not an Affiliate. Section 4.05.
Limitation on Indebtedness.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue, assume or become
liable for, contingently or otherwise (collectively an "incurrence"), any
Indebtedness (other than Exchange Debentures issued under this Indenture)
unless, after giving effect to such incurrence on a pro forma basis,
Indebtedness of the Company and its Restricted Subsidiaries, on a consolidated
basis, shall not be more than the product of the Annualized Pro Forma EBITDA for
the latest fiscal quarter preceding such incurrence for which financial
statements are available, multiplied by 8.75.
Notwithstanding the above, this provision will not limit the
incurrence of Indebtedness which is incurred by the Company or its Restricted
Subsidiaries for working capital purposes or capital expenditures with respect
to plant, property and equipment of the Company and its Restricted Subsidiaries
in an aggregate amount not to exceed $50,000,000. Further, this provision will
not limit Permitted Refinancing Indebtedness, subject to the provisions of
Section 4.06.
Section 4.06. Limitation on Restricted Payments.
So long as any of the Exchange Debentures remain outstanding,
the Company shall not make, and shall not permit any Restricted Subsidiary to
make, any Restricted Payment if (a) at the time of such proposed Restricted
Payment, a Default or Event of Default shall have occurred and be continuing or
shall occur as a consequence of such Restricted Payment, or (b) immediately
after giving effect to any such Restricted Payment, the aggregate of all
Restricted Payments which shall have been made on or after January 1, 1993 (the
amount of any Restricted Payment, if other than cash, to be based upon fair
market value as determined in good faith by the Company's Board of Directors
whose determination shall be conclusive) would exceed an amount equal to the
greater of (i) the sum of $5,000,000 or (ii) the difference between (a) the
<PAGE>
Cumulative Credit and (b) the sum of the aggregate amount of all Restricted
Payments, and all Permitted Investments made pursuant to clause (v) of the
definition of "Permitted Investments," made on or after January 1, 1993 plus 1.2
times Cumulative Interest Expense.
Section 4.07. Reports to Holders.
The Company will send to the Trustee and to Exchange
Debentureholders, within 15 days after the filing thereof with the SEC, copies
of its annual reports on Form 10-K, its Quarterly Reports on Form 10-Q and its
Current Reports on Form 8-K; provided, however, that notwithstanding any event
which results in the Company being relieved of its obligation to file
information, documents and reports with the SEC pursuant to Sections 13 or 15(d)
of the Exchange Act, the Company shall nevertheless continue, so long as any
Exchange Debenture remains outstanding and unpaid, (i) to file with the SEC (at
such time as it would be required to file such reports under the Exchange Act),
and to send to the Trustee and Exchange Debentureholders (within 15 days
thereafter), quarterly and annual reports and information, documents and other
reports substantially equivalent to those it would have been obligated to file
if it had remained subject to such sections of the Exchange Act, and (ii) so
long as the Exchange Debentures have not been registered pursuant to the
Registration Rights Agreement, upon the request of an Exchange Debentureholder,
to provide information required to be delivered under Rule 144A(d)(4) under the
Securities Act to such Exchange Debentureholder and its prospective purchasers
designated by such Exchange Debentureholder.
Section 4.08. Notice of Defaults Or Events of Default.
In the event that any Default or Event of Default shall occur
and be continuing, the Company will, within 10 days of the occurrence thereof,
give written notice of such Default or Event of Default to the Trustee.
Section 4.09. Compliance Certificates.
The Company shall deliver to the Trustee on or before 105 days
after the end of its fiscal year and on or before 50 days after the end of its
second fiscal quarter in each year an Officers' Certificate stating whether or
not the signers know of any Default or Event of Default. If they do know of such
a Default or Event of Default, the certificate shall describe such Default or
Event of Default and the efforts to remedy or obtain a waiver of the same. The
certificate must comply with Section 12.05 hereof.
Section 4.10. Covenant to Secure Exchange Debentures Equally.
Except for Liens created or assumed by the Company in
connection with the acquisition of real property or equipment to be used by the
Company in the operation of its business which do not secure Indebtedness in
excess of the purchase price of such real property or equipment, the Company
covenants that, if it shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, to secure Indebtedness that
is subordinate or junior in right of payment to any Senior Debt, it will make or
cause to be made effective provisions whereby the Exchange Debentures will be
secured by such Lien equally and ratably with such Indebtedness of the Company
secured by such Lien as long as any such other Indebtedness of the Company shall
be so secured. The restriction imposed by this Section 4.10 shall not apply with
respect to a Lien, including a pledge of Capital Stock of a Subsidiary or an
Affiliate, to secure Indebtedness which is an obligation of such Subsidiary or
Affiliate and not an obligation of the Company.
Section 4.11. Limitation on Investment in Affiliates and Unrestricted
<PAGE>
Subsidiaries.
After the date of this Indenture, the Company may not, nor
will the Company allow any Restricted Subsidiary to, make a Restricted
Investment other than by way of Permitted Investments unless pro forma for such
Restricted Investment the Leverage Ratio of the Company does not exceed 7.75:1.
Section 4.12. Limitation on Sale of Assets.
Neither the Company nor any Restricted Subsidiary of the
Company shall sell an asset (including Capital Stock of Restricted Subsidiaries)
or reclassify a Restricted Subsidiary existing on the date of this Indenture as
an Unrestricted Subsidiary (a "Reclassification") unless (a) in the case of an
asset sale, (i) at least 75% of the net proceeds received by the Company or such
Restricted Subsidiary is in cash, cash equivalents or common or preferred
Capital Stock or debt securities issued by a Person which has Investment Grade
Senior Debt and (ii) cash proceeds from the asset sale are used to reduce debt
and such debt reduction results in the Company's Leverage Ratio being lower pro
forma after such asset sale than prior to such asset sale, or (b) in the case of
an asset sale or Reclassification, pro forma for such asset sale or
Reclassification the Indebtedness of the Company and its Restricted
Subsidiaries, on a consolidated basis, shall not be more than 7.75 multiplied by
Annualized Pro Forma EBITDA, provided that in no case under either clause (a) or
(b) shall the Company undertake an asset sale or Reclassification, if pro forma
for such an asset sale or Reclassification the Company and its Restricted
Subsidiaries would be the owners of fewer than 75% of the cable systems
(measured on the basis of basis subscribers as of February 22, 1994) owned by
the Company and its Restricted Subsidiaries as of February 22, 1994, provided
however, that the Company and its Restricted Subsidiaries may sell additional
assets of up to 10% of assets held as of February 22, 1994 if the consideration
received from such sale is (i) cash which is used within 12 months to purchase
additional systems of equivalent value or (ii) other cable systems of equivalent
value.
Section 4.13. No Senior Subordinated Debt
The Company shall not directly or indirectly create, incur,
issue, assume or become liable for, contingently or otherwise, any Indebtedness
that is subordinate or junior in right of payment to any Senior Debt and senior
in any respect in right of payment to the Exchange Debentures.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Mergers and Consolidations.
The Company may not consolidate with, merge with or into, or
transfer all or substantially all of its assets (as an entirety or substantially
as an entirety in one transaction or a series of related transactions), to any
Person unless: (i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or to which the properties and assets of the Company are transferred
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all of the obligations of the Company under
the Exchange Debentures and this Indenture, and the obligations under this
Indenture shall remain in full force and effect; (ii) immediately before and
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; and (iii) immediately after
<PAGE>
giving effect to such transaction on a pro forma basis for the most recent
quarter, the pro forma Consolidated Fixed Charge Ratio of the surviving entity
shall be at least 1:1; provided that, if the Consolidated Fixed Charge Ratio of
the Company for the most recent quarter preceding such transaction is within the
range set forth in Column A below, then the pro forma Consolidated Fixed Charge
Ratio of the surviving entity after giving effect to such transaction shall be
at least equal to the greater of the percentage of the Consolidated Fixed Charge
Ratio of the Company for the most recent quarter preceding such transaction set
forth in Column B below or the ratio set forth in Column C below:
A B C
1.1111:1 to 1.4999:1 90% 1.00:1
--------------------------------------
1.5 and higher 80% 1.35:1
and provided, further, that if the pro forma Consolidated Fixed Charge Ratio of
the surviving entity is 2:1 or more, the calculation in the preceding proviso
shall be inapplicable and such transaction shall be deemed to have complied with
the requirements of such proviso.
In connection with any consolidation, merger or transfer
contemplated by this Section 5.01, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this Section 5.01 and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the successor corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor corporation had been
named as the Company herein, and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the Exchange
Debentures.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of any
principal of any Exchange Debenture when the same becomes due
and payable at maturity, upon acceleration, redemption or
otherwise, whether or not such payment is prohibited by the
provisions of Article 11 hereof;
(2) the Company defaults in the payment of any
interest on any Exchange Debenture when the same becomes due
and payable and the default continues for a period of 30 days,
whether or not such payment is prohibited by the provisions of
Article 11 hereof;
<PAGE>
(3) the Company defaults in the observance or
performance of any other covenant in the Exchange Debentures
or this Indenture for 60 days after written notice from the
Trustee or the Holders of not less than 25% in aggregate
principal amount of the Exchange Debentures then outstanding;
(4) the Company fails to pay when due principal,
interest or premium aggregating $10,000,000 or more with
respect to any Indebtedness of the Company or any Restricted
Subsidiary, or the acceleration of any such Indebtedness which
default shall not be cured or waived, or such acceleration
shall not be rescinded or annulled, within ten days after
written notice as provided in this Indenture;
(5) a court of competent jurisdiction enters a final
judgment or judgments for the payment of money in excess of
$10,000,000 against the Company or any Restricted Subsidiary
and such judgment remains undischarged for a period of 60
consecutive days during which a stay of enforcement of such
judgment shall not be in effect;
(6) the Company, or any Restricted Subsidiary with
liabilities of greater than $10,000,000 under GAAP as of the
date of the event described in this clause (6), pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order
for relief against it in an involuntary case,
(C) consents to the appointment of a
Custodian of it or for all or substantially all of
its property, or
(D) makes a general assignment for the
benefit of its creditors;
(7) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief against the Company, or
any Restricted Subsidiary with liabilities of greater
than $10,000,000 under GAAP as of the effective date
of such order or decree, in an involuntary case,
(B) appoints a Custodian of the Company, or
any Restricted Subsidiary with liabilities of greater
than $10,000,000 under GAAP as of the effective date
of such order or decree, or for all or substantially
all of its property, or
(C) orders the liquidation of the Company,
or any Restricted Subsidiary with liabilities of
greater than $10,000,000 under GAAP as of the
effective date of such order or decree, and the order
or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or State law for the relief of debtors. The term "Custodian"
<PAGE>
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clauses (3) and (4) is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities notify the Company and the Trustee,
of the Default and the Company does not cure the Default within (a) 60 days
after receipt of such notice in the case of a Default under clause (3) and (b)
10 days after receipt of such notice in the case of a Default under clause (4).
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default." If the Holders of at least 25% in principal
amount of the outstanding Exchange Debentures request the Trustee to give such
notice on their behalf, the Trustee shall do so.
Subject to Section 7.05 hereof, the Trustee may withhold
notice to the Holders of the Exchange Debentures of any default (except in
payment of principal or interest on the Exchange Debentures) if the Trustee
considers it to be in the best interest of the Holders of the Exchange
Debentures to do so.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization)
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of not less than 25% in aggregate principal amount of the Exchange Debentures
then outstanding may declare to be immediately due and payable the principal
amount of all the Exchange Debentures then outstanding plus accrued but unpaid
interest to the date of acceleration; provided, however, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained by the Trustee, the Holders of a majority in aggregate principal amount
of outstanding Exchange Debentures by written notice to the Trustee and the
Company may rescind and annul such acceleration and its consequences if all
existing Events of Default, other than the nonpayment of accelerated principal
or interest, have been cured or waived. In case an Event of Default specified in
Section 6.01(6) or (7) occurs, such amount with respect to all of the Exchange
Debentures shall be due and payable immediately without any declaration or other
act on the part of the Trustee or the Holders of the Exchange Debentures.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of and interest on the Exchange Debentures or to enforce
the performance of any provision of the Exchange Debentures or this Indenture
and may take any necessary action requested of it as Trustee to settle,
compromise, adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not
possess any of the Exchange Debentures or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Exchange Debentureholder
in exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of
a majority in principal amount of the Exchange Debentures then outstanding have
<PAGE>
the right to waive any existing default or compliance with any provision of this
Indenture or the Exchange Debentures and to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations specified in this Indenture.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the Exchange
Debentures then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee by this Indenture. The Trustee, however, may
refuse to follow any direction that conflicts with law or this Indenture or that
the Trustee determines may be unduly prejudicial to the rights of another
Exchange Debentureholder not taking part in such direction, and the Trustee
shall have the right to decline to follow any such direction if the Trustee,
being advised by counsel, determines that the action so directed may not
lawfully be taken or if the Trustee in good faith shall, by a Trust Officer,
determine that the proceedings so directed would involve it in personal
liability; provided that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
Section 6.06. Limitation on Suits.
Subject to Section 6.07 below, an Exchange Debentureholder may
not institute any proceeding or pursue any remedy with respect to this Indenture
or the Exchange Debentures unless:
(1) the Holder gives to the Trustee written
notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate
principal amount of the Exchange Debentures then outstanding
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
indemnity reasonably satisfactory to the Trustee against any
loss, liability or expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of
indemnity; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60 day
period by the Holders of a majority in aggregate principal
amount of the Exchange Debentures then outstanding.
An Exchange Debentureholder may not use this Indenture to
prejudice the rights of another Exchange Debentureholder or to
obtain a preference or priority over another Exchange
Debentureholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of an Exchange Debenture to receive payment of principal of
and interest on the Exchange Debenture on or after the respective due dates
expressed in the Exchange Debenture, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
<PAGE>
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company or any other obligor on the Exchange Debentures for the whole amount
of unpaid principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate then borne by the Exchange Debentures, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Exchange Debentureholders allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Exchange Debentures), its creditors or
its property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same after deduction of its charges and expenses to the extent
that any such charges and expenses are not paid out of the estate in any such
proceedings and any Custodian in any such judicial proceeding is hereby
authorized by each Exchange Debentureholder 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 Exchange Debentureholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee or any predecessor trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee or any predecessor Trustee under Section 7.07
hereof out of the estate in any such proceeding shall be denied for any reason,
payment of the same shall be secured by a lien on, and shall be paid out of, any
and all distributions, dividends, monies, securities and other properties which
the Holders of the Exchange Debentures 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
Exchange Debentureholder any plan of reorganization, arrangement, adjustment or
composition affecting the Exchange Debentures or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Exchange Debentureholder in any such proceedings.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee or any predecessor trustee for amounts
due under Sections 6.09 and 7.07 hereof;
SECOND: to Exchange Debentureholders for amounts due and
unpaid on the Exchange Debentures for principal and interest as to each,
ratably, without preference or priority of any kind, according to the amounts
<PAGE>
due and payable on the Exchange Debentures; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Exchange Debentureholders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Exchange Debentures then outstanding.
\ ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the same circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that
are specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture.
The Trustee, however, shall examine the certificates and
opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts.
(3) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
<PAGE>
6.05 hereof.
(4) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if
it shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, paragraphs
(a), (b) and (c) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity reasonably satisfactory to it
against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of
Counsel, or both, which shall conform to the provisions of
Section 12.05 hereof. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on
such Certificate or Opinion.
(3) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent
appointed with due care.
(4) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably
believes to be authorized or within its rights or powers.
(5) The Trustee may consult with counsel, and the
advice or opinion of such counsel as to matters of law shall
be full and complete authorization and protection in respect
of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of
such counsel.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Exchange Debentures and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however, shall
<PAGE>
be subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Exchange Debentures, it shall not be
accountable for the Company's use of the proceeds from the sale of Exchange
Debentures and it shall not be responsible for any statement in the Exchange
Debentures other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Exchange Debentureholder notice of
the Default within 90 days after it occurs. Except in the case of a Default in
payment of the principal of or interest on any Exchange Debenture the Trustee
may withhold the notice if and so long as the board of directors of the Trustee,
the executive committee or any trust committee of such board and/or its Trust
Officers in good faith determine(s) that withholding the notice is in the
interests of the Exchange Debentureholders.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after May 15 of any year, commencing the May 15
following the date of this Indenture, the Trustee shall mail to each Exchange
Debentureholder a brief report dated as of such May 15 that complies with TIA
SS- 313(a) (but if no event described in TIA SS- 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA SS- 313(b)(2).
Reports pursuant to this Section shall be transmitted by mail:
(1) to all registered Holders of Exchange Debentures,
as the names and addresses of such Holders appear on the
Registrar's books;
(2) to such Holders of Exchange Debentures as have,
within the two years preceding such transmission, filed their
names and addresses with the Trustee for that purpose; and
(3) except in the case of reports pursuant to TIA SS-
313(b), to each Exchange Debentureholder whose name and
address is preserved at the time by the Trustee, as provided
in Section 2.05.
A copy of each report at the time of its mailing to Exchange
Debentureholders shall be filed with the SEC and each stock exchange on which
the Exchange Debentures are listed. The Company shall notify the Trustee when
the Exchange Debentures are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its services hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust). The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it in
connection with its duties under this Indenture, including the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
<PAGE>
The Company shall indemnify the Trustee for, and hold it
harmless against, any loss, liability or reasonable expense incurred by it in
connection with the performance of its duties under this Indenture including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder (including, without limitation, settlement costs). The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by the Trustee through its
negligence or bad faith. To secure the Company's payment obligations in Sections
6.09 and 7.07, the Trustee shall have a lien prior to the Exchange Debentures on
all money or property held or collected by the Trustee except such money or
property held in trust to pay principal of and interest on particular Exchange
Debentures.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses
and the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law. However, in the event that such
expenses of administration are disallowed by a final judgment of a court of
competent jurisdiction, the expenses thereby, and all other unreimbursed
expenses of the Trustee, shall constitute a general unsecured claim of the
Trustee against the estate.
For purposes of this Section 7.07, the term "Trustee" shall
include any trustee appointed pursuant to Article 10.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The
Holders of a majority in principal amount of the outstanding Exchange Debentures
may remove the Trustee by notifying the removed Trustee and may appoint a
successor Trustee with the Company's written consent. Subject to the provisions
of Section 6.11, any Exchange Debentureholder who has been a bona fide holder of
Exchange Debentures for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee, and the appointment of a successor, if the Trustee
fails, after written notice therefor by such Holder, to comply with the
provisions of clause (i) of TIA 310(b). The Company may remove the Trustee at
its election if:
(1) the Trustee fails to comply with
Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes
charge of the Trustee or its property;
(4) the Trustee otherwise becomes incapable of
acting; or
(5) a successor corporation becomes successor Trustee
pursuant to Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
<PAGE>
If a successor Trustee does not take office within 45 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Exchange Debentures may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Exchange
Debentureholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Exchange Debentureholder.
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA SS- 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $5,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA SS- 310(b), including the provision in SS- 310(b)(1).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA 311(a), excluding any
creditor relationship listed in TIA 311(b). A Trustee who has resigned or been
removed shall be subject to TIA 311(a) to the extent indicated therein.
Section 7.12. Paying Agents.
The Company shall cause each Paying Agent other than the
Trustee to execute and deliver to it and the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section
7.12:
(A) that it will hold all sums held by it as agent
for the payment of principal of or interest on, the Exchange
Debentures (whether such sums have been paid to it by the
Company or by any obligor on the Exchange Debentures) in trust
for the benefit of Holders of the Exchange Debentures;
(B) that it will at any time during the continuance
of any Event of Default, upon written request from the Trustee,
deliver to the Trustee all sums so held in trust by it; and
(C) that it will give the Trustee written notice
within three (3) Business Days of any failure of the Company
(or by any obligor on the Exchange Debentures) in the payment
<PAGE>
of any installment of the principal of or interest on, the
Exchange Debentures when the same shall be due and payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this
Indenture or the Exchange Debentures without notice to or consent of any
Exchange Debentureholder:
(1) to comply with Section 5.01 hereof;
(2) to convey, transfer, assign, mortgage or
pledge any property to the Trustee and otherwise to comply
with Section 4.10 hereof;
(3) to provide for uncertificated Exchange
Debentures in addition to or in place of certificated Exchange
Debentures; or
(4) to cure any ambiguity, defect or inconsistency,
or to make any other change that does not materially and
adversely affect the rights of any Exchange Debentureholder.
The Trustee is hereby authorized to join with the Company in
the execution of any supplemental indenture authorized or permitted by the terms
of this Indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which adversely affects
its own rights, duties or immunities under this Indenture.
Section 8.02. With Consent of Holders.
Except as provided below in this Section 8.02, the Company and
the Trustee may modify or supplement this Indenture or the Exchange Debentures
with the written consent of the Holders of at least one-half in principal amount
of the outstanding Exchange Debentures without notice to any Exchange
Debentureholder. The Holders of a majority in aggregate principal amount of the
outstanding Exchange Debentures may waive compliance in a particular instance by
the Company with any provision of this Indenture or the Exchange Debentures
without notice to any Exchange Debentureholder. Any amendment to the provisions
of Article 11 hereof including the related definitions will require the consent
of the holders of at least two-thirds in aggregate principal amount of the
Exchange Debentures then outstanding if such amendment would adversely affect
the rights of the Holders of Exchange Debentures. Subject to Section 8.04,
without the consent of each Exchange Debentureholder affected, however, an
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
may not:
(1) reduce the amount of Exchange Debentures whose
Holders must consent to an amendment, supplement or waiver to
this Indenture or the Exchange Debentures;
(2) reduce the rate of or change the time for
payment of interest on any Exchange Debenture;
(3) reduce the principal of or change the stated
maturity of any Exchange Debenture or alter or waive any of
<PAGE>
the provisions with respect to the redemption of the Exchange
Debentures;
(4) change the amount or time of any payment
required by the Exchange Debentures;
(5) waive a default in the payment of the
principal of, interest on, or redemption payment with respect
to any Exchange Debenture;
(6) make any Exchange Debenture payable in money
other than that stated in the Exchange Debenture or change the
place of payment from New York, New York; or
(7) make any changes in Sections 6.04, 6.07 hereof or
this sentence of Section 8.02.
After an amendment, supplement or waiver under this Section
8.02 becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the Exchange
Debentureholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Exchange Debentures shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of an Exchange Debenture is a continuing
consent conclusive and binding upon such Holder and every subsequent Holder of
the same Exchange Debenture or portion thereof, and of any Exchange Debenture
issued upon the transfer thereof or in exchange therefor or in place thereof,
even if notation of the consent is not made on any such Exchange Debenture. Any
such Holder or subsequent Holder, however, may revoke the consent as to his
Exchange Debenture or portion of an Exchange Debenture, if the Trustee receives
the notice of revocation before the date the amendment, supplement, waiver or
other action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
<PAGE>
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Exchange Debentureholder, unless it makes a
change described in any of clauses (1) through (7) of Section 8.02 hereof. In
that case the amendment, supplement, waiver or other action shall bind each
Holder of an Exchange Debenture who has consented to it and every subsequent
Holder of an Exchange Debenture or portion of an Exchange Debenture that
evidences the same debt as the consenting Holder's Exchange Debenture. Section
8.05. Notation on or Exchange of Exchange Debentures.
If an amendment, supplement, or waiver changes the terms of an
Exchange Debenture, the Trustee may request the Holder of the Exchange Debenture
to deliver it to the Trustee. In such case, the Trustee shall place an
appropriate notation on the Exchange Debenture about the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Exchange Debenture shall issue and
the Trustee shall authenticate a new security that reflects the changed terms.
Section 8.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that such amendment, supplement or waiver is authorized or permitted by
this Indenture. The Company may not sign an amendment or supplement until the
Board of Directors approves it.
ARTICLE 9
SATISFACTION AND DISCHARGE OF INDENTURE: UNCLAIMED MONEYS
Section 9.01. Satisfaction and Discharge of Indenture.
If at any time
(a) either
(i) there shall have been cancelled by the
Trustee or delivered to the Trustee for cancellation
all Exchange Debentures theretofore authenticated and
delivered (other than any Exchange Debentures that
are asserted to have been destroyed, lost or stolen
and that shall have been replaced as provided in
Section 2.07 hereof, or paid, or Exchange Debentures
for whose payment money has theretofore been
deposited in trust with the Trustee); or
(ii) all such Exchange Debentures not
theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation shall have become due
and payable, or are by their terms to become due and
payable within one (1) year, and the Company has
deposited or caused to be deposited with the Trustee
<PAGE>
as trust funds the entire amount sufficient to pay at
maturity the principal of and accrued interest on all
such Exchange Debentures not theretofore cancelled by
the Trustee or delivered to the Trustee for
cancellation; and
(b) the Company has paid or caused to be paid
all other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate stating that all conditions precedent
provided for herein relating to the satisfaction and discharge
of this Indenture have been complied with; and
(d) the Company has delivered to the Trustee an
Opinion of Counsel stating that the documents and other items
that have been or are therewith delivered to the Trustee
conform to the requirements of this Indenture, and that, upon
the basis of a Company Request and the accompanying documents
and items specified in this Section 9.01, all conditions
precedent provided for herein relating to the satisfaction and
discharge of this Indenture have been complied with, then,
upon Company Request, this Indenture and the rights and
interests hereby created shall cease to be of further effect
(except as to any surviving rights of registration of transfer
or exchange of Exchange Debentures), and the Trustee, at the
cost and expense of the Company, shall, subject to Section
9.05 hereof, execute and deliver proper instruments
acknowledging satisfaction and discharge of this Indenture.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company in Sections 2.03,
2.04, 2.05, 2.06, 2.07, 4.01, 6.09, 7.07, 7.08, 9.04 and 9.05
shall survive until the Exchange Debentures are no longer
outstanding. Thereafter, the Company's obligations to the
Trustee under Sections 7.07, 9.04 and 9.05 hereof shall
survive. Section 9.02. Funds Deposited for Payment of Exchange
Debentures.
All moneys deposited with the Trustee pursuant to Section 9.01
hereof shall be held in trust and shall be available for
payment when the Exchange Debentures become due and payable in
accordance with their terms, either directly or through any
Paying Agent, to the Holders of the particular Exchange
Debentures for the payment of which such moneys have been
deposited with the Trustee.
Section 9.03. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of this
Indenture shall, upon demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Company, and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
Section 9.04. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or
then held by the Company in trust for the payment of the principal of or
interest on any Exchange Debenture that are not applied but remain unclaimed by
the Holder of such Exchange Debenture for two (2) years after the date upon
<PAGE>
which the principal of or interest on such Exchange Debenture shall have
respectively become due and payable shall be repaid to the Company upon Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Exchange Debenture entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or any such
Paying Agent, before being required to make any such repayment, may, at the
expense of the Company, either mail to each Exchange Debentureholder affected,
at the address shown in the register of the Exchange Debentures maintained by
the Registrar pursuant to Section 2.03 hereof, or cause to be published once a
week for two successive weeks, in a newspaper published in the English language,
customarily published each Business Day and of general circulation in the City
of New York, New York, a notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such mailing or publication, any unclaimed balance of such moneys then
remaining will be repaid to the Company. After payment to the Company, Exchange
Debentureholders entitled to the money must look only to the Company for payment
as general creditors unless applicable abandoned property law designates another
person.
Section 9.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money in
accordance with Section 9.01 hereof by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Exchange Debentures shall be revived
and reinstated as though no deposit had occurred pursuant to this Article 9
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 9.01; provided, however, that if the Company
has made any payment of principal of or interest on any Exchange Debentures
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the holders of such Exchange Debentures to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 10
DEFEASANCE AND COVENANT DEFEASANCE
Section 10.01. Applicability of Article; Company Option to Effect Defeasance
The Company may at its option by a Board Resolution at any
time, with respect to the Exchange Debentures elect to have Section 10.02 or
Section 10.03 hereof be applied to the outstanding Exchange Debentures upon
compliance with the conditions set forth below in this Article 10. Section
10.02. Defeasance and Discharge.
Upon the Company's exercise of the option described in Section
10.01 above applicable to this Section with respect to the Exchange Debentures,
the Company shall be deemed to have been discharged from its obligations with
respect to the Exchange Debentures on the date the conditions set forth in
Section 10.04 below are satisfied (hereinafter, "Defeasance"). For this purpose,
such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Exchange Debentures and to
have satisfied all its other obligations under such Exchange Debentures and this
Indenture insofar as such Exchange Debentures are concerned (and the Trustee, at
the expense of the Company, shall, subject to Section 10.06 hereof, execute
proper instruments acknowledging the same), except for the following which shall
<PAGE>
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of outstanding Exchange Debentures to receive solely from the trust
funds described in Section 10.04 hereof and as more fully set forth in such
Section, payments in respect of the principal of and interest on such Exchange
Debentures when such payments are due, (B) the Company's obligations with
respect to such Exchange Debentures under Sections 2.03, 2.04, 2.05, 2.06, 2.07
and 2.08 hereof, (C) the rights, powers, trusts, duties, and immunities of the
Trustee hereunder (including claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof) and (D) this Article 10. Subject to compliance
with this Article 10, the Company may exercise its option under this Section
10.02 with respect to the Exchange Debentures notwithstanding the prior exercise
of its option under Section 10.03 below with respect to the Exchange Debentures.
Section 10.03. Covenant Defeasance.
Upon the Company's exercise of the option in Section 10.01
above applicable to this Section with respect to the Exchange Debentures, the
Company shall be released from its obligations under Article III, Sections 4.04,
4.05, 4.06, 4.10, 4.11, 4.12 and 4.13 and clause (iii) of Section 5.01 hereof
with respect to the outstanding Exchange Debentures on and after the date the
conditions set forth in Section 10.04 below are satisfied (hereinafter,
"Covenant Defeasance"). For this purpose, such Covenant Defeasance means that
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section or
portion thereof, whether directly or indirectly by reason of any reference
elsewhere herein to any such specified Section or portion thereof or by reason
of any reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Exchange Debentures shall be unaffected thereby.
Section 10.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of
Section 10.02 or Section 10.03 above to the outstanding Exchange Debentures:
(1) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 7.10 hereof who shall
agree to comply with the provisions of this Article 10
applicable to it) as funds in trust for the purpose of making
the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the
Exchange Debentures, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with
their terms will provide, not later than the due date of any
payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of and
accrued interest on the outstanding Exchange Debentures at the
maturity date or on the applicable redemption date, as the
case may be, of such principal or interest;
(2) no Event of Default or Default with respect to
the Exchange Debentures shall have occurred and be continuing
on the date of such deposit, or shall have occurred and be
continuing at any time during the period ending on the 91st
<PAGE>
day after the date of such deposit or, if longer, ending on
the day following the expiration of the longest preference
period under any Bankruptcy Law applicable to the Company in
respect of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration
of such period);
(3) such Defeasance or Covenant Defeasance shall not
cause the Trustee to have a conflicting interest for purposes
of the TIA with respect to any securities of the Company;
(4) such Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute default
under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound;
(5) in the case of an election under Section 10.02
above, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that the Company has received from,
or there has been published by, the Internal Revenue Service a
ruling to the effect that, and such opinion shall confirm
that, the Holders of the outstanding Exchange Debentures or
persons in their positions will not recognize income, gain or
loss for Federal income tax purposes as a result of such
Defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as
would have been the case if such Defeasance had not occurred;
(6) in the case of an election under Section 10.03
hereof, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
outstanding Exchange Debentures will not recognize income,
gain or loss for Federal income tax purposes as a result of
such Covenant Defeasance and will be subject to Federal income
tax on the same amount, in the same manner and at the same
times as would have been the case if such Covenant Defeasance
had not occurred;
(7) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to
either the Defeasance under Section 10.02 above or the
Covenant Defeasance under Section 10.03 above (as the case may
be) have been complied with; and
(8) the Company shall have delivered to the Trustee
an Officers' Certificate stating its intention to effect a
Defeasance pursuant to the provisions of this Article 10 at
least sixty (60) days prior to such Defeasance.
Section 10.05. Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions
All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 10.04 in
respect of the outstanding Exchange Debentures shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Exchange
Debentures and this Indenture, to the payment, either directly or through any
Paying Agent as the Trustee may determine, to the Holders of such Exchange
Debentures, of all sums due and to become due thereon in respect of principal
<PAGE>
and accrued interest, but such money need not be segregated from other funds
except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 10.04 above or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Exchange Debentures.
Anything in this Article 10 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 10.04 above which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Defeasance or Covenant
Defeasance. Section 10.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 10.01 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Exchange
Debentures shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 10 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 10.01; provided, however, that if the Company has made any payment
of principal of or accrued interest on any Exchange Debentures because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Exchange Debentures to receive such payment from the
money or U.S.
Governmental Obligations held by the Trustee or Paying Agent.
ARTICLE 11
SUBORDINATION
Section 11.01. Agreement to Subordinate.
The Company agrees, and each Exchange Debentureholder by
accepting an Exchange Debenture agrees, that the Indebtedness evidenced by the
Exchange Debenture is subordinated in right of payment, to the extent and in the
manner provided in this Article, 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 11.02. Certain Definitions.
As used in this Article 11, the following terms shall have the
following meanings:
"Designated Senior Debt" means any Senior Debt permitted
hereunder that has been designated by the Company as "Designated Senior Debt."
"Obligations" means any principal, interest, penalties, fees
(including, but not limited to, reasonable fees of counsel), indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing any indebtedness.
<PAGE>
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"Senior Debt" means (a) any Indebtedness that is permitted
under this Indenture that is not by its terms pari passu with or subordinated to
the Exchange Debentures, (b) all Obligations of the Company with respect to the
foregoing clause (a) including post-petition interest and (c) all (including all
subsequent) renewals, extensions, amendments, refinancings, repurchases or
redemptions, modifications, replacements or refundings thereto (whether or not
coincident therewith) that are permitted pursuant to this Indenture.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include (i) any Indebtedness of the Company to any of its Subsidiaries, (ii) any
Indebtedness incurred for the purchase of goods or materials or for services
obtained in the ordinary course of business (other than with the proceeds of
borrowings from banks or other financial institutions) or (iii) any Indebtedness
incurred in violation of this Indenture.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
Section 11.03. 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, or in an assignment for the benefit of creditors or any marshaling of
the Company's assets and liabilities:
(1) 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, whether or not an allowable claim) before
Exchange Debentureholders shall be entitled to receive any
payment with respect to the Exchange Debentures (except that,
in either case, Exchange Debentureholders may receive (i)
securities that are subordinated at least to the same extent
as the Exchange Debentures to (a) Senior Debt and (b) any
securities issued in exchange for Senior Debt and (ii)
payments made from the trust described in the discharge and
defeasance provisions of Articles 9 and 10 hereunder); and
(2) until all Obligations with respect to Senior Debt
(as provided in subsection (1) above) are paid in full, any
distribution to which the Exchange Debentureholders would be
entitled but for this Article shall be made to holders of
Senior Debt (except that Exchange Debentureholders may receive
(i) securities that are subordinated at least to the same
extent as the Exchange Debentures to (a) Senior Debt and (b)
any securities issued in exchange for Senior Debt and (ii)
payments made from the trust described in the discharge and
defeasance provisions of Articles 9 and 10 hereunder).
Section 11.04. Default on Designated Senior Debt.
The Company may not make any payment or distribution to the
Trustee or any Exchange Debentureholder in respect of Obligations with respect
to the Exchange Debentures and may not acquire from the Trustee or any Exchange
Debentureholder any securities for cash or property (other than (i) securities
that are subordinated at least to the same extent as the Exchange Debentures to
<PAGE>
(a) Senior Debt and (b) any securities issued in exchange for Senior Debt and
(ii) payments made from the trust described in the discharge and defeasance
provisions of Articles 9 and 10 hereunder) if:
(i) a default in the payment of principal, premium,
if any, or interest with respect to Designated Senior Debt
occurs and is continuing beyond any applicable grace period in
the agreement, indenture or other documents 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 a notice of the default
(a "Payment Blockage Notice") from the Company or the
Representative of such Senior Debt. 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 (i) at least 360 days shall have
elapsed since the effectiveness of the immediately prior
Payment Blockage Notice and (ii) all scheduled payments of
principal, premium, if any, interest and liquidated damages on
the Exchange Debentures that have come due have been paid in
full in cash to the extent required by the terms of the
Exchange Debentures. 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.
The Company may and shall resume payments on and distributions
in respect of the Exchange Debentures and may acquire them:
(1) in the case of a default referred to in Section
11.04(i) hereof, the date upon which the default is cured or
waived, or
(2) in the case of a default referred to in Section
11.04(ii) hereof, the earlier of (A) the date upon which such
default is cured or waived or (B) 179 days after the date on
which the applicable Payment Blockage Notice is received,
unless the maturity of such Designated Senior Debt has been
accelerated,
if this Article otherwise permits the payment,
distribution or acquisition at the time of such payment or
acquisition.
Section 11.05. Acceleration of Securities.
If payment of the Exchange Debentures is accelerated because
of an Event of Default, the Company shall promptly notify holders of Senior Debt
of the acceleration.
Section 11.06. When Distribution Must Be Paid Over.
In the event that the Trustee or any Exchange Debentureholder
receives any payment of any Obligations with respect to the Exchange Debentures
at a time when the Trustee or such Exchange Debentureholder, as applicable, has
actual knowledge that such payment is prohibited by Section 11.04 hereof, such
payment shall be held by the Trustee or such Exchange Debentureholder, in trust
<PAGE>
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 11, 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
Exchange Debentureholders or the Company or any other Person money or assets to
which any holders of Senior Debt shall be entitled by virtue of this Article 11,
except if such payment is made as a result of the willful misconduct or gross
negligence of the Trustee.
Section 11.07. 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 Exchange Debentures to violate this Article, but
failure to give such notice shall not affect the subordination of the Exchange
Debentures to Senior Debt as provided in this Article.
Section 11.08. Subrogation.
After all Senior Debt is paid in full and until the Exchange
Debentures are paid in full, Exchange Debentureholders shall be subrogated
(equally and ratably with all other Indebtedness pari passu with the Exchange
Debentures) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Exchange Debentureholders have been applied to the payment of Senior Debt. A
distribution made under this Article to holders of Senior Debt that otherwise
would have been made to Exchange Debentureholders is not, as between the Company
and the Exchange Debentureholders, a payment by the Company on the Exchange
Debentures.
Section 11.09. Relative Rights.
This Article defines the relative rights of Exchange
Debentureholders and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Exchange
Debentureholders, the obligation of the Company, which is
absolute and unconditional, to pay principal of and interest
on the Exchange Debentures in accordance with their terms;
(2) affect the relative rights of Exchange
Debentureholders as creditors of the Company other than their
rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Exchange
Debentureholder 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
<PAGE>
payments otherwise payable to Exchange Debentureholders.
If the Company fails because of this Article to pay principal
of or interest on the Exchange Debentures on the due date, the failure is still
a Default or Event of Default.
Section 11.10. 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 Exchange Debentures 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. Section
11.11. Distribution or Notice to Representatives.
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 11, the Trustee and the Exchange Debentureholders
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 Exchange Debentureholders 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 11.
Section 11.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 11 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 Exchange Debentures, 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 Exchange Debentures to violate this Article.
Only the Company or a Representative may give the notice. Nothing in this
Article 11 shall impair 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 11.13. Authorization to Effect Subordination.
Each Exchange Debentureholder by the Exchange
Debentureholder's acceptance thereof authorizes and directs the Trustee on the
Exchange Debentureholder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article 11, and
appoints the Trustee to act as the Exchange Debentureholder'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, a Representative is hereby authorized to file an appropriate claim
for and on behalf of the Exchange Debentureholders.
<PAGE>
Section 11.14. Amendments.
The provisions of this Article 11 shall not be amended or
modified without the written consent of the holders of all Senior Debt.
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 12.02. Notices.
Any notice or communication shall be given in writing and
delivered in person, sent by telex or telephone facsimile, delivered by
commercial courier service or mailed by first-class mail, postage prepaid,
addressed as follows:
If to the Company:
Adelphia Communications Corporation
Main at Water Street
Coudersport, Pennsylvania 16195
Attention: Colin Higgin, Esq.
Copy to:
Buchanan Ingersoll Professional Corporation
1 Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, Pennsylvania 15219
Attention: Carl E. Rothenberger, Jr., Esq.
If to the Trustee:
Bank of Montreal Trust Company
77 Water Street
New York, New York 10005
Attention: Corporate Trust Department
Such notices or communications shall be effective when
received and shall be sufficiently given if so given within the time prescribed
in this Indenture.
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to an Exchange
Debentureholder shall be mailed to him by first class mail, postage prepaid, at
his address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA SS- 313(c),
to the extent required by the TIA.
Failure to mail a notice or communication to an Exchange
Debentureholder or any defect in it shall not affect its sufficiency with
<PAGE>
respect to other Exchange Debentureholders. If a notice or communication to an
Exchange Debentureholder is mailed in the manner provided above, it shall be
deemed duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 12.03. Communications by Holders with Other Holders.
Exchange Debentureholders may communicate pursuant to TIA SS-
312(b) with other Exchange Debentureholders with respect to their rights under
this Indenture or the Exchange Debentures. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA SS- 312(c). Section
12.04. Certificate and Opinion as to Conditions.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.05 below) stating that, in
the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 12.05 below) stating that, in
the opinion of such counsel, all such conditions precedent
have been complied with.
Section 12.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA SS- 314(a)(4)) shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person,
it or he has made such examination or investigation as is
necessary to enable it or him to express an informed opinion
as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion
of such Person, such covenant or condition has been complied
with.
Section 12.06. When Treasury Exchange Debentures Disregarded.
<PAGE>
In determining whether the Holders of the required aggregate
principal amount of Exchange Debentures have concurred in any direction, waiver
or consent, Exchange Debentures owned by the Company or any other obligor on the
Exchange Debentures or by any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or
such obligor shall be disregarded, except that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Exchange Debentures which the Trustee knows are so owned shall
be so disregarded. Exchange Debentures so owned which have been pledged in good
faith shall not be disregarded if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to the Exchange
Debentures and that the pledgee is not the Company or any other obligor upon the
Exchange Debentures or any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or
such obligor.
Section 12.07. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or
meetings of Exchange Debentureholders. The Registrar and Paying Agent may make
reasonable rules for their functions.
Section 12.08. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day
on which banking institutions are not required to be open in the State of New
York. If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
Section 12.09. Governing Law.
The laws of the State of New York shall govern this Indenture
and the Exchange Debentures without regard to principles of conflicts of law.
Section 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any Subsidiary. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 12.11. No Recourse against Others.
No recourse for the payment of the principal of or accrued
interest on any of the Exchange Debentures, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in this Indenture or in any supplemental
indenture, or in any of the Exchange Debentures, or because of the creation of
any Indebtedness represented thereby, shall be had against any stockholder,
officer, director or employee, as such, past, present or future, of the Company
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee or director, either directly or through the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Indenture and the Exchange
Debentures are solely obligations of the Company, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, any
stockholder, officer, employee or director of the Company or any successor
<PAGE>
corporation because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this
Indenture or the Exchange Debentures or implied therefrom, and that any and all
such personal liability of, and any and all claims against every stockholder,
officer, employee and director, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issuance of the Exchange Debentures. It is understood that this limitation
on recourse is made expressly for the benefit of any such shareholder, employee,
officer or director and may be enforced by any of them.
Section 12.12. Successors.
All agreements of the Company in this Indenture and the
Exchange Debentures shall bind its successor. All agreements of the Trustee, any
additional trustee and any Paying Agents in this Indenture shall bind its
successor.
Section 12.13. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 12.14. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 12.15. Separability.
Each provision of this Indenture shall be considered separable
and, if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Exchange Debentures 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.
ARTICLE 13
REDEMPTION
Section 13.01. Notices to Trustee.
If the Company redeems Exchange Debentures pursuant to the
optional redemption provisions of Section 13.07 hereof, it shall furnish to the
Trustee, at least 45 days (unless a shorter period may be satisfactory to the
Trustee) 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
Exchange Debentures to be redeemed and (iv) the redemption price. Section 13.02.
Selection of Exchange Debentures to Be Redeemed.
If less than all of the Exchange Debentures are to be redeemed
at any time, the Trustee shall select the Exchange Debentures to be redeemed
among the Holders of the Exchange Debentures in compliance with the requirements
of the principal national securities exchange, if any, on which the Exchange
Debentures are listed or, if the Exchange Debentures are not so listed, on a pro
rata basis, by lot or in accordance with any other method the Trustee deems fair
and appropriate. In the event of a partial redemption by lot, the particular
<PAGE>
Exchange Debentures 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 Exchange Debentures not previously called for
redemption.
The Trustee shall promptly notify the Company in writing of
the Exchange Debentures selected for redemption and, in the case of any Exchange
Debentures selected for partial redemption, the principal amount thereof to be
redeemed. Exchange Debentures and portions of Exchange Debentures selected shall
be in amounts of $1,000 or whole multiples of $1,000; except that if all of the
Exchange Debentures of a Holder are to be redeemed, the entire outstanding
amount of Exchange Debentures 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 Exchange Debentures called for
redemption also apply to portions of Exchange Debentures called for redemption.
Section 13.03. Notice of Redemption.
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 Exchange Debentures are to be redeemed
at its registered address.
The notice shall identify the Exchange Debentures to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Exchange Debenture is being redeemed in part, the
portion of the principal amount of such Exchange Debenture to be redeemed and
that, after the redemption date upon surrender of such Exchange Debenture, a new
Exchange Debenture in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Exchange Debenture;
(d) the name and address of the Paying Agent;
(e) that Exchange Debentures 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 and Liquidated Damages, if any, on Exchange
Debentures called for redemption ceases to accrue on and after the redemption
date;
(g) the paragraph of the Exchange Debentures and/or Section of
this Indenture pursuant to which the Exchange Debentures 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
Exchange Debentures.
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
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.
<PAGE>
Section 13.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
13.03 hereof, Exchange Debentures 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 13.05. Deposit of Redemption Price.
On or prior to 10:00 a.m. Eastern Time on 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 and Liquidated
Damages, if any, on all Exchange Debentures 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 and
Liquidated Damages, if any, on all Exchange Debentures to be redeemed.
If Exchange Debentures called for redemption are paid or if
the Company has deposited with the Trustee or Paying Agent money sufficient to
pay the redemption price of, and unpaid and accrued interest and Liquidated
Damages, if any, on all Exchange Debentures to be redeemed, on and after the
applicable redemption date, interest and Liquidated Damages, if any, ceases to
accrue on the Exchange Debentures or the portions of Exchange Debentures called
for redemption (regardless of whether certificates for such Exchange Debentures
are actually surrendered). If an Exchange Debenture 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 and Liquidated Damages, if any, shall be paid to
the Person in whose name such Exchange Debenture was registered at the close of
business on such record date. If any Exchange Debenture 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 or Liquidated Damages, if any, not paid on
such unpaid principal, in each case, at the rate provided in the Exchange
Debentures and in Section 4.01 hereof.
Section 13.06. Exchange Debentures Redeemed in Part.
Upon surrender of an Exchange Debenture 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
Exchange Debenture equal in principal amount to the unredeemed portion of the
Exchange Debenture surrendered.
Section 13.07. Optional Redemption.
The Exchange Debentures will be subject to redemption on or
after July 15, 2002 at the option of the Company, in whole or in part, in
accordance with the notice provisions of Section 13.03 hereof, at the redemption
prices (expressed as percentages of principal amount thereof) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on July 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2002...............................................................106.500%
2003...............................................................105.417%
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2004...............................................................104.333%
2005...............................................................103.250%
2006...............................................................102.167%
2007...............................................................101.083%
2008 and thereafter................................................100.000%
</TABLE>
In addition, prior to July 15, 2000, the Company may, at its
option, redeem up to 33% of the aggregate of (i) the Liquidation Preference of
the Exchangeable Preferred Stock issued less the Liquidation Preference of
Exchangeable Preferred Stock exchanged for Exchange Debentures and (ii) the
principal amount of Exchange Debentures issued, with the net proceeds of one or
more common equity offerings received on or after the date of original issuance
of the Exchangeable Preferred Stock at a redemption price of 113% of the
Liquidation Preference or principal amount, as the case may be, plus accumulated
and unpaid dividends and Liquidated Damages, in the case of Exchangeable
Preferred Stock and accrued and unpaid interest and Liquidated Damages, in the
case of Exchange Debentures; provided, that after any such redemption, at least
67% of the aggregate of (i) the Liquidation Preference of the Exchangeable
Preferred Stock issued less the Liquidation Preference of Exchangeable Preferred
Stock exchanged for Exchange Debentures and (ii) the principal amount of
Exchange Debentures issued remain outstanding; and provided further, that any
such redemption shall occur within 75 days of the date of closing of such
offering of common equity of the Company.
Section 13.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption
payments with respect to the Exchange Debentures.
[The rest of this page has been intentionally left blank.]
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed, and attested, all as of the date and year first written above.
ADELPHIA COMMUNICATIONS CORPORATION
By:
Name:
Title:
WITNESS:
Name:
BANK OF MONTREAL TRUST COMPANY, as Trustee
By:
Name:
<PAGE>
Title:
WITNESS:
Name:
<PAGE>
Exhibit A
(Face Of Note)
10 1/2% Senior Notes Due 2004
No. $__________
ADELPHIA COMMUNICATIONS CORPORATION
Promises to pay to ________________________ or registered assigns, the
principal sum of_____________________ Dollars on July 15, 2004.
Interest Payment Dates: January 15, and July 15
Record Dates: January 1, and July 1
Dated:
ADELPHIA COMMUNICATIONS CORPORATION
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 Signature
<PAGE>
A-10
(Back of Note)
10 1/2% Senior Notes due 2004
[Unless and until it is exchanged in whole or in part for
Notes in definitive form, this Note may not be transferred except as a whole by
the Depository to a nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]1/
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (4) TO INSTITUTIONAL
ACCREDITED INVESTORS IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE
IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Adelphia Communications Corporation, a Delaware
corporation (the "Company") promises to pay interest on the principal amount of
this Note at 10 1/2% per annum from July 7, 1997 until July 15, 2004 and shall
pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company shall pay interest
and Liquidated Damages, if any, semi-annually in arrears on January 15 and July
15 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
January 15, 1998. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal from
<PAGE>
time to time on demand at a rate equal to the per annum rate on the Notes 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, if any, (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 shall make payments in
respect of the Notes represented by the Global Note (including principal,
interest and Liquidated Damages, if any) by wire transfer of immediately
available funds to the accounts specified by the Note Custodian. With respect to
Notes issued in definitive form, the Company shall make all payments of
principal, interest and Liquidated Damages, if any, by mailing a check to each
such Holder's registered address, provided that all payments with respect to
Notes having an aggregate principal amount of $100,000 or more, the Holders of
which have given wire transfer instructions to the Company at least ten business
days prior to the applicable payment date, will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. The Notes represented by the Global Note are expected to be eligible to
trade in DTC's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such notes will, therefore, be required by DTC to be
settled in immediately available funds. The Company expects that secondary
trading in the Definitive Notes also will be settled in immediately available
funds.
3. Paying Agent and Registrar. Initially, Bank of Montreal
Trust Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Notes may be presented for registration of transfer and exchange
at the offices of the 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 July 7, 1997 ("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-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. The Notes are senior unsecured obligations of the Company limited to $250
million in aggregate principal amount.
5. Mandatory Redemption. Except as set forth in paragraph 6
below, the Company shall not be required to make mandatory redemption payments
with respect to the Notes.
6. Repurchase at Option of Holder. Within 50 days of (i) the
proposed occurrence of a Change of Control or (ii) the occurrence of Change of
Control Triggering Event, the Company shall 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
100% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, which date shall be
no later than 50 days from the date such notice is mailed (the "Change of
Control Payment Date"). Within 50 days of (i) the proposed occurrence of a
Change of Control or (ii) the occurrence of Change of Control Triggering Event,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture. Such right
to require the repurchase of Notes shall not continue after discharge of the
Company from its obligations with respect to the Notes. The board of directors
of the Company may not waive this provision.
<PAGE>
7. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture.
8. Persons Deemed Owners. The registered Holder of a Note may
be treated as its owner for all purposes.
9. 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 issue up to $100,000,000 in aggregate
principal amount of additional Notes, to transfer, assign, mortgage or pledge
any property to the Trustee and otherwise comply with the covenant to secure
Notes equally, 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.
10. Defaults and Remedies. An Event of Default occurs if: (i)
the Company defaults in the payment when due of any interest on, or Liquidated
Damages with respect to, any Note and such default continues for a period of 30
days; (ii) the Company defaults in the payment of the principal of any Note at
its maturity; (iii) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in the Indenture or the Notes for 60
days after written notice to the Company by the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding; (iv) the Company
fails to pay when due principal, interest or premium aggregating $10,000,000 or
more with respect to any Indebtedness of the Company or any Restricted
Subsidiary, or the acceleration of any such Indebtedness which default shall not
be cured or waived, or such acceleration shall not be rescinded or annulled,
within 10 days after written notice; (v) 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 Restricted Subsidiaries 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
judgments exceeds $10 million; or (vi) the Company or any Restricted Subsidiary
with liabilities of greater than $10,000,000 under GAAP as of the date of the
event described in this clause, pursuant to or within the meaning of Bankruptcy
Law: (a) commences a voluntary case, (b) consents to the entry of an order for
relief against it in an involuntary case, (c) consents to the appointment of a
Custodian of it or for all or substantially all of its property, or (d) makes a
general assignment for the benefit of its creditors, (vii) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for
relief against the Company, or any Restricted Subsidiary with liabilities of
greater than $10,000,000 under GAAP as of the effective date of such order or
decree in an involuntary case, (b) appoints a custodian of the Company, or any
Restricted Subsidiary of Restricted Subsidiary with liabilities of greater than
$10,000,000 under GAAP as of the effective date of such order or decree or for
all or substantially all of its property or (c) orders the liquidation of the
Company, or any Restricted Subsidiary with liabilities greater than $10,000,000
<PAGE>
under GAAP as of the effective date of such order or decree; and the order or
decree remains unstayed and in effect for 60 consecutive days. 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 immediately. Notwithstanding the foregoing, in the case an Event
of Default specified in clauses (6) or (7) of Section 6.01 of the Indenture
occurs with respect to the Company, or a Restricted Subsidiary with liabilities
of greater than $10,000,000 under GAAP as of the effective date of such order or
decree, all outstanding Notes will become due and payable without further action
or notice. Holders of the Notes 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 not less than 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 the principal of and Liquidated Damages, if any, or interest on, the
Notes (provided, however, that the Holders of a majority in aggregate principal
amount of the then outstanding Notes may rescind an acceleration and its
consequence, including any related payment default) or a default with respect to
any covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Note affected.
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 and what action
the Company is taking or proposes to take thereto.
11. 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.
12. 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 including any rights against any general partner of the Company in its
capacity as general partner. The waiver and release are part of the
consideration for the issuance of the Notes.
13. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENENT
(= 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).
15. Additional Rights of Holders of Transfer Restricted
Securities. In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Transfer Restricted Securities shall have all the rights
set forth in the Notes Registration Rights Agreement dated as of July 7, 1997,
<PAGE>
between the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
16. 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 shall 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:
Adelphia Communications Corporation
Main at Water Street
Coudersport, Pennsylvania 16915
Attention: Colin H. Higgin, Esq.
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(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)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Article 3 of the Indenture, check the box below:
[GRAPHIC OMITTED]Article 3
If you want to elect to have only part of the Note purchased
by the Company pursuant to Article 3 of the Indenture, state the amount you
elect to have purchased: $_______________
Date:____________________ Your Signature:
(Sign exactly as your name appears on the
Note)
Tax Identification No.:_______________
<PAGE>
SCHEDULE OF EXCHANGES OF NOTES2/
The following exchanges of a part of this Global Note for
other Notes have been made:
Principal Amount of
Amount of decrease Amount of increase this Global Note
Signature of in Principal Amount in Principal Amount
following such authorized officer of this Global Note
of this Global Note decrease (or increase) of Trustee
or Note Custodian
Date of Exchange
<PAGE>
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION
OF TRANSFER OF DEFINITIVE NOTES
(Pursuant to Section 2.06(b) of the Indenture)
Bank of Montreal Trust Company
77 Water Street
New York, New York 10005
U.S.A.
Re: 10 1/2% Senior Notes due 2004 of Adelphia Communications Corporation.
Reference is hereby made to the Indenture, dated as of July 7,
1997 (the "Indenture"), among Adelphia Communications Corporation (the
"Company"), as Issuer 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.
This letter relates to $__________ principal amount of Notes
which are evidenced by one or more Definitive Notes (CUSIP No. __________) and
registered with the Registrar in the name of
_________________________________________ (the "Transferor"). The Transferor has
requested an exchange or transfer of such Definitive Note(s) in the form of an
equal principal amount of Notes evidenced by one or more Definitive Notes (CUSIP
No. __________), to be delivered to the Transferor or, in the case of a transfer
of such Notes, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the
Holder of such Surrendered Notes hereby certifies that:
[CHECK ONE]
[GRAPHIC OMITTED] the Surrendered Notes are being acquired for the
Transferor's own account, without transfer;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred to the
Company;
or
[GRAPHIC OMITTED] Surrendered Notes are being transferred 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 Surrendered Notes are being transferred to a Person that
the Transferor reasonably believes is purchasing the
Surrendered Notes for its own account, or for one or more
accounts with respect to which such Person exercises sole
<PAGE>
investment discretion, and such Person and each such account
is a "qualified institutional buyer" within the meaning of
Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred pursuant
to an effective registration statement under the Securities
Act;
or
[GRAPHIC OMITTED] such transfer is being effected pursuant to an
exemption from the registration requirements of the Securities
Act other than Rule 144A or Rule 144, and the Transferor
hereby further certifies that the Notes are being transferred
in compliance with the transfer restrictions applicable to the
Global Note and in accordance with the requirements of the
exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to
this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer
is in compliance with the Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Smith Barney Inc., Bear, Stearns &
Co. Inc., NationsBanc Capital Markets, Inc. and TD Securities (USA) Inc. (the
"Initial Purchasers"), the initial purchasers of such Notes being transferred.
[Insert Name of Transferor]
By:
Name:
Title:
Dated:
cc: Adelphia Communications Corporation
Smith Barney Inc.
<PAGE>
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM GLOBAL NOTE
TO DEFINITIVE NOTE
(Pursuant to Section 2.06(c) of the Indenture)
Bank of Montreal Trust Company
77 Water Street
New York, New York 10005
U.S.A.
Re: 10 1/2% Senior Notes due 2004 of Adelphia Communications Corporation.
Reference is hereby made to the Indenture, dated as of July 7,
1997 (the "Indenture"), among Adelphia Communications Corporation (the
"Company"), as Issuer 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.
This letter relates to $__________ principal amount of Notes
which are evidenced by the Global Note (CUSIP No. __________) held with the
Depository in the name of ________________ (the "Transferor"). The Transferor
has requested a transfer of such beneficial interest in the Notes to a Person
who will take delivery thereof in the form of an equal principal amount of Notes
evidenced by one or more Definitive Notes (CUSIP No. __________), to be
registered with the Registrar in the name of ______________.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the
Holder of such Surrendered Notes hereby certifies that:
[CHECK ONE]
[GRAPHIC OMITTED] the Surrendered Notes are being transferred to the
beneficial owner of such Notes;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred 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 Surrendered Notes are being transferred to a Person that
the Transferor reasonably believes is purchasing the
Surrendered Notes 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 each case in a transaction meeting the
requirements of Rule 144A;
or
<PAGE>
[GRAPHIC OMITTED] the Surrendered Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred pursuant
to an effective registration statement under the Securities
Act;
or
[GRAPHIC OMITTED] such transfer is being effected pursuant to an
exemption from the registration requirements of the Securities
Act other than Rule 144A or Rule 144, and the Transferor
hereby further certifies that the Notes are being transferred
in compliance with the transfer restrictions applicable to the
Global Note and in accordance with the requirements of the
exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to
this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer
is in compliance with the Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and Smith Barney Inc., Bear,
Stearns & Co. Inc., NationsBanc Capital Markets, Inc. and TD Securities (USA)
Inc. (the "Initial Purchasers"), the initial purchasers of such Notes being
transferred.
[Insert Name of Transferor]
By:
Name:
Title:
Dated:
cc: Adelphia Communications Corporation
Smith Barney Inc.
<PAGE>
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER FROM
DEFINITIVE NOTE TO GLOBAL NOTE
(Pursuant to Section 2.06(e) of the Indenture)
Bank of Montreal Trust Company
77 Water Street
New York, New York 10005
U.S.A.
Re: 10 1/2% Senior Notes due 2004 of Adelphia Communications Corporation.
Reference is hereby made to the Indenture, dated as of July 7,
1997 (the "Indenture"), among Adelphia Communications Corporation (the
"Company"), as Issuer 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.
This letter relates to $__________ principal amount of Notes
which are evidenced by one or more Definitive Notes (CUSIP No. __________) and
registered with the Registrar in the name of
_________________________________________ (the "Transferor"). The Transferor has
requested a transfer of such Definitive Notes to a Person who will take delivery
thereof in the form of an equal beneficial interest in the Global Note (CUSIP
No. ____________).
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the
Holder of such Surrendered Notes hereby certifies that:
[CHECK ONE]
[GRAPHIC OMITTED] the Surrendered Notes are being transferred to the
beneficial owner of such Notes;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred 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 Surrendered Notes are being transferred to a Person that
the Transferor reasonably believes is purchasing the
Surrendered Notes 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 each case in a transaction meeting the
requirements of Rule 144A;
or
<PAGE>
[GRAPHIC OMITTED] the Surrendered Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[GRAPHIC OMITTED] the Surrendered Notes are being transferred pursuant
to an effective registration statement under the Securities
Act;
or
[GRAPHIC OMITTED] such transfer is being effected pursuant to an
exemption from the registration requirements of the Securities
Act other than Rule 144A or Rule 144, and the Transferor
hereby further certifies that the Notes are being transferred
in compliance with the transfer restrictions applicable to the
Global Note and in accordance with the requirements of the
exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to
this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer
is in compliance with the Securities Act;
Upon giving effect to this request to exchange a Definitive
Note for a beneficial interest in the Global Note, the
resulting beneficial interest shall be subject to the
restrictions on transfer applicable to the Global Note
pursuant to the Indenture and the Securities Act.
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and Smith Barney Inc., Bear,
Stearns & Co. Inc., NationsBanc Capital Markets, Inc. and TD Securities (USA)
Inc. (the "Initial Purchasers"), the initial purchasers of such Notes being
transferred.
[Insert Name of Transferor]
By:
Name:
Title:
cc: Adelphia Communications Corporation
Smith Barney Inc.
<PAGE>
EXCHANGEABLE PREFERRED STOCK
REGISTRATION RIGHTS AGREEMENT
Dated as of July 7, 1997
by and among
Adelphia Communications Corporation
Smith Barney Inc.
Bear, Stearns & Co. Inc.
NationsBanc Capital Markets, Inc.
TD Securities (USA) Inc.
and
Highland Holdings
<PAGE>
This Exchangeable Preferred Stock Registration Rights Agreement (this
"Agreement") is made and entered into as of July 7, 1997 by and among Adelphia
Communications Corporation (the "Company") and Smith Barney Inc., Bear, Stearns
& Co. Inc., NationsBanc Capital Markets, Inc. and TD Securities (USA) Inc.
(collectively, the "Initial Purchasers"), who have agreed to purchase an
aggregate of 950,000 shares of 13% Series A Cumulative Exchangeable Preferred
Stock, par value $.01 per share (Liquidation Preference $100.00 per share) of
the Company (the "Exchangeable Preferred Stock") pursuant to the Purchase
Agreement (as defined below) and Highland Holdings who has agreed to purchase
550,000 shares of the Exchangeable Preferred Stock pursuant to a separate
agreement with the Company. Unless the context otherwise requires, the term
"Exchangeable Preferred Stock" refers collectively to the 950,000 shares to be
purchased by the Initial Purchasers and the 550,000 shares to be purchased by
Highland Holdings.
This Agreement is made pursuant to the Purchase Agreement, dated July
1, 1997 (the "Purchase Agreement"), between the Company and the Initial
Purchasers and the separate purchase agreement, dated __________, 1997 between
the Company and Highland Holdings (the "Highland Holdings Purchase Agreement").
In order to induce the Initial Purchasers and Highland Holdings to purchase the
Exchangeable Preferred Stock, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
2 of the Purchase Agreement and the obligations of Highland Holdings set forth
in the Highland Holdings Purchase Agreement.
The parties hereby agree as follows:
<PAGE>
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Amount: With respect to any Share, the Liquidation Preference of such
Share, and with respect to any Debenture, the principal amount of such
Debenture.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificate of Designations: The Certificate of Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions Thereof in
respect of the Exchangeable Preferred Stock.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Transfer Agent and/or the Registrar, as applicable, under the Certificate
of Designations and/or the Exchange Indenture, as applicable, of Exchange
Securities with (a) in the case of Exchange Shares, the same aggregate
Liquidation Preference as the aggregate Liquidation Preference of the
Exchangeable Preferred Stock that was tendered by Holders thereof pursuant to
the Exchange Offer and (b) in the case of New Exchange Debentures, the same
aggregate principal amount as the aggregate principal amount of Exchange
Debentures that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Exchangeable Preferred
Stock, each Dividend Payment Date and with respect to the Exchange Debentures,
each Interest Payment Date.
Debentures: The Exchange Debentures and the New Exchange Debentures.
Dividend Payment Date: As defined in the Certificate of Designations.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Debentures: The 13% Senior Subordinated Exchange Debentures
due 2009 of the Company for which the Exchangeable Preferred Stock may be
exchanged.
Exchange Indenture: The Exchange Indenture, to be dated as of the date
of the first issuance of Exchange Debentures thereunder, between the Company and
Bank of Montreal Trust Company, as trustee (the "Trustee"), pursuant to which
<PAGE>
the Exchange Debentures are to be issued, as such Exchange Indenture is amended
or supplemented from time to time in accordance with the terms thereof.
Exchange Offer: The registration by the Company under the Act of the
Exchange Securities pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Exchange Securities (a) in the case of Exchangeable
Preferred Stock, with an aggregate Liquidation Preference equal to the aggregate
Liquidation Preference of the Transfer Restricted Securities tendered in such
exchange offer by such Holders and (b) in the case of Exchange Debentures, in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exchange Securities: The Exchange Shares and the New Exchange
Debentures.
Exchange Shares: The shares of 13% Series B Cumulative Exchangeable
Preferred Stock, par value $.01 per share (Liquidation Preference $100.00 per
share) of the Company to be issued pursuant to the Certificate of Designations
in the Exchange Offer.
Exchangeable Preferred Stock: As defined in the preamble hereto.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Exchangeable Preferred Stock purchased by the Initial
Purchasers to certain "qualified institutional buyers," as such term is defined
in Rule 144A under the Act.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Initial Purchasers: As defined in the preamble hereto.
Interest Payment Date: As defined in the Exchange Indenture.
Liquidated Damages: As defined in Section 5 hereof.
Liquidation Preference: $100.00 per share of Exchangeable Preferred
Stock or Exchange Shares.
NASD: National Association of Securities Dealers, Inc.
New Exchange Debentures: The 13% Senior Subordinated Exchange
Debentures due 2009, to be issued pursuant to the Exchange Indenture in the
Exchange Offer.
Payment Date: The Dividend Payment Date and/or the Interest Payment
Date, whichever is applicable.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
<PAGE>
thereto, including post-effective amendments, and all material incorporated by
reference into such prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Shares or Debentures, each Person who is a Holder of Shares or Debentures on the
record date with respect to the Payment Date on which such Damages Payment Date
shall occur.
Registrar: Means the Registrar of the Debentures as defined in the
Exchange Indenture.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of Exchange Securities pursuant to an Exchange Offer
or (b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Securities: The Exchangeable Preferred Stock and the Exchange
Debentures.
Shares: The Exchange Shares and the Exchangeable Preferred Stock.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Agent: Means the Transfer Agent with respect to the Shares as
defined in the Certificate of Designations.
Transfer Restricted Securities: Each Security, until the earliest to
occur of (a) the date on which such Security 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 Act, (b) the date on which such
Security has been effectively registered under the Act and disposed of in
accordance with a Shelf Registration Statement and (c) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Act or by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
<PAGE>
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company shall (i) use its reasonable efforts to
cause to be filed with the Commission as soon as practicable after the Closing
Date, but in no event later than 90 days after the Closing Date, a Registration
Statement under the Act relating to the Exchange Securities and the Exchange
Offer, (ii) use its best efforts to cause such Registration Statement to become
effective no later than 180 days after the Closing Date, (iii) in connection
with the foregoing, file (A) all pre-effective amendments to such Registration
Statement as may be necessary in order to cause such Registration Statement to
become effective, (B) if applicable, a post-effective amendment to such
Registration Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings in connection with the registration and qualification of the
Exchange Securities to be made under the Blue Sky laws of such jurisdictions as
are necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Registration Statement, commence the Exchange Offer. The
Exchange Offer Registration Statement shall be on the appropriate form
permitting registration of the Exchange Securities to be offered in exchange for
the Transfer Restricted Securities and to permit resales of Exchange Securities
held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Exchange Securities and the Notes (as defined
in the Purchase Agreement) shall be included in the Exchange Offer Registration
Statement. The Company shall use its best efforts to cause the Exchange Offer to
be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Securities that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Company), may exchange such
Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and may be required,
therefore, to deliver a prospectus meeting the requirements of the Act in
connection with any sales of the Exchange Securities received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Securities held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Exchange Securities acquired by
<PAGE>
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that such Registration Statement
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the date on which the Exchange Offer Registration
Statement is declared effective.
The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to Broker-Dealers promptly upon request, at any time
during such one year period in order to facilitate such sales.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or permitted to Consummate the Exchange
Offer, in either case, because the Exchange Offer is not permitted by applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 business days of the Consummation of the
Exchange Offer (A) that such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) that such
Holder may not resell the Exchange Securities acquired by it in the Exchange
Offer to the public without delivering a prospectus and that the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder, or (iii) if any Holder of Transfer
Restricted Securities is a Broker-Dealer and holds Securities acquired directly
from the Company or an affiliate of the Company and shall so notify the Company,
then the Company shall
(x) cause to be filed a shelf registration statement pursuant
to Rule 415 under the Act, which may be an amendment to the Exchange
Offer Registration Statement (in either event, the "Shelf Registration
Statement") on or prior to the earliest to occur of (1) the 30th day
after the date on which the Company is notified by the Commission or
otherwise determines that it is not required to file the Exchange Offer
Registration Statement or permitted to Consummate the Exchange Offer,
(2) the 30th day after the date on which the Company receives notice
from a Holder of Transfer Restricted Securities as contemplated by
clauses (ii) or (iii) above, and (3) the 60th day after the Closing
Date (such earliest date being the "Shelf Filing Deadline"), which
Shelf Registration Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission on or before the
90th day after the Shelf Filing Deadline.
The Company shall use its best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for resales of Securities by the Holders of Transfer
Restricted Securities entitled to the benefit of this Section 4(a), and to
ensure that it conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, until the second anniversary of the Closing Date or such shorter period
that will terminate when all the Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or become
eligible for resale pursuant to Rule 144 without volume or other restrictions.
(b) Provision by Holders of Certain Information in Connection with the
<PAGE>
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
5. LIQUIDATED DAMAGES
If (i) the Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has
not been Consummated within 30 business days after 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 immediately declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default"), the Company hereby agrees to pay
liquidated damages ("Liquidated Damages") to each Holder of Transfer Restricted
Securities with respect to the first 90-day period immediately following the
occurrence of such Registration Default, in an amount equal to 0.25% per annum
on the Amount of Transfer Restricted Securities held by such Holder for the
period that the Registration Default continues. The amount of the Liquidated
Damages shall increase by an additional 0.25% per annum for each subsequent 90
day period until all Registration Defaults have been cured, up to a maximum
amount of Liquidated Damages of 2.0% per annum on the Amount of Transfer
Restricted Securities. All accrued Liquidated Damages shall be paid to Record
Holders by the Company by wire transfer of immediately available funds or by
federal funds check on each Damages Payment Date, as provided in the Exchange
Indenture or the Certificate of Designations, as applicable. Following the cure
of all Registration Defaults relating to any particular Transfer Restricted
Securities, the accrual of Liquidated Damages with respect to such Transfer
Restricted Securities will cease.
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall have
been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all of the provisions of Section
6(c) below, shall use its best efforts to effect such exchange to permit the
sale of Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and shall comply with all of
the following provisions:
<PAGE>
(i) If in the reasonable opinion of counsel to the Company
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Company hereby agrees to seek a no-action letter or
other favorable decision from the Commission allowing the Company to
Consummate an Exchange Offer for such Securities. The Company hereby
agrees to pursue the issuance of such a decision to the Commission
staff level but shall not be required to take commercially unreasonable
action to effect a change of Commission policy. The Company hereby
agrees, however, to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursue a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) as a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Exchange Securities to be issued in the Exchange Offer and (C) it is
acquiring the Exchange Securities in its ordinary course of business.
In addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Company's preparations for the Exchange
Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
secondary resale transaction should 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 if the resales are of Exchange Securities obtained by such Holder
in exchange for Securities acquired by such Holder directly from the
Company.
(iii) prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall, provide a supplemental
letter to the Commission stating (A) that the Company is registering
the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13,
1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above
and (B) including a representation that the Company has not entered
into any arrangement or understanding with any Person to distribute the
Exchange Securities to be received in the Exchange Offer and that, to
the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Exchange
Securities in its ordinary course of business and has no arrangement or
<PAGE>
understanding with any Person to participate in the distribution of the
Exchange Securities received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Securities by
Broker-Dealers), the Company shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
for the period specified in Section 3 or 4 of this Agreement, as
applicable; upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective
and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement, in the case of
clause (A), correcting any such misstatement or omission, and, in the
case of either clause (A) or (B), use its best efforts to cause such
amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for its intended purpose(s) as
soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
<PAGE>
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of
any Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s), if any, for a
period of at least five business days, and the Company will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which a selling Holder
of Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably object within
five business days after the receipt thereof. A selling Holder or
underwriter, if any, shall be deemed to have reasonably objected to
such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Company's representatives available
for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the
filing thereof as such selling Holders or underwriter(s), if any,
reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the underwriters, all
financial and other records, pertinent corporate documents and
properties of the Company and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such Holders, underwriter, attorney or accountant in connection with
such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration
<PAGE>
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the Amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
Amount of Exchangeable Preferred Stock or Exchange Debentures covered
thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company
hereby consents to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to any Registration Statement contemplated by this Agreement,
all to such extent as may be requested by the Initial Purchasers or by
any Holder of Transfer Restricted Securities or underwriter in
connection with any sale or resale pursuant to any Registration
Statement contemplated by this Agreement; and whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Company shall:
(A) furnish to the Initial Purchasers, each selling Holder and
each underwriter, if any, in such substance and scope as they may
request and as are customarily made by issuers to underwriters in
primary underwritten offerings, (i) upon the date of the Consummation
of the Exchange Offer, (ii) if applicable, the effectiveness of the
Shelf Registration Statement and (iii) upon the filing of any amendment
or supplement to any Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, signed by (y) the President or any Vice
<PAGE>
President and (z) a principal financial or accounting officer of the
Company confirming, as of the date thereof, the matters set forth in
paragraphs (j) and (k) of Section 7 of the Purchase Agreement and such
other matters as such parties may reasonably request;
(2) an opinion, dated the date of Consummation of the Offer or
the date of effectiveness of the Shelf Registration Statement, as the
case may be, of counsel for the Company, covering the matters set forth
in paragraphs (d), (e), (f) and (g) of Section 7 of the Purchase
Agreement and such other matters as such parties may reasonably
request, and in any event including a statement to the effect that such
counsel has participated in conferences with officers and other
representatives of the Company's representatives of the independent
public accountants for the Company and the Initial Purchasers'
representatives and the Initial Purchasers' counsel in connection with
the preparation of such Registration Statement and the related
Prospectus and have considered the matters required to be stated
therein and the statements contained therein, although such counsel has
not independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis of
the foregoing (relying as to materiality to a certain extent upon facts
provided to such counsel by officers and other representatives of the
Company and without independent check or verification), no facts came
to such counsel's attention that caused such counsel to believe that
the applicable Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became effective,
and, in the case of the Exchange Offer Registration Statement, as of
the date of Consummation, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its date and,
in the case of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) customary comfort letters, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, from the Company's
independent accountant, Deloitte & Touche LLP, in the customary form
and covering matters of the type customarily covered in comfort letters
by underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 7(i) of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clause
(A) above and with any customary conditions contained in the
<PAGE>
underwriting agreement or other agreement entered into by the Company
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the Company
shall so advise the Initial Purchasers and the underwriters(s), if any, and each
selling Holder promptly and, if requested by such Persons, shall confirm such
advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and its respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by any
Registration Statement; provided, however, that the Company shall not
be required to register or qualify to transact business where it is not
now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters
and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) shall issue, upon the request of any Holder of
Securities covered by the Shelf Registration Statement, Exchange
Securities having an aggregate Amount equal to the aggregate Amount of
Securities surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Exchange Securities to be
registered in the name of such Holder or in the name of the
purchaser(s) of such Securities, as the case may be; in return, the
Securities held by such Holder shall be surrendered to the Company for
cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two business days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
<PAGE>
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Exchange Indenture and the
Transfer Agent with printed certificates for the applicable Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its reasonable best efforts
to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
(xix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xx) in the event of any registration of the Exchange
Debentures or the issuance of New Exchange Debentures in exchange for
Exchange Debentures, cause the Exchange Indenture to be qualified under
the TIA on or prior to the later of (A) the effective date of the first
Registration Statement required by this Agreement or (B) the date of
the first exchange of Exchange Debentures for Exchangeable Preferred
Stock, and, in connection therewith, cooperate with the Trustee and the
Holders of Debentures to effect such changes to the Exchange Indenture
as may be required for such Exchange Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Exchange
Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company is then listed if
requested by the Holders of a majority in aggregate Amount of
Exchangeable Preferred Stock or Exchange Debentures or the managing
underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
<PAGE>
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
7. REGISTRATION EXPENSES
(a) All expenses associated with and incident to the Company's
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
filings made by the Initial Purchasers or any Holder with the NASD and
reasonable counsel fees and disbursements in connection therewith (and, if
applicable, the fees and expenses of any "qualified independent underwriter" and
its counsel that may be required by the rules and regulations of the NASD));
(ii) all reasonable fees and disbursements of compliance with federal securities
and state Blue Sky or securities laws (including all fees and expenses of
counsel to the underwriter(s) in connection with compliance with state Blue Sky
or securities laws); (iii) all expenses of printing (including printing
certificates for the Exchange Securities to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and, subject to Section
7(b) below, the Holders of Transfer Restricted Securities; (v) all application
and filing fees, if any, in connection with listing the Securities and the
Exchange Securities on a national securities exchange or automated quotation
system pursuant to the requirements hereof; (vi) all fees and expenses of the
Trustee under the Exchange Indenture to the extent provided in the Exchange
Indenture and of any escrow agent, custodian or exchange agent; and (vii) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company shall, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company shall reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in Amount of the Transfer Restricted Securities for whose benefit such
<PAGE>
Registration Statement is being prepared.
8. INDEMNIFICATION
(a) Indemnification by the Company. Upon any registration of Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, pursuant to Sections 3 and 4 hereof, and in consideration of the
agreements of the Initial Purchasers and Highland Holdings contained herein, and
as an inducement to the Initial Purchasers and Highland Holdings to purchase the
Securities, the Company shall and hereby agrees to, (i) indemnify and hold
harmless each Holder of Transfer Restricted Securities and Broker-Dealer
Transfer Restricted Securities, as applicable, to be included in such
registration and each person who participates as a placement or sales agent or
as an underwriter in any offering or sale of such Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities, as applicable, against any
losses, claims, damages or liabilities, joint or several, to which such Holder,
agent or underwriter may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement under which such
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities,
as applicable, were registered under the Act, or any preliminary, final or
summary Prospectus contained therein or furnished by the Company to any such
Holder, agent or underwriter, or any amendment 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 (ii) reimburse such Holder, such agent and such
underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
under (i) above to any such person in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such Registration Statement, or preliminary, final or summary Prospectus, or
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by such person expressly for use therein.
(b) Indemnification by the Holders and any Agents and Underwriters. The
Company may require, as a condition to including any Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as applicable, in
any Registration Statement filed pursuant to Sections 3 and 4 hereof and to
entering into any underwriting agreement, if any, with respect thereto, that the
Company shall have received an undertaking reasonably satisfactory to them from
the Holders of such Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, and from each underwriter named in any
such underwriting agreement, if any, severally and not jointly, to (i) indemnify
and hold harmless the Company, and, in the case of a Shelf Registration
Statement, all other Holders of Transfer Restricted Securities, against any
losses, claims, damages or liabilities to which the Company, or such other
Holders of Transfer Restricted Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, or any
preliminary, final or summary Prospectus contained therein or furnished by the
Company to any such Holder, agent or underwriter, if any, or any amendment 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, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
<PAGE>
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Holder or
underwriter expressly for use therein, and (ii) reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that no such Holder shall be required to undertake
liability to any person under this Section 8(b) for any amounts in excess of the
dollar amount of the proceeds to be received by such Holder from the sale of
such Holder's Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 8, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 8(a) or 8(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
Notwithstanding the foregoing, any indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless the indemnified party shall have been advised by
counsel that representation of the indemnified party by counsel provided by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between the indemnifying party and the indemnified party, including
situations in which there are one or more legal defenses available to the
indemnified party that are different from or additional to those available to
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all indemnified parties, except to the extent that
local counsel, in addition to its regular counsel, is required in order to
effectively defend against such action or proceeding. The indemnifying party
shall not be required to indemnify any indemnified party for any amount paid or
payable by such indemnified party in the settlement of any action, proceeding or
investigation without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
<PAGE>
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 8(a) or Section 8(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. It is understood that
contribution under this subsection (d) is unavailable to indemnified parties to
the same extent that indemnification is unavailable under the proviso at the end
of subsection (a) above. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Holder shall be required to contribute any
amount in excess of the amount by which the dollar amount of the proceeds
received by such Holder from the sale of any Transfer Restricted Securities
(after deducting any fees, discounts and commissions applicable thereto) or
Broker-Dealer Transfer Restricted Securities, as applicable, exceeds the amount
of any damages which such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and no
underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Transfer Restricted Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Holders'
and any underwriters' obligations in this Section 8(d) to contribute shall be
several in proportion to the Amount of Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities, as applicable, registered or
underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each Holder, agent and underwriter and each person, if any, who controls any
Holder, agent or underwriter within the meaning of the Act; and the obligations
of the Holders and any underwriters contemplated by this Section 8 shall be in
addition to any liability which the respective Holder or underwriter may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company (including any person who, with his consent,
is named in any Registration Statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the meaning
<PAGE>
of the Act.
9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the holders of a majority in
aggregate Amount of the Transfer Restricted Securities included in such
offering; provided, that such investment bankers and managers must be reasonably
satisfactory to the Company.
12. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages (including the
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any agreement in effect on the date
hereof.
(c) Adjustments Affecting the Securities. The Company shall not take
any action, or permit any change to occur, with respect to the Securities that
would materially and adversely affect the ability of the Holders to Consummate
the Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding Amount of
<PAGE>
Exchangeable Preferred Stock or Exchange Debentures, as applicable.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does not
affect directly or indirectly the rights of other Holders whose securities are
not being tendered pursuant to such Exchange Offer may be given by the Holders
of a majority of the outstanding Amount of Transfer Restricted Securities being
tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Transfer Agent or the Registrar under the Exchange Indenture (as
applicable), with a copy to the Transfer Agent or the Registrar under
the Exchange Indenture (as applicable); and
(ii) if to the Company:
Adelphia Communications Corporation
Main at Water Street
Coudersport, PA 16915
Telecopier No.: (814) 274-7098
Attention: Tim Rigas
With a copy to:
Buchanan Ingersoll
1 Oxford Center
301 Grant Street, 20th Floor
Pittsburgh, PA 15219
Telecopier No.: (412) 562-1041
Attention: Carl Rothenberger
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Exchange Indenture and to the Transfer Agent at the
address specified in the Certificate of Designations.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
<PAGE>
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement together with the Securities, the
Exchange Securities, the Exchange Indenture, the Certificate of Designations and
the Purchase Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
[signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Adelphia Communications Corporation
By:
Name:
Title:
Smith Barney Inc.
Bear, Stearns & Co. Inc.
NationsBanc Capital Markets, Inc.
TD Securities (USA) Inc.
By: Smith Barney Inc.
By:
Name:
Title:
Highland Holdings
By:
Name:
Title:
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
SERIES C CUMULATIVE
CONVERTIBLE PREFERRED STOCK
OF
ADELPHIA COMMUNICATIONS CORPORATION
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
Adelphia Communications Corporation (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, certifies that pursuant to the authority contained in Article
Fourth of its Certificate of Incorporation, as amended (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Series C Preferred Stock
Committee (the "Committee") of the Board of Directors of the Corporation at a
meeting held on July 1, 1997 duly approved and adopted the following resolution
which resolution remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the
Committee by the Board of Directors on June 22, 1997, and pursuant to the
authority vested in the Board of Directors by the Certificate of Incorporation,
the Committee does hereby designate, create, authorize and provide for the
issuance of Series C Cumulative Convertible Preferred Stock (the "Series C
Preferred Stock"), par value $.01 per share, with a liquidation preference of
$1,000 per share, consisting of 100,000 shares, no shares of which have
heretofore been issued by the Corporation, having the following voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as follows:
1. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this Section 1 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural).
Affiliate. The term "Affiliate" of any specified Person shall
mean 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
<PAGE>
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.
Applicable Redemption Price. The term "Applicable Redemption
Price" shall mean a price per share equal to the following redemption prices
(expressed as a percentage of the Liquidation Preference thereof) during the
twelve-month periods commencing on August 1 of the years indicated:
2000 104.00%
2001 102.00%
2002 100.00%
in each case, together with accrued and unpaid dividends (if any) thereon to the
Redemption Date.
Business Day. The term "Business Day" shall mean a day other
than a Saturday or Sunday or any federal holiday.
Capital Stock. The term "Capital Stock" shall mean (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 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.
Class A Common Stock. The term "Class A Common Stock" shall
mean the Class A Common Stock, par value $.01 per share, of the Corporation.
Class B Common Stock. The term "Class B Common Stock" shall
mean the Class B Common Stock, par value $.01 per share, of the Corporation.
Common Equity. The term "Common Equity" shall mean all shares
now or hereafter authorized of any class of common stock of the Corporation,
including the Class A Common Stock and Class B Common Stock, and any other stock
of the Corporation, howsoever designated, authorized after the Initial Issue
Date, that have the right (subject always to prior rights of any class or series
of preferred stock) to participate in the distribution of the assets and
earnings of the Corporation without limit as to per share amount.
Continuing Directors. The term "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors of
the Corporation who (i) was a member of such Board of Directors on the Initial
Issue Date 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.
Conversion Agent. The term "Conversion Agent" shall mean the
entity designated from time to time by the Corporation to act as conversion
agent for the Series C Preferred Stock.
Conversion Date. The term "Conversion Date" shall have the
meaning set forth in Section 4(b) below.
Conversion Payments. The term "Conversion Payments" shall
have the meaning set forth in Section 4(a)
below.
Conversion Price. The term "Conversion Price" shall
<PAGE>
mean $8.48, subject to the adjustments provided in Section 4.
Conversion Rate. The term "Conversion Rate" shall mean the
number of shares of Class A Common Stock issuable upon conversion of one share
of Series C Preferred Stock, determined by dividing the Liquidation Preference
of such share of Series C Preferred Stock by the Conversion Price.
Current Market Price. The term "Current Market Price" shall
mean, with respect to any particular security on any date of determination, the
average over the 20 Trading Days ending on the date immediately preceding the
date of such determination of the last reported sale price, or, if no such sale
takes place on any such day, the closing bid price, in either case as reported
for consolidated transactions on the principal national securities exchange
(including the Nasdaq National Market and Nasdaq Stock Market) on which such
security is listed or admitted for trading; provided, however, that if any event
that results in an adjustment of the Conversion Rate occurs during the period
beginning on the first day of such 20-day period and ending on the date
immediately preceding the date of determination, the Current Market Price as
determined pursuant to the foregoing will be appropriately adjusted to reflect
the occurrence of such event or, if such security is not listed on any exchange
or admitted for trading on any such exchange or market, the Current Market Price
of such security shall be the last reported bid price for such security on the
date preceding the date of such determination provided by a New York Stock
Exchange member firm designated by the Corporation or, if no such member firm
can provide such a bid price, as determined in good faith by a majority of the
independent directors of the Corporation. In the event the Corporation is
required to pay cash to Holders of Series C Preferred Stock seeking to convert
shares of Series C Preferred Stock at a time when an insufficient number of
shares of Class A Common Stock are authorized for issuance, the Corporation is
restricted by government regulations from issuing shares of Class A Common Stock
upon conversion of any shares of Series C Preferred Stock or in lieu of the
issuance of a fractional share, the Current Market Price shall be determined on
the basis of the average of the five Trading Days ending on and including the
third Trading Day preceding the date of such conversion, as the case may be.
Dividend Payment Date. The term "Dividend Payment Date" shall
have the meaning set forth in Section 2(a) below.
Dividend Period. The term "Dividend Period" shall mean the
period from, and including, the Initial Issue Date to, but not including, the
first Dividend Payment Date and thereafter, each quarterly period from, and
including, the preceding Dividend Payment Date to, but not including the next
Dividend Payment Date.
Equity Interests. The term "Equity Interests" shall mean
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).
Executive Officer. The term "Executive Officer" shall mean any
officer of the Corporation that would be deemed to be an "executive officer"
within meaning of the rules and regulations of the Securities and Exchange
Commission.
Holder. The term "Holder" shall mean the record holder of one
or more shares of Series C Preferred Stock, as shown on the books and records of
the Transfer Agent.
Initial Issue Date. The term "Initial Issue Date" shall mean
the date that shares of Series C Preferred Stock are first issued by the
<PAGE>
Corporation.
Junior Securities. The term "Junior Securities" shall mean any
class of stock ranking junior to the Series C Preferred Stock as to the payment
of dividends and as to rights in liquidation, dissolution or winding up of the
affairs of the Corporation. The Corporation's Class A Common Stock and Class B
Common Stock are expressly defined and included as Junior Securities.
Liquidation Preference. The term "Liquidation Preference"
shall mean $1,000 per share of Series C Preferred Stock, plus accrued and unpaid
dividends (if any) to the date fixed for liquidation, dissolution, winding up or
reduction or decrease in capital stock, or in the case of Parity Securities,
such other amounts per share as may be set forth in the Certificate of
Designations for such Parity Securities, as the context requires.
Market Capitalization. The term "Market Capitalization" shall
mean, as of any date, the product of the Current Market Price of the Class A
Common Stock as of such date times the number of shares of Class A Common Stock
outstanding as of such date.
Officers' Certificate. The term "Officers' Certificate" shall
mean a certificate signed on behalf of the Corporation by two officers of the
Corporation, one of whom must be the Chief Executive Officer, the Chief
Financial Officer, the Treasurer or the principal accounting officer of the
Corporation that meets the requirements of Section 11 hereof.
Parity Securities. The term "Parity Securities" shall mean any
class or series of stock of the Corporation authorized after the Initial Issue
Date that is entitled to receive payment of dividends and to receive assets upon
liquidation, dissolution or winding up of the affairs of the Corporation on a
parity with the Series C Preferred Stock. The Corporation's Series A Preferred
Stock and Series B Preferred Stock are expressly defined and included as Parity
Securities.
Record Date. The term "Record Date" shall have the meaning
set forth in Section 2(a) below.
Redemption Date. The term "Redemption Date" shall have the
meaning set forth in Section 5(d) below.
Rights. The term "Rights" shall mean securities, rights,
options or warrants entitling a holder thereof to subscribe for or purchase any
shares of Class A Common Stock or Class B Common Stock of the Corporation.
Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
Senior Securities. The term "Senior Securities" shall mean any
class or series of stock of the Corporation authorized after the Initial Issue
Date ranking senior to the Series C Preferred Stock in respect of the right to
receive dividends and in respect of the right to participate in any distribution
upon liquidation, dissolution or winding up of the affairs of the Corporation.
Series A Preferred Stock. The term "Series A Preferred Stock"
shall mean the 13% Series A Cumulative Exchangeable Preferred Stock, $.01 par
value, of the Corporation.
Series B Preferred Stock. The term "Series B Preferred Stock"
shall mean the 13% Series B Cumulative Exchangeable Preferred Stock, $.01 par
value, of the Corporation.
<PAGE>
Trading Day. The term "Trading Day" with respect to either the
Class A Common Stock or Series C Preferred Stock, as the case may be, shall mean
any day on which any market (including, without limitation, any formal or
informal over the counter market) in which the applicable security is then
traded and in which a quoted price may be ascertained is open for business.
Transfer Agent. The term "Transfer Agent" shall mean the
entity designated from time to time by the Corporation to act as the registrar
and transfer agent for the Series C Preferred Stock.
Voting Rights Trigger Event. The term "Voting Rights Trigger
Event" shall have the meaning set forth in Section 5(b) below.
2. Dividends.
(a) The Holders of shares of the Series C Preferred Stock
shall be entitled to receive, when, as and if dividends are declared by the
Board of Directors out of funds of the Corporation legally available therefor,
cumulative preferential dividends from the Initial Issue Date of the Series C
Preferred Stock accruing at the rate per share of $81.25 per annum , or $20.3125
per quarter, payable quarterly in arrears on January 31, April 30, July 30 and
October 31 in each year or, if any such date is not a Business Day, on the next
succeeding business day (each, a "Dividend Payment Date"), to the Holders of
record as of the immediately preceding January 15, April 15, July 15 and October
15 (each, a "Record Date"). Dividends will be payable in cash. The first
dividend payment of $20.3125 per share of Series C Preferred Stock will be
payable on October 31, 1997. Dividends payable on the Series C Preferred Stock
will be computed on the basis of a 360-day year of twelve 30-day months and will
be deemed to accrue on a daily basis.
(b) Dividends on the Series C Preferred Stock shall accrue
whether or not the Corporation has earnings or profits, whether or not there are
funds legally available for the payment of such dividends and whether or not
dividends are declared. Dividends will accumulate to the extent they are not
paid on the Dividend Payment Date for the quarter to which they relate;
provided, however, the Corporation shall be required to declare and pay such
dividends to the extent there are funds legally available therefor, except to
the extent that it is the good faith judgment of management of the Corporation
that the use of such funds for the payment of dividends would place the
Corporation or any of its Subsidiaries in default under any agreement relating
to the senior indebtedness of the Corporation or any of its Subsidiaries, in
which case the Corporation shall furnish to each Holder, prior to the Dividend
Payment Date at issue, a certificate to such effect signed by the President, the
Chief Executive Officer or a Vice President or a Vice Chairman of the Company.
Accumulated unpaid dividends will bear interest at the rate of 13% per annum.
The Corporation shall take all actions required or permitted under Delaware law
to permit the payment of dividends on the Series C Preferred Stock.
(c) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding share of
the Series C Preferred Stock with respect to any Dividend Period unless all
dividends for all preceding Dividend Periods have been declared and paid upon,
or declared and a sufficient sum set apart for the payment of such dividend
upon, all outstanding shares of Series C Preferred Stock. Provided that all
dividends for all preceding Dividend Periods have been paid in full, to the
extent that cash is not available for a full dividend payment in a current
Dividend Period, the Corporation may declare and pay a partial dividend on the
Series C Preferred Stock, provided that, the Series C Preferred Stock will share
any partial dividends paid on Parity Securities on a pro-rata basis, other than
<PAGE>
dividends paid solely in shares of Parity Securities. Unless full cumulative
dividends on all outstanding shares of Series C Preferred Stock due for all past
Dividend Periods shall have been declared and paid, or declared and a sufficient
sum for the payment thereof set apart, then: (i) no dividend (other than a
dividend payable solely in shares of any Junior Securities or Parity Securities,
respectively) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Securities or any Parity
Securities, respectively; (ii) no other distribution (other than as required by
the terms of the Certificate of Designations of Parity Securities) shall be made
upon or any sum set apart for the payment of any distribution upon, any shares
of Junior Securities or any Parity Securities; (iii) no shares of Junior
Securities or Parity Securities shall be purchased, redeemed or otherwise
acquired or retired for value (excluding an exchange for shares of other Junior
Securities) by the Corporation or any of its Subsidiaries (other than as
required by the terms of the Certificate of Designations of Parity Securities);
and (iv) no monies shall be paid into or set apart or made available for a
sinking or other like fund for the purchase, redemption or other acquisition or
retirement for value of any shares of Junior Securities or Parity Securities by
the Corporation or any of its Subsidiaries (other than as required by the terms
of the Certificate of Designations of Parity Securities). Holders of the Series
C Preferred Stock will not be entitled to any dividends, whether payable in
cash, property or stock, in excess of the full cumulative dividends as herein
described. This Section 2(c) shall not prevent the Corporation from making
Conversion Payments pursuant to Section 4(a).
3. Distributions Upon Liquidation, Dissolution or
Winding Up.
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of the Corporation's Capital Stock (a "reduction or decrease in capital
stock"), each Holder of shares of Parity Securities shall be entitled to payment
out of the assets of the Corporation available for distribution of an amount
equal to the respective Liquidation Preference per share of the specific series
of Parity Securities held by such Holder (as fixed in the Certificate of
Designations for such series of Parity Securities), before any distribution is
made on any Junior Securities, including, without limitation, Common Equity of
the Corporation. After payment in full of the Liquidation Preference to which
Holders of Parity Securities are entitled, such Holders will not be entitled to
any further participation in any distribution of assets of the Corporation.
However, neither the voluntary sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property or assets of the Corporation nor the consolidation or merger of
the Corporation with or into one or more corporations will be deemed to be a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation or reduction or decrease in capital stock, unless such sale,
conveyance, exchange or transfer shall be in connection with a liquidation,
dissolution or winding up of the business of the Corporation or reduction or
decrease in capital stock.
4. Conversion Rights.
(a) Each Holder of shares of Series C Preferred Stock shall
have the right, at such Holder's option, to convert all or any portion of its
shares of Series C Preferred Stock into shares of Class A Common Stock at any
time, unless previously redeemed or repurchased, at the Conversion Rate (subject
to the Corporation obtaining the necessary governmental approvals). In the event
that an insufficient number of shares of Class A Common Stock are available for
issuance or the Corporation is restricted by government regulation from issuing
<PAGE>
shares of Class A Common Stock upon conversion of any shares of Series C
Preferred Stock, (i) if the inability to honor the conversion is due to there
being an insufficient number of shares of Class A Common Stock available for
issuance, , such Holders may require the Corporation to hold a special meeting
of the stockholders of the Corporation for the purpose of authorizing a
sufficient number of additional shares of Class A Common Stock to permit the
conversion of all of such Holders' shares of Series C Preferred Stock, or (ii)
if the Holders do not exercise the option set forth in clause (i) or it is not
available to them, the Corporation shall be required to pay to the Holder of
each share of Series C Preferred Stock seeking to convert such share an amount
per share of Class A Common Stock in cash equal to 110% of the Current Market
Price of the Class A Common Stock as of the date of such conversion (the
"Conversion Payments"). In the event that a special meeting is held pursuant to
clause (i) in the preceding sentence and the stockholders fail to authorize the
requisite number of additional shares of Class A Common Stock, each Holder
requesting said special meeting of the stockholders may either retract the
exercise of its conversion right or choose to accept a Conversion Payment as
provided above. The right to convert a share of Series C Preferred Stock called
for redemption shall terminate at the close of business on the Redemption Date
for such Series C Preferred Stock; provided however that in the event that
shares to be converted are called for redemption during the pendency of the
meeting described in clause (i) above, then Holders of such shares may elect to
accept the Conversion Payment by giving notice thereof to the Corporation.
(b) The right of conversion attaching to any share of Series C
Preferred Stock may be exercised by the Holder thereof by delivering the share
of Series C Preferred Stock to be converted to the office of the Conversion
Agent, accompanied by a duly signed and completed notice of conversion in form
reasonably satisfactory to the Conversion Agent. The "Conversion Date" will be
the date on which the share of Series C Preferred Stock and the duly signed and
completed notice of conversion are so delivered. As promptly as practicable on
or after the Conversion Date (but not more than three (3) trading days
thereafter), the Corporation shall issue and deliver to the Conversion Agent a
certificate or certificates for the number of full shares of Class A Common
Stock issuable upon conversion, together with payment in cash, determined as
provided below, in lieu of any fraction of a share. Such certificate or
certificates shall be delivered by the Conversion Agent to the appropriate
Holder by mailing certificates evidencing the shares of Class A Common Stock to
such Holders at its address set forth in the register of Holders maintained by
the Transfer Agent. All shares of Class A Common Stock issuable upon conversion
of the Series C Preferred Stock shall be fully paid and nonassessable and shall
rank pari passu with the other shares of Class A Common Stock outstanding from
time to time. Any Series C Preferred Stock surrendered for conversion during the
period from the close of business on any Record Date to the opening of business
on the next succeeding Dividend Payment Date must be accompanied by payment of
an amount equal to the dividends declared and payable on such Dividend Payment
Date on the Series C Preferred Stock being surrendered for conversion. In the
case of any Series C Preferred Stock that has been converted after any Record
Date but before the next Dividend Payment Date, dividends that are declared and
payable on such Dividend Payment Date shall be payable on such Dividend Payment
Date notwithstanding such conversion, and such dividends shall be paid to the
Holder of such Series C Preferred Stock on such Record Date. No other payment or
adjustment for dividends, or for any dividends in respect of shares of Class A
Common Stock, shall by made upon conversion. Holders of Class A Common Stock
issued upon conversion shall not be entitled to receive any dividends payable to
holders of Class A Common Stock as of any record time before the close of
business on the Conversion Date.
(c) The Corporation shall not issue a fractional share of
Class A Common Stock upon conversion of Series C Preferred Stock. Instead the
<PAGE>
Corporation shall deliver a check for an amount equal to the applicable fraction
of a share multiplied by the Current Market Price of the Class A Common Stock
calculated as of the close of business on the Conversion Date, rounded to the
nearest cent.
(d) A Holder delivering Series C Preferred Stock for
conversion will not be required to pay any taxes or duties in respect of the
issue or delivery of Class A Common Stock on conversion but will be required to
pay any tax or duty that may be payable in respect of any transfer involved in
the issue or delivery of the shares of Class A Common Stock in a name other than
that of the Holder of the Series C Preferred Stock. Certificates representing
shares of Class A Common Stock will not be issued or delivered unless all taxes
and duties, if any, payable by the Holder have been paid.
(e) The Corporation has reserved and shall continue to reserve
out of its authorized but unissued Class A Common Stock or its Class A Common
Stock held in treasury enough shares of Class A Common Stock to permit the
conversion of at least 100,000 shares of Series C Preferred Stock in full and
shall, as soon as practical, reserve and continue to reserve out of its
authorized but unissued Class A Common Stock held in treasury enough shares of
Class A Common Stock to permit the conversion of any other outstanding shares of
Series C Preferred Stock in full, assuming, in each case, that such conversion
took place at the Conversion Rate in effect from time to time (provided that
such reservation shall be proportionally reduced as shares of Series C Preferred
Stock are repurchased, redeemed, converted, exchanged or retired). All shares of
Class A Common Stock that may be issued upon conversion of Series C Preferred
Stock shall be fully paid and nonassessable. The Corporation shall take all
commercially reasonable steps to comply with all securities laws regulating the
offer and delivery of shares of Class A Common Stock upon conversion of Series C
Preferred Stock and shall take all commercially reasonable steps to list such
shares on each national securities exchange on which the Class A Common Stock is
listed.
(f) If the Corporation:
(i) pays a dividend (or makes a distribution) on its
Class A Common Stock in shares of its Class A Common Stock;
(ii) subdivides its outstanding shares of Class A
Common Stock into a greater number of shares;
(iii) combines its outstanding shares of Class A
Common Stock into a smaller number of shares; or
(iv) issues any shares of its Capital Stock by
reclassification of its Class A Common Stock;
then the Conversion Price in effect immediately prior to such action shall be
adjusted so that the Holder of each share of Series C Preferred Stock thereafter
converted may receive the number of shares of Capital Stock of the Corporation
that such Holder would have owned immediately following such action if such
Holder had converted Series C Preferred Stock immediately prior to such action.
The adjustment shall become effective immediately after the record date in the
case of a dividend or distribution and immediately after the effective date of a
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(g) If the Corporation distributes any Rights to all holders
of its Class A Common Stock entitling them to purchase shares of Class A Common
Stock and/or Class B Common Stock at a price per share that is less than the
<PAGE>
Conversion Price on the date of distribution of such Rights, the Conversion
Price shall be reduced in accordance with the formula:
C' = C x ((O + ((N x P) / C)) / (O + N))
where:
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
O = the number of shares of Class A Common
Stock and Class B Common Stock outstanding
on the record date for the distribution.
N = the number of additional shares of Class A
Common Stock and/or Class B Common Stock
offered.
P = the offering price per share of the
additional shares of Class A Common Stock
and/or Class B Common Stock.
The adjustment shall be made successively whenever any such Rights are issued
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such Rights. If at the end of
the period during which such Rights are exercisable, not all Rights shall have
been exercised, the Conversion Price shall be immediately readjusted to what it
would have been if "N" in the above formula had been the number of shares
actually issued.
(h) If the Corporation distributes to all holders of shares of
its Class A Common Stock (i) any shares of any class of Capital Stock of the
Corporation other than its Class A Common Stock, (ii) any evidence of
indebtedness or other securities of the Corporation or any Subsidiary of the
Corporation, or (iii) cash or any other assets of the Corporation (including
securities, but excluding those dividends, Rights and distributions referred to
above in this Section 4 and in Section 4(i) and Section 4(j), dividends and
distributions paid exclusively in cash and distributions upon mergers or
consolidations to which Section 4(m) applies), the Conversion Price shall be
reduced in accordance with the formula:
C' = C - F
where:
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
F = the fair market value on the record date
of the Capital Stock, indebtedness, other
securities, cash or other assets distributed
per share of Class A Common Stock.
The adjustment shall be made successively whenever any such distribution is made
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
(i) If the Corporation issues shares of Class A Common Stock
<PAGE>
and/or Class B Common Stock for a consideration per share less than the
Conversion Price per share on the date the Corporation issues such additional
shares, the Conversion Price shall be reduced in accordance with the formula:
C' = C x ((O + (P / C)) / A)
where:
C = the then current Conversion Price.
O = the number of shares of Class A Common Stock
and Class B Common Stock outstanding
immediately prior to the issuance of such
additional shares.
P = the aggregate consideration received for the
issuance of such additional
shares.
A = the number of shares Class A Common Stock
and Class B Common Stock outstanding
immediately after the issuance of such
additional shares.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
This Section 4(i) does not apply to (i) any transaction or issuance described in
Section 4(g) or 4(h) above or Section 4(j) below, (ii) the conversion of Series
C Preferred Stock or Class B Common Stock or the conversion, exchange or
exercise of securities issued in transactions that were subject to Sections 4(g)
or 4(h) above, (iii) Class A Common Stock or Class B Common Stock issued to the
Corporation's employees under bona fide employee benefit plans adopted by the
Board of Directors of the Corporation and approved by the holders of Class A
Common Stock and/or Class B Common Stock when required by law, (iv) Class A
Common Stock or Class B Common Stock issued to acquire, or in the acquisition
of, all or any portion of a business as a going concern, in an arm's-length
transaction between the Corporation and an unaffiliated third party, whether
such acquisition shall be effected by purchase of assets, exchange of
securities, merger, consolidation or otherwise, (v) Class A Common Stock or
Class B Common Stock issued in a bona fide public offering pursuant to a firm
commitment underwriting or (vi) Class A Common Stock or Class B Common Stock
issued to lenders or bond purchasers that are unaffiliated third parties in any
financing transaction on arm's-length terms (collectively, "Exempt Issuances").
(j) If the Corporation issues any Rights (other than Series C
Preferred Stock or Class B Common Stock or securities issued in transactions
described in Section 4(g) or Section 4(h)) and for a consideration per share of
Class A Common Stock and/or Class B Common Stock initially deliverable upon
conversion, exchange or exercise of such Rights that is less than the Conversion
Price per share on the date of issuance of such Rights, the Conversion Price
shall be reduced in accordance with the formula:
C' = C x ((O + (P / C)) / (O + D))
where:
C' = the adjusted Conversion Price.
<PAGE>
C = the then current Conversion Price.
O = the number of shares of Class A Common
Stock and Class B Common Stock outstanding
immediately prior to the issuance of such
Rights.
P = the aggregate consideration received for
the issuance of such Rights plus the
aggregate consideration payable upon
exercise of all such Rights.
D = the maximum number of shares deliverable
upon conversion or in exchange for or upon
exercise of such Rights at the initial
conversion, exchange or exercise rate.
The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance. If
all of the Class A Common Stock and/or Class B Common Stock deliverable upon
conversion, exchange or exercise of such Rights has not been issued when such
Rights are no longer outstanding, then the Conversion Price shall promptly be
readjusted to the Conversion Price that would then be in effect had the
adjustment upon the issuance of such Rights been made on the basis of the actual
number of shares of Class A Common Stock and/or Class B Common Stock issued upon
conversion, exchange or exercise of such Rights. This Section 4(j) does not
apply to any transaction that would be an Exempt Issuance if shares of Class A
Common Stock or Class B Common Stock were issued instead of Rights.
(k) In case the Corporation or any of its Subsidiaries shall,
by dividend or otherwise, make distributions exclusively in cash (excluding any
cash that is distributed upon a merger or consolidation to which Section 4(h)
applies) to all the holders of its Class A Common Stock in an aggregate amount
that, combined together with (i) the aggregate amount of all other such all-cash
distributions to all holders of its Class A Common Stock made within the 12
months preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this Section 4(g) has been made and (ii) the
aggregate of any cash plus the fair market value of other consideration payable
in respect of any tender or exchange offer or other stock repurchase program by
the Corporation or any of its Subsidiaries for all or any portion of the Class A
Common Stock concluded within the 12 months preceding the date of payment of
such distribution and in respect of which no adjustment pursuant to this Section
4(g) has been made, exceeds 10% of the Corporation's Market Capitalization on
the record date for such distribution then, and in each such case, immediately
after the close of business on such date of such distribution, the Conversion
Price shall be reduced in accordance with the formula:
C' = C - E
where:
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
E = the total of such combined amount of such
dividends and distributions per share of
Class A Common Stock.
(l) In the case of the consummation of a tender offer,
<PAGE>
exchange offer (other than an odd-lot offer) or other stock repurchase program
made by the Corporation or any Subsidiary thereof for all or any portion of the
Class A Common Stock and/or Class B Common Stock involving the payment by the
Corporation or such Subsidiary of an aggregate consideration that, together with
(i) any cash or other consideration payable in a tender offer, exchange offer or
other stock repurchase program by the Corporation or any of its Subsidiaries for
Class A Common Stock and/or Class B Common Stock consummated within 12 months
preceding the consummation of such tender offer, exchange offer or other stock
repurchase program (the "Expiration Time") in respect of which no adjustment has
been made pursuant to this Section 4(l) or Section 4(k) and (ii) the aggregate
amount of all such all-cash distributions referred to in Section 4(k) above to
all holders of Class A Common Stock and/or Class B Common Stock within the 12
months preceding such Expiration Time in respect of which no adjustments have
been made, exceeds 10% of the Corporation's Market Capitalization as of the
Trading Day next succeeding the Expiration Time, the Conversion Price shall be
reduced in accordance with the formula:
C' = C x ((M - E) / N)
where:
C' = the adjusted Conversion Price.
C = the then current Conversion Price.
M = the Conversion Price on the Trading Day
next succeeding the expiration Time times
the number of shares of Class A Common Stock
and Class B Common Stock outstanding at the
Expiration Time (including any tendered,
exchanged or purchased shares).
N = The Conversion Price on the Trading Day
next succeeding the Expiration Time times
the number of shares of the Class A Common
Stock and Class B Common Stock outstanding
at the Expiration Time (less any shares
purchased in such tender offer, exchange
offer or other stock repurchase program).
E = the total of such combined amount of
payments and distributions described in the
first paragraph of this Section 4(l).
The reduction shall become effective immediately prior to the
opening of business on the day following the Expiration Time.
(m) In case of any consolidation, amalgamation, arrangement or
merger of the Corporation with or into another person or any merger of another
person with or into the Corporation (other than a merger that does not result in
any reclassification, conversion, exchange or cancellation of any class or
series of the Common Equity), or in case of any sale or transfer of all or
substantially all of the assets of the Corporation, each share of Series C
Preferred Stock then outstanding will, without the consent of the Holder of any
Series C Preferred Stock, become convertible only into the kind and amount of
securities, cash and other property receivable upon such consolidation,
amalgamation, arrangement, merger, sale or transfer by a Holder of the number of
shares of Class A Common Stock (and other securities, if applicable) into which
such Series C Preferred Stock was convertible immediately prior thereto
(assuming such holder of Class A Common Stock (and other securities, if
<PAGE>
applicable) failed to exercise any rights of election and that such Series C
Preferred Stock was then convertible).
(n) In addition, in the event that any other transaction or
event occurs as to which the foregoing conversion price adjustment provisions
are not strictly applicable but the failure to make any adjustment would
adversely affect the conversion rights represented by the Series C Preferred
Stock in accordance with the essential intent and principles of such provisions,
then, in each such case, either (i) the Corporation shall appoint an investment
banking firm of recognized national standing, or any other financial expert that
does not (or whose directors, officers, employees, affiliates or stockholders do
not) have a direct or material indirect financial interest in the Corporation or
any of its Subsidiaries, who has not been, and, at the time it is called upon to
give independent financial advice to the Corporation, is not (and none of its
directors, officers, employees, affiliates or stockholders are) a promoter,
director or officer of the Corporation or any of its Subsidiaries, which will
give their opinion upon or (ii) the Board of Directors shall determine,
consistent with the Board of Directors' fiduciary duties to the Corporation's
stockholders, the adjustment, if any, on a basis consistent with the essential
intent and principles established in the foregoing conversion price adjustment
provisions, necessary to preserve, without dilution, the conversion rights
represented by the Series C Preferred Stock. Upon receipt of such opinion or
determination, the Corporation shall promptly mail a copy thereof to the Holders
of the Series C Preferred Stock and will make the adjustments described therein.
(o) For purposes of any computation respecting consideration
received pursuant to a transaction described or contemplated by this Section 4,
the following shall apply:
(i) in the case of the issuance of shares of Class A
Common Stock or Class B Common Stock for cash, the consideration shall
be the amount of such cash, provided that in no case shall any
deduction be made for any commissions, discounts or other expenses
incurred by the Corporation for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of shares of Class A
Common Stock or Class B Common Stock for a consideration in whole or in
part other than cash, the consideration other than cash shall be deemed
to be the fair market value thereof (irrespective of the accounting
treatment thereof);
(iii) whenever this Certificate of Designations calls
for the determination of "fair market value," such fair market value
shall be determined in good faith by the Board of Directors of the
Corporation and as evidenced by a written resolution thereof; and
(iv) in the case of the issuance of Rights, the
aggregate consideration received therefor shall be deemed to be the
consideration received by the Corporation for the issuance of such
Rights plus the additional minimum consideration, if any, to be
received by the Corporation upon the conversion or exchange or exercise
thereof (the consideration in each case to be determined in the same
manner as provided in this Section 4(o)).
(p) No adjustment in the Conversion Price need be made unless
the adjustment would require an increase or decrease of at least 1% in the
Conversion Price. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 4 shall be made to the nearest one hundredth of a cent or to the nearest
<PAGE>
1/1000th of a share, as the case may be. No adjustment formula set forth in this
Section 4 shall be applied to result in an increase in the Conversion Price.
(q) No adjustment in the Conversion Price need be made under
this Section 4 for (i) rights to purchase Class A Common Stock or Class B Common
Stock pursuant to a Corporation plan for reinvestment of dividends or interest,
or (ii) any change in the par value or no par value of the Class A Common Stock
or Class B Common Stock, and in no event shall any adjustment made under this
Section 4 that would reduce the Conversion Price below the par value of the
Class A Common Stock. If an adjustment is made to the Conversion Price upon the
establishment of a record date for a distribution subject to Sections 4(g) or
4(h) above and if such distribution is subsequently cancelled, the Conversion
Price then in effect shall be readjusted, effective as of the date when the
Board of Directors of the Corporation determines to cancel such distribution, to
the Conversion Price that would have been in effect if such record date had not
been fixed. No adjustment in the Conversion Price need be made under Sections
4(g) and 4(h) above if the Corporation issues or distributes to each Holder of
Series C Preferred Stock the shares of Class A Common Stock, Class B Common
Stock, evidences of indebtedness, assets or Rights referred to in those Sections
that each Holder would have been entitled to receive had the Series C Preferred
Stock been converted into Class A Common Stock prior to the happening of such
event or the record date with respect thereto.
(r) The Corporation shall provide to Holders of Series C
Preferred Stock reasonable notice of any event that would result in an
adjustment to the Conversion Price pursuant to any of the adjustments in this
Section 4 so as to permit the Holders to effect a conversion of shares of Series
C Preferred Stock into shares of Class A Common Stock prior to the occurrence of
such event. The Corporation shall file with the Transfer Agent a certificate
from the Corporation's independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. Subject to Section 4(v)
below, the certificate shall be conclusive evidence that the adjustment is
correct.
(s) The Corporation from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least
20 Business Days and if the reduction is irrevocable during the period, but in
no event may the Conversion Price be less than the par value of a share of Class
A Common Stock. Whenever the Conversion Price is reduced, the Corporation shall
mail to holders of Series C Preferred Stock a notice of the reduction. The
Corporation shall mail, first class, postage prepaid, the notice at least 15
days before the date the reduced conversion price takes effect. The notice shall
state the reduced conversion price and the period it will be in effect. A
reduction of the Conversion Price does not change or adjust the Conversion Price
otherwise in effect for purposes of Sections 4(f), 4(g), 4(h), 4(i), 4(j), 4(k)
and 4(l) above.
(t) If:
(i) the Corporation takes any action which would
require an adjustment in the Conversion Price pursuant to Section 4(g)
or 4(h) above, or clause (iv) of Section 4(f) above;
(ii) the Corporation consolidates or merges with, or
transfers all or substantially all of its assets to, another
corporation, and stockholders of the Corporation must approve the
transaction; or
(iii) there is a dissolution or liquidation of the
Corporation;
<PAGE>
a holder of Series C Preferred Stock may want to convert such stock into shares
of Class A Common Stock prior to the record date for or the effective date of
the transaction so that he may receive the rights, warrants, securities or
assets which a holder of shares of Class A Common Stock on that date may
receive. Therefore, the Corporation shall mail to such holders, first class,
postage prepaid, a notice stating the proposed record or effective date, as the
case may be. The Corporation shall mail the notice at least ten days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (i), (ii) or (iii) of this
Section 4(t).
(u) In any case in which this Section 4 shall require that an
adjustment as a result of any event become effective from and after a record
date, the Corporation may elect to defer until after the occurrence of such
event (i) the issuance to the holder of any shares of Series C Preferred Stock
converted after such record date and before the occurrence of such event of the
additional shares of Class A Common Stock issuable upon such conversion over and
above the shares issuable on the basis of the Conversion Price in effect
immediately prior to adjustment and (ii) a check for any remaining fractional
shares of Class A Common Stock as provided in Section 4(c) above.
(v) Except as provided in the immediately following sentence,
any determination that the Corporation or its Board of Directors must make
pursuant to this Section 4 shall be conclusive. Whenever the Corporation or its
Board of Directors shall be required to make a determination under this Section
4, such determination shall be made in good faith and may be challenged in good
faith by the Holders of a majority of the outstanding shares of Series C
Preferred Stock (with shares held by the Corporation or any of its Affiliates
not being considered to be outstanding for this purpose), and any dispute shall
be resolved by an investment banking firm of recognized national standing
selected by the Corporation and acceptable to such Holders of Series C Preferred
Stock. If such investment banking firm resolves that the adjustment should have
been more favorable to the Holders, the Corporation shall bear the costs of such
firm and if such investment banking firm resolves that such determination was
correct or should have been less favorable to the Holders, the Holders
challenging such determination shall bear the costs of such firm.
(w) All shares of Series C Preferred Stock converted pursuant
to this Section 4 shall be retired and shall be restored to the status of
authorized and unissued shares of convertible exchangeable preferred stock,
without designation as to series and may thereafter be reissued as shares of any
series of convertible exchangeable preferred stock other than Series C Preferred
Stock.
(x) Overdue Conversion Payments shall bear interest at the
rate of 13% per annum.
(y) Except as set forth in this Section 4, none of the
adjustments described in this Section 4 shall duplicate adjustments previously
made or made simultaneously pursuant to other subsections of this Section 4, or
otherwise double count any transaction.
5. Redemption at the Corporation's Option.
(a) The Series C Preferred Stock may be redeemed, in whole or
in part, at the option of the Corporation at any time on or after August 1,
2000, at the Applicable Redemption Price.
(b) In case of redemption of less than all of the shares of
Series C Preferred Stock at the time outstanding, the shares to be redeemed
<PAGE>
shall be selected pro rata or by lot as determined by the Corporation in its
sole discretion.
(c) Notice of any redemption shall be sent by or on behalf of
the Corporation not more than 60 days nor less than 30 days prior to the date
specified for redemption in such notice (the "Redemption Date"), by first class
mail, postage prepaid, to all Holders of record of the Series C Preferred Stock
at their respective last addresses as they shall appear on the books of the
Corporation; provided, however, that no failure to give such notice or any
defect therein or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any shares of Series C Preferred Stock except
as to the Holder to whom the Corporation has failed to give notice or except as
to the Holder to whom notice was defective. In addition to any information
required by law or by the applicable rules of any exchange or quotation system
upon which Series C Preferred Stock may be listed or admitted to trading, such
notice shall state: (i) whether such redemption is being made pursuant to the
optional or the mandatory redemption provisions hereof; (ii) the Redemption
Date; (iii) the Applicable Redemption Price; (iv) the number of shares of Series
C Preferred to be redeemed and, if less than all shares held by such Holder are
to be redeemed, the number of such shares to be redeemed; (v) the place or
places where certificates for such shares are to be surrendered for payment of
the Applicable Redemption Price, including any procedures applicable to
redemptions to be accomplished through book-entry transfers; (vi) that dividends
on the shares to be redeemed will cease to accrue on the Redemption Date; (vii)
the Conversion Price; (viii) that Series C Preferred Stock called for redemption
may be converted at any time before the close of business on the Redemption
Date; and (ix) that Holders of Series C Preferred Stock must satisfy the
requirements of Section 4(b) above if such Holders desire to convert such
shares. Upon the mailing of any such notice of redemption, the Corporation shall
become obligated to redeem at the time of redemption specified thereon all
shares called for redemption.
(d) If notice has been mailed in accordance with Section 5(c)
above and provided that on or before the Redemption Date specified in such
notice, all funds necessary for such redemption shall have been set aside by the
Corporation, separate and apart from its other funds in trust for the pro rata
benefit of the Holders of the shares so called for redemption, so as to be, and
to continue to be available therefor, then, from and after the Redemption Date,
dividends on the shares of the Series C Preferred Stock so called for redemption
shall cease to accrue, and said shares shall no longer be deemed to be
outstanding and shall not have the status of shares of Series C Preferred Stock,
and all rights of the Holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the Applicable Redemption Price) shall
cease. Upon surrender, in accordance with said notice, of the certificates for
any shares so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the Applicable Redemption Price. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate or certificates shall be issued representing the unredeemed shares
without cost to the Holder thereof.
(e) Any funds deposited with a bank or trust company for the
purpose of redeeming Series C Preferred Stock shall be irrevocable except that:
(i) the Corporation shall be entitled to receive from
such bank or trust company the interest or other earnings, if any,
earned on any money so deposited in trust, and the Holders of any
shares redeemed shall have no claim to such interest or other earnings;
and
<PAGE>
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the Holders of the Series C Preferred
Stock entitled thereto at the expiration of two years from the
applicable Redemption Date shall be repaid, together with any interest
or other earnings earned thereon, to the Corporation, and after any
such repayment, the Holders of the shares entitled to the funds so
repaid to the Corporation shall look only to the Corporation for
payment without interest or other earnings.
(f) No Series C Preferred Stock may be redeemed except with
funds legally available for the purpose. The Corporation shall take all actions
required or permitted under Delaware Law to permit any such redemption.
(g) Notwithstanding the foregoing provisions of this Section
5, unless the full cumulative dividends on all outstanding shares of Series C
Preferred Stock shall have been paid or contemporaneously are declared and paid
for all past dividend periods, none of the shares of Series C Preferred Stock
shall be redeemed unless all outstanding shares of Series C Preferred Stock are
simultaneously redeemed.
(h) All shares of Series C Preferred Stock redeemed pursuant
to this Section 5 shall be restored to the status of authorized and unissued
shares of preferred stock, without designation as to series and may thereafter
be reissued as shares of any series of preferred stock other than shares of
Series C Preferred Stock.
6. Voting Rights.
(a) The Holders of record of shares of Series C Preferred
Stock shall not be entitled to any voting rights except as hereinafter provided
in this Section 6 or as otherwise provided by law.
(b) If and upon:
(i) the accumulation of accrued and unpaid dividends
on the outstanding Series C Preferred Stock in an amount equal to six
(6) full quarterly dividends (whether or not consecutive);
(ii) the failure of the Corporation to honor its
obligations with respect to any share of Series C Preferred Stock upon
conversion thereof pursuant to Section 4 hereof;
(iii) in the event that all shares of Series C
Preferred Stock have not been converted into shares of Class A Common
Stock by August 1, 2009, the Series C Preferred Stock shall not have
been redeemed by the Corporation by such date in accordance with
Section 5;
(iv) the failure of the Corporation to comply with
any of the other covenants or agreements set forth in this Certificate
of Designations and the continuance of such failure for 45 consecutive
days or more (each of the events described in clauses 6(b)(i) through
(iv) being referred to herein as a "Voting Rights Trigger Event");
then the authorized number of members of the Corporation's Board of Directors
will be immediately and automatically increased by two, and the Holders of a
majority of the outstanding shares of Series C Preferred Stock, voting
separately as a class, shall be entitled to elect two directors of the
Corporation.
<PAGE>
(c) Whenever such voting right shall have vested, such right
may be exercised initially either by written consent or at a special meeting of
the Holders of Series C Preferred Stock, called as hereinafter provided, or at
any annual meeting of stockholders held for the purpose of electing directors,
and thereafter at such annual meetings or by the written consent of the Holders
of Series C Preferred Stock. Such right of the Holders of Series C Preferred
Stock to elect directors may be exercised until (i) all dividends in arrears
shall have been paid in full and (ii) all other Voting Rights Trigger Events
have been cured or waived, at which time the right of the Holders of Series C
Preferred Stock to elect such number of directors shall cease, the term of such
directors previously elected shall thereupon terminate at the end of the quarter
first commencing after such voting rights terminate, and the authorized number
of directors of the Corporation shall thereupon return to the number of
authorized directors otherwise in effect, but subject always to the same
provisions for the renewal and divestment of such special voting rights in the
case of any such future Voting Rights Trigger Events.
(d) At any time when such voting right shall have vested in
the Holders of Series C Preferred Stock and if such right shall not already have
been initially exercised, a proper officer of the Corporation shall, upon the
written request of Holders of record of 10% or more of the Series C Preferred
Stock then outstanding, addressed to the Secretary of the Corporation, call a
special meeting of Holders of Series C Preferred Stock. Such meeting shall be
held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Corporation or, if none, at a place designated by a
majority-in-interest of the Holders of Series C Preferred Stock requesting such
meeting. If such meeting shall not be called by the proper officers of the
Corporation within 30 days after the personal service of such written request
upon the Secretary of the Corporation, or within 30 days after mailing the same
within the United States, by registered mail, addressed to the Secretary of the
Corporation at its principal office (such mailing to be evidenced by the
registry receipt issued by the postal authorities), then the Holders of record
of 10% of the shares of Series C Preferred Stock then outstanding may designate
in writing a Holder of Series C Preferred Stock to call such meeting at the
expense of the Corporation, and such meeting may be called by such person so
designated upon the notice required for annual meetings of stockholders and
shall be held at the place for holding annual meetings of the Corporation or, if
none, at a place designated by such Holder. Any Holder of Series C Preferred
Stock that would be entitled to vote at such meeting shall have access to the
stock books of the Corporation for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this Section.
Notwithstanding the provisions of this paragraph, however, no such special
meeting shall be called if any such request is received less than 90 days before
the date fixed for the next ensuing annual or special meeting of stockholders.
The Corporation shall pay all expenses incurred in connection with holding such
special meeting and all reasonable expenses incurred in connection with the
solicitation of votes or proxies from the Holders of the Series C Preferred
Stock. Any director elected pursuant to this Section 6(d) shall be entitled to
receive the same fees and reimbursement of expenses as may be provided to the
rest of the directors of the Corporation.
(e) If a director so elected by the Holders of Series C
Preferred Stock shall cease to serve as a director before his term shall expire,
the Holders of Series C Preferred Stock then outstanding may, at a special
meeting of the Holders called as provided above, elect a successor to hold
office for the unexpired term of the director whose place shall be vacant.
(f) The Corporation shall not, without the affirmative vote or
consent of the Holders of a majority of the then outstanding shares of Series C
<PAGE>
Preferred Stock (with shares held by the Corporation not being considered to be
outstanding for this purpose):
(i) authorize, create (by way of reclassification or
otherwise) or issue any Parity Securities, or any obligation or
security convertible into or evidencing the right to purchase any
Parity Securities (except for issuances as provided in the
Corporation's Certificate of Designations as in effect on the Initial
Issue Date with respect to its Series A Preferred Stock and its Series
B Preferred Stock); provided that the redesignation of the Company's
unissued Series B Preferred Stock as Series A Preferred Stock, or of
its unissued or issued but not outstanding Series A Preferred Stock for
the purpose of paying pay-in-kind dividends on either its Series A
Preferred Stock or its Series B Preferred Stock shall not require the
consent of the Holders of the Series C Preferred Stock as provided in
this Section 6; or
(ii) amend or otherwise alter its Certificate of
Incorporation in any manner that adversely affects the rights of
Holders of Series C Preferred Stock or the holders of Class A Common
Stock.
(g) Without the consent of each Holder affected, an amendment
or waiver may not (with respect to any shares of Series C Preferred Stock held
by a non-consenting Holder):
(i) alter the voting rights with respect to the
Series C Preferred Stock or reduce the number of shares of Series C
Preferred Stock whose Holders must consent to an amendment, supplement
or waiver;
(ii) alter the provisions with respect to the
redemption of the Series C Preferred Stock or waive a redemption
payment with respect to any share of Series C Preferred Stock;
(iii) reduce the Liquidation Preference of any share
of Series C Preferred Stock;
(iv) reduce the rate of or change the time for
payment of dividends on any share of Series C Preferred Stock;
(v) alter the provisions with respect to the
conversion rights of the Series C Preferred Stock;
(vi) waive a default or event of default in the
payment of dividends (if any) on the Series C Preferred Stock;
(vii) make any share of Series C Preferred Stock
payable in money other than that stated in this Certificate of
Designations;
(viii) make any change in the provisions of this
Certificate of Designations relating to waivers of the rights of
Holders of Series C Preferred Stock to receive the Liquidation
Preference, dividends (if any) on the Series C Preferred Stock; or
(viii) make any change in the foregoing amendment
and waiver provisions.
(h) The Corporation shall not, without the consent of at least
<PAGE>
66-2/3% of the then outstanding shares of Series C Preferred Stock (with shares
held by the Corporation not being considered to be outstanding for this
purpose), authorize, create (by way of reclassification or otherwise) or issue
any Senior Securities or any obligation or security convertible or exchangeable
into or evidencing a right to purchase, shares of any class or series of Senior
Securities.
(i) The Corporation in its sole discretion may without the
vote or consent of any Holders of the Series C Preferred Stock amend or
supplement this Certificate of Designations:
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to provide for uncertificated Series C Preferred
Stock in addition to or in place of certificated Series C Preferred
Stock; or
(iii) to make any change that would provide any
additional rights or benefits to the Holders of the Series C Preferred
Stock or that does not adversely affect the legal rights or benefits
under this Certificate of Designations of any such Holder.
7. Certain Covenants.
(a) Payments for Consent. Neither the Corporation nor any of
its Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of dividend or other distribution, fee or
otherwise, to any Holder of any Series C Preferred Stock for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Certificate of Designations or the Series C Preferred Stock unless such
consideration is offered to be paid and is paid to all Holders of the Series C
Preferred Stock that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
(b) Reports.
(i) Whether or not required by the rules and
regulations of the Securities and Exchange Commission (the
"Commission"), so long as any shares of Series C Preferred Stock are
outstanding, the Corporation shall furnish to the Holders of Series C
Preferred Stock (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on
Forms 10-Q and 10-K if the Corporation were required to file such
Forms, including "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 Corporation's certified
independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if the Corporation
were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the
Corporation shall file a copy of all such information and reports with
the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request. In addition, for so
long as any Series C Preferred Stock remains outstanding, the
Corporation 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.
<PAGE>
(ii) The Corporation shall deliver to the Holders,
within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Corporation
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 Corporations has kept, observed, performed and
fulfilled its obligations under this Certificate of Designations and
further stating, as to each such officer signing such certificate, that
to the best of his or her knowledge the Corporation has kept, observed,
performed and fulfilled each and every covenant contained in this
Certificate of Designations and is not in default in the performance or
observance of any of the terms, provisions and conditions of this
Certificate of Designations (or, if any such default shall have
occurred, describing all such defaults of which he or she may have
knowledge and what action the Corporation 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 Liquidation Preference of or dividends, if any, on
the Series C Preferred Stock is prohibited or if such event has
occurred, a description of the event and what action the Corporation is
taking or proposes to take with respect thereto.
(iii) 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 7(b)(i) above shall be accompanied by a written statement of
the Corporation'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
Corporation has violated any provisions of this Certificate of
Designations or, if any such violation has 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.
(iv) The Corporation shall, so long as any of the
shares of Series C Preferred Stock are outstanding, deliver to the
Holders, forthwith upon any Executive Officer of the Corporation
becoming aware of any default under this Certificate of Designations,
an Officers' Certificate specifying such default and what action the
Corporation is taking or proposes to take with respect thereto.
(c) Conflicts with By-laws. If any provisions of the
Corporation's By-laws conflict in any way with this Certificate of Designations,
the Corporation shall, so long as any of the shares of Series C Preferred Stock
are outstanding, take all necessary actions to amend such By-laws and thereby
resolve the conflict.
8. Payment and Conversion.
(a) All amounts payable in cash with respect to the Series C
Preferred Stock shall be payable in United States dollars at the office or
agency of the Corporation maintained for such purpose within the City and State
of New York or, at the option of the Corporation, payment of dividends (if any)
may be made by check mailed to the Holders of the Series C Preferred Stock at
their respective addresses set forth in the register of Holders of Series C
Preferred Stock maintained by the Transfer Agent, provided that all cash
payments with respect to the Global Shares (as defined below) and shares of
<PAGE>
Series C Preferred Stock the Holders of which have given wire transfer
instructions to the Corporation will be required to be made by wire transfer of
immediately available funds to the accounts specified by the Holders thereof.
Unless otherwise designated by the Corporation, the Corporation's office or
agency in New York shall be the office of the Paying Agent maintained for such
purpose.
(b) Any payment on the Series C Preferred Stock due on any day
that is not a Business Day need not be made on such day, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
due date.
(c) The Corporation has initially appointed the Transfer Agent
to act as the Paying Agent and Conversion Agent. The Corporation may at any time
terminate the appointment of any Paying Agent or Conversion Agent and appoint
additional or other Paying Agents and Conversion Agents, provided that until the
Series C Preferred Stock has been delivered to the Corporation for cancellation,
or moneys sufficient to pay the Liquidation Preference and accrued dividends (if
any) on the Series C Preferred Stock have been made available for payment and
either paid or returned to the Corporation as provided in this Certificate of
Designations, it shall maintain an office or agency in the Borough of Manhattan,
The City of New York for surrender of Series C Preferred Stock for conversion.
(d) All moneys deposited with any Paying Agent or then held by
the Corporation in trust for the payment of the Liquidation Preference and
dividends (if any) on any shares of Series C Preferred Stock which remain
unclaimed at the end of two years after such payment has become due and payable
will be repaid to the Corporation, and the Holder of such shares of Series C
Preferred Stock will thereafter look only to Corporation for payment thereof.
9. Officers' Certificate.
Each Officers' Certificate provided for in this Certificate of
Designations shall include:
(a) a statement that the officer 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 officer, 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
officer, such condition or covenant has been satisfied.
10. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of
Series C Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than those
specifically set forth in this Certificate of Designations (as such Certificate
of Designations may be amended from time to time) and in the Certificate of
Incorporation. The shares of Series C Preferred Stock shall have no preemptive
or subscription rights.
<PAGE>
11. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
12. Severability of Provisions.
If any voting powers, preferences and relative, participating,
optional and other special rights of the Series C Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as such resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof unless so expressed herein.
[The remainder of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be duly executed by Timothy J. Rigas, Executive Vice President
and Chief Financial Officer, and attested by Colin Higgin, its assistant
secretary, this 2nd day of July, 1997.
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ Timothy J. Rigas
Timothy J. Rigas
Executive Vice President and
Chief Financial Officer
ATTEST:
By: /s/ Colin Higgin
Colin Higgin
Assistant Secretary
<PAGE>
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
5 1/2% SERIES D CONVERTIBLE PREFERRED STOCK
OF
ADELPHIA COMMUNICATIONS CORPORATION
----------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------
Adelphia Communications Corporation, a Delaware corporation (the
"Company"), certifies that pursuant to the authority contained in Article Fourth
of its Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware (the "DGCL"), the Series D
Preferred Stock Committee (the "Committee") of the Board of Directors of the
Company (the "Board of Directors") at a meeting held on April 26, 1999, duly
approved and adopted the following resolution which resolution remains in full
force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Committee by the
Board of Directors and by the Certificate of Incorporation, the Committee does
hereby designate, create, authorize and provide for the issue of a series of
preferred stock having a par value of $.01 per share, with a liquidation
preference of $200.00 per share subject to adjustment as provided in Section 7
hereof (the "Liquidation Preference") which shall be designated as 5 1/2% Series
D Convertible Preferred Stock (the "Convertible Preferred Stock") consisting of
2,875,000 shares, no shares of which have heretofore been issued by the Company,
having the following powers, designations, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations and restrictions:
1. Ranking. The Convertible Preferred Stock shall rank, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (i) senior to the Class A Common Stock, par value
$.01 per share, of the Company (the "Class A Common Stock"), the Class B Common
Stock, par value $.01 per share, of the Company (the "Class B Common Stock" and,
together with the Class A Common Stock, the "Common Stock") and to each other
class or series of stock of the Company (including any series of preferred stock
<PAGE>
established after April 26, 1999 by the Board of Directors) the terms of which
do not expressly provide that it ranks senior to or on a parity with the
Convertible Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Junior Securities"); (ii) on a parity with the Company's 13%
Series B cumulative exchangeable preferred stock, par value $.01 per share (the
"Series B Exchangeable Preferred Stock") and the Company's 8-1/8% Series C
cumulative convertible preferred stock, par value $.01 per share (the "Series C
Cumulative Preferred Stock" and, together with the Series B Exchangeable
Preferred Stock, the "Preferred Stock"), except that no cash dividend
distributions nor any distributions may be declared or paid on, nor any
redemptions made with respect to the Series B Exchangeable Preferred Stock or
the Convertible Preferred Stock unless full cumulative dividends have been paid
on all outstanding shares of Series C Cumulative Preferred Stock for all prior
dividend periods; and (iii) junior to any equity security, the terms of which
expressly provide that such class or series will rank senior to the Convertible
Preferred Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Equity Securities"). The Convertible Preferred Stock shall constitute "Parity
Securities" under the Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof for the Series B
Exchangeable Preferred Stock and the Series C Cumulative Preferred Stock as
defined therein.
2. Dividends.
(A) The holders of shares of the Convertible Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the Board of
Directors out of funds of the Company legally available therefor, cash
dividends, accruing from the date of issuance (the "Convertible Preferred Stock
Issue Date") or the most recent Dividend Payment Date on which dividends have
been paid at the rate per annum of 5 1/2% of the Liquidation Preference per
share (initially equivalent to $11.00 per annum per share of Convertible
Preferred Stock), payable quarterly in arrears on each May 1, August 1, November
1 and February 1, commencing on August 1, 1999 (each a "Dividend Payment Date").
If any such date is not a Business Day, such payment shall be made on the next
succeeding Business Day. In either case such payments shall be made to the
holders of record as of a date preceding the Dividend Payment Date as determined
by the Board of Directors (each, a "Record Date"). Dividends payable on the
Convertible Preferred Stock will be computed on the basis of a 360-day year
consisting of twelve 30-day months and will be deemed to accrue on a daily
basis.
(B) On each Dividend Payment Date all dividends which shall have
accrued on each share of Convertible Preferred Stock outstanding on such
Dividend Payment Date shall accumulate and be deemed to become "due" whether or
not there shall be funds legally available for payment thereof and whether or
not dividends are declared. Any dividend which shall not be paid on the Dividend
Payment Date on which it shall become due (whether because of the absence of
legally available funds for the payment thereof or otherwise) shall be deemed to
be "past due" until such dividend shall be paid or until the share of
Convertible Preferred Stock with respect to which such dividend became due shall
no longer be outstanding, whichever is the earlier to occur. No interest, sum of
money in lieu of interest, or other property or securities shall be payable in
<PAGE>
respect of any dividend payment or payments which are past due. Dividends paid
on shares of Convertible Preferred Stock in an amount less than the total amount
of such dividends at the time accumulated and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.
(C) If dividends are not paid in full, or declared in full and sums set
aside for the payment thereof, upon the Convertible Preferred Stock and any
equity security, the terms of which expressly provide that such class or series
will rank on a parity with the Convertible Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the Company (collectively referred to as "Parity Securities"), subject to the
prior rights of holders of any Senior Equity Securities and the Series C
Cumulative Preferred Stock, all dividends declared upon shares of the
Convertible Preferred Stock and such Parity Securities will when, as and if
declared, be declared pro rata so that in all cases the amount of dividends
declared and paid per share on the Convertible Preferred Stock and such Parity
Securities will bear to each other the same ratio that accumulated dividends per
share on the shares of Convertible Preferred Stock and such Parity Securities
bear to each other. Except as set forth above, unless full cumulative dividends
on the Convertible Preferred Stock have been paid, or declared and sums set
aside for the payment thereof, dividends (other than in Common Stock or other
Junior Securities) may not be paid, or declared and sums set aside for payment
thereof, and other distributions may not be made upon the Common Stock or other
Junior Securities; and no shares of Common Stock nor any other Junior Securities
may be redeemed, purchased or otherwise acquired for any consideration by the
Company (except by conversion into or exchange for other Junior Securities and
except for capital stock acquired by the Company in connection with the payment
of any amounts upon the exercise of the Company's stock options).
(D) Dividends on the Convertible Preferred Stock shall accrue without
interest whether or not the Company has earnings or profits, whether or not
there are funds legally available for the payment of such dividends and whether
or not dividends are declared. Dividends will accumulate to the extent they are
not paid on the Dividend Payment Date for the period to which they relate.
(E) Any reference to "distribution" contained in this Section 2 shall
not be deemed to include any distribution made in connection with any
liquidation, winding-up or dissolution of the Company.
3. Conversion.
(A) Subject to and upon compliance with the provisions of this Section
3, each share of Convertible Preferred Stock shall, at the option of the holder
thereof, be convertible at any time (unless such share is called for redemption,
then to and including but not after the close of business on the date
immediately prior to the Redemption Date (as defined herein), unless the Company
shall default in payment due upon redemption thereof), into that number of fully
paid and non-assessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100,000th of a share) obtained by dividing $200.00
by the Conversion Price in effect at such time and by surrender of the
<PAGE>
certificate or certificates representing such shares so to be converted in the
manner provided in Section 3(B).
(B) To convert Convertible Preferred Stock, the holder of one or more
shares of Convertible Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares at any of the offices or
agencies to be maintained for such purpose by the Company accompanied by the
funds, if any, required by the last paragraph of this Section 3(B) and shall
give written notice of conversion in the form provided on such shares of
Convertible Preferred Stock (or such other notice as is acceptable to the
Company) to the Company at such office or agency that the holder elects to
convert the shares of Convertible Preferred Stock specified in said notice. Such
notice shall also state the name or names, together with address or addresses,
in which the certificate or certificates for shares of Class A Common Stock
which shall be issuable in such conversion shall be issued. Each certificate
representing a share of Convertible Preferred Stock surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the name in which such share is registered, be accompanied by
instruments of transfer, in form satisfactory to the Company, duly executed by
the holder or his duly authorized attorney and an amount sufficient to pay any
transfer or similar tax. As promptly as practicable after the surrender of
certificates representing such shares of Convertible Preferred Stock and the
receipt of such notice, instruments of transfer and funds, if any, as aforesaid,
the Company shall issue and shall deliver at such office or agency to such
holder, or as designated in such holder's written instructions, a certificate or
certificates for the number of full shares of Class A Common Stock issuable upon
the conversion of such shares of Convertible Preferred Stock in accordance with
the provisions of this Section 3 and a check or cash in respect of any
fractional interest in a share of Class A Common Stock arising upon such
conversion, as provided in Section 3(C).
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which certificates representing such
shares of Convertible Preferred Stock shall have been surrendered and such
notice (and any applicable instruments of transfer and any required taxes)
received by the Company as aforesaid, and the person or persons in whose name or
names any certificate or certificates for shares of Class A Common Stock shall
be issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date,
and such conversion shall be at the Conversion Price in effect at such time on
such date, unless the stock transfer books of the Company shall be closed on
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date upon which certificates representing
such shares of Convertible Preferred Stock shall have been surrendered and such
notice received by the Company.
Holders of Convertible Preferred Stock at the close of business on a
Record Date will be entitled to receive an amount equal to the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such Record Date and prior to such Dividend
Payment Date; provided, however, that Convertible Preferred Stock surrendered
<PAGE>
for conversion during the period between the close of business on any Record
Date and the opening of business on the corresponding Dividend Payment Date
(except shares converted after the issuance of a notice of redemption with
respect to a Redemption Date during such period or coinciding with such Dividend
Payment Date, which will be entitled to such dividend) must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of Convertible Preferred Stock on a Record Date
who (or whose transferee) tenders any such shares for conversion into shares of
Class A Common Stock on such Dividend Payment Date will receive the dividend
payable by the Company on such shares of Convertible Preferred Stock on such
date, and the converting holder need not include payment of the amount of such
dividend upon surrender of Convertible Preferred Stock for conversion. Except as
provided herein, the Company will make no payment or allowance for unpaid
dividends, whether or not in arrears, on converted shares or for dividends on
the Class A Common Stock issued upon such conversion.
(C) No fractional shares or scrip representing fractions of shares of
Class A Common Stock shall be issued upon conversion of Convertible Preferred
Stock. If more than one share of Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Class A Common Stock issuable upon conversion thereof shall be
computed on the basis of the Liquidation Preference for each such share so
surrendered. In lieu of any fractional interest in a share of Class A Common
Stock which would otherwise be deliverable upon the conversion of any shares of
Convertible Preferred Stock, the Company shall pay to the holder of such shares
an amount in cash (computed to the nearest cent) equal to the closing price (as
defined in Section 5 hereof) on the Business Day next preceding the day of
conversion multiplied by the fractional interest that otherwise would have been
deliverable upon conversion of such share.
(D) The "Conversion Price" shall mean and be $81.45, subject to
adjustment from time to time by the Company as follows:
(i) In case the Company shall (a) pay a dividend or make a
distribution in shares of Common Stock on its Class A Common Stock, (b)
subdivide its outstanding shares of Class A Common Stock into a greater
number of shares, (c) combine its outstanding shares of Class A Common
Stock into a smaller number of shares, or (d) issue by reclassification
of its Class A Common Stock any shares of capital stock of the Company,
then in each such case the Conversion Price in effect immediately prior
to such action shall be adjusted so that the holder of any share of
Convertible Preferred Stock thereafter surrendered for conversion shall
be entitled to receive the number of shares of Class A Common Stock or
other capital stock of the Company which such holder would have owned
or been entitled to receive immediately following such action had such
share of Convertible Preferred Stock been converted immediately prior
to the occurrence of such event. An adjustment made pursuant to this
subsection (i) shall become effective immediately after the record
date, in the case of a dividend or distribution, or immediately after
the effective date, in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to
this subsection (i), the holder of any share of Convertible Preferred
Stock thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes of capital stock or shares of
Class A Common Stock and other capital stock of the Company, the Board
<PAGE>
of Directors (whose determination shall be conclusive and shall be
described in a statement filed by the Company with the Transfer Agent)
shall determine the allocation of the adjusted Conversion Price between
or among shares of such classes of capital stock or shares of Class A
Common Stock and other capital stock.
(ii) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Class A Common Stock entitling
them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase shares of Common Stock at
a price per share less than the current market price per share (as
determined pursuant to subsection (iv) of this Section 3(D)) of the
Common Stock (other than pursuant to any stock option, restricted stock
or other incentive or benefit plan or stock ownership or purchase plan
for the benefit of employees, directors or officers or any dividend
reinvestment plan of the Company in effect at the time hereof or any
other similar plan adopted or implemented hereafter), then the
Conversion Price in effect immediately prior thereto shall be adjusted
so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the record date by a
fraction of which the numerator shall be the number of shares of Class
A Common Stock outstanding on the record date plus the number of Shares
which the aggregate proceeds to the Company from the exercise of such
rights or warrants would purchase at such current market price, and of
which the denominator shall be the number of shares of Class A Common
Stock outstanding on the record date plus the number of additional
shares of Common Stock offered for subscription or purchase. Such
adjustment shall be made successively whenever any rights or warrants
are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
rights or warrants; provided, however, in the event that all the Shares
of Common Stock offered for subscription or purchase are not delivered
upon the exercise of such rights or warrants, upon the expiration of
such rights or warrants the Conversion Price shall be readjusted to the
Conversion Price which would have been in effect had the numerator and
the denominator of the foregoing fraction and the resulting adjustment
been made based upon the number of shares of Common Stock actually
delivered upon the exercise of such rights or warrants rather than upon
the number of shares of Common Stock offered for subscription or
purchase. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less
than such current market price, and in determining the aggregate
offering price of such shares of Common Stock, there shall be taken
into account any consideration received by the Company for such rights
or warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Company
with the Transfer Agent).
(iii) In case the Company shall, by dividend or otherwise,
distribute to all holders of its outstanding Class A Common Stock any
capital stock (other than Common Stock), evidences of its indebtedness
or assets or rights or warrants to subscribe for or purchase securities
of the Company (excluding rights and warrants referred to in subsection
(ii) of this Section 3(D) and dividends or distributions payable in
stock for which adjustment is made pursuant to subsection (i) of this
<PAGE>
Section 3(D) and dividends and distributions paid in cash out of the
retained earnings of the Company and distributions upon mergers or
consolidations to which Section 3(H) applies), then in each such case
the Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effective
immediately prior to the record date of such distribution by a fraction
of which the numerator shall be the current market price per share as
determined pursuant to subsection (iv) of this Section 3(D) of the
Class A Common Stock less the fair market value on such record date (as
determined by the Board of Directors, whose determination shall be
conclusive and shall be described in a statement filed by the Company
with the Transfer Agent) of the portion of the capital stock or assets
or the evidences of indebtedness or assets so distributed to the holder
of one share of Class A Common Stock or of such subscription rights or
warrants applicable to one share of Class A Common Stock, and of which
the denominator shall be such current market price per share of Class A
Common Stock. Such adjustment shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such distribution.
The occurrence of a distribution or the occurrence of any
other event as a result of which holders of Convertible Preferred Stock
shall not be entitled to receive rights, including exchange rights (the
"Rights"), pursuant to any stockholders protective rights agreement
(the "Rights Agreement") that may be adopted by the Company as if such
holders had converted such shares into Class A Common Stock immediately
prior to the occurrence of such distribution or event shall not be
deemed a distribution of securities for the purpose of any Conversion
Price adjustment pursuant to this subparagraph (iii) or otherwise give
rise to any Conversion Price adjustment pursuant to this Section 3;
provided, however, that in lieu of any adjustment to the Conversion
Price as a result of any such a distribution or occurrence, the Company
shall make provision so that Rights, to the extent issuable at the time
of conversion of any shares of Convertible Preferred Stock into shares
of Class A Common Stock, shall issue and attach to such shares of Class
A Common Stock then issued upon conversion in the amount and manner and
to the extent and as provided in the Rights Agreement in respect of
issuances at the time of Class A Common Stock other than upon
conversion.
(iv) For the purpose of any computation under subsections (ii)
and (iii) of this Section 3(D), the current market price per share of
Class A Common Stock on any date shall be deemed to be the average of
the closing price (as defined in Section 5(B) hereof) of the Class A
Common Stock for the shorter of (a) 20 consecutive trading days (as
defined in Section 5) ending on the last full trading day prior to the
Time of Determination or (b) the period commencing on the date next
succeeding the first public announcement of the issuance of such rights
or warrants or such distribution through such last full trading day
prior to the Time of Determination. For purposes of the foregoing, the
term "Time of Determination" shall mean the time and date of the
earlier of (I) the record date for determining stockholders entitled to
receive the rights, warrants or distributions referred to in Section
3(D)(ii) and (iii) or (II) the commencement of "ex-dividend" trading on
the exchange or market referred to in the definition of "closing
price."
<PAGE>
For the purpose of any computation under subsections (ii) and
(iii) of this Section 3(D), the current market price per share of Class
B Common Stock on any date shall be as determined by an independent
investment banking or appraisal firm of recognized national standing.
(v) In any case in which this Section 3(D) shall require that
an adjustment be made immediately following a record date or an
effective date the Company may elect to defer (but only until the
filing by the Company with the Transfer Agent of the certificate
required by subsection (vii) of this Section 3(D)) issuing to the
holder of any share of Convertible Preferred Stock converted after such
record date or effective date the shares of Class A Common Stock
issuable upon such conversion over and above the shares of Class A
Common Stock issuable upon such conversion on the basis of the
Conversion Price prior to adjustment, and paying to such holder any
amount of cash in lieu of a fractional share.
(vi) Notwithstanding anything to the contrary contained in
this Section 3, no adjustment in the Conversion Price shall be required
to be made unless such adjustment would require an increase or decrease
of at least one percent of such price; provided, however, that any
adjustment which by reason of this subsection (vi) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 3(D) shall
be made to the nearest cent or to the nearest 1/100,000th of a share,
as the case may be. Anything in this Section 3(D) to the contrary
notwithstanding, the Company shall be entitled to make such reduction
in the Conversion Price, in addition to those required by this Section
3(D), as it in its discretion shall determine to be advisable in order
that any stock dividend, subdivision of shares, distribution of rights
to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable to the recipients.
Except as set forth in subsections (i), (ii) and (iii) above, the
Conversion Price shall not be adjusted for the issuance of Class A
Common Stock, or any securities convertible into or exchangeable for
Class A Common Stock or carrying the right to purchase any of the
foregoing, in exchange for cash, property or services.
(vii) Whenever the Conversion Price is adjusted as herein
provided, (A) the Company shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment
and a brief statement of the facts requiring such adjustment and the
manner of computing the same, which certificate shall be conclusive
evidence of the correctness of such adjustment, and (B) the Company
shall also mail or cause to be mailed by first class mail, postage
prepaid, as soon as practicable to each holder of record of shares of
Convertible Preferred Stock a notice stating that the Conversion Price
has been adjusted and setting forth the adjusted Conversion Price. The
Transfer Agent shall not be under any duty or responsibility with
respect to the certificate required by this subsection (vii) except to
exhibit the same to any holder of shares of Convertible Preferred Stock
who requests to inspect it.
<PAGE>
(viii) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of this Section 3(D), the
holder of any share of Convertible Preferred Stock thereafter
surrendered for conversion shall become entitled to receive any shares
of the Company other than shares of Class A Common Stock, thereafter
the Conversion Price of such other shares so receivable upon conversion
of any share of Convertible Preferred Stock shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to Class A
Common Stock contained in this Section.
(ix) The Company from time to time may decrease the Conversion
Price by any amount for any period of time if the period is at least 20
days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Company shall mail to holders of
record of shares of Convertible Preferred Stock a notice of the
decrease at least 15 days before the date the decreased Conversion
Price takes effect, and such notice shall state the decreased
Conversion Price and the period it will be in effect.
(E) In Case:
(i) the Company shall take any action which would require an
adjustment in the Conversion Price pursuant to Section 3(D); or
(ii) the Company shall authorize the granting to the holders
of its Class A Common Stock generally of rights or warrants to
subscribe for or purchase any shares of stock of any class or of any
other rights (other than Rights to which the second paragraph of
subparagraph (D)(iii) of this Section 3 applies); or
(iii) there shall be any reorganization or reclassification of
the Class A Common Stock (other than an event to which subparagraph
(D)(i) of this Section 3 applies) or any merger or consolidation to
which the Company is a party or any sale or transfer of all or
substantially all of the property and assets of the Company, in each
case for which approval of any stockholders of the Company is required;
or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then in each such case the Company shall cause to be given to the holders of
shares of Convertible Preferred Stock and the Transfer Agent as promptly as
possible, but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such action or granting of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Class A Common
Stock of record to be entitled to such distribution, rights or warrants are to
be determined, or (ii) the date on which such reorganization, reclassification,
merger, consolidation, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected
that holders of Class A Common Stock of record shall be entitled to exchange
their shares of Class A Common Stock for securities, cash or other property
<PAGE>
deliverable upon such reorganization, reclassification, merger, consolidation,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice or any defect therein shall not affect the legality or validity or the
proceedings described in subsection (i), (ii), (iii) or (iv) of this Section
3(E).
(F) The Company shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
shares of Class A Common Stock or its issued shares of Class A Common Stock held
in its treasury, or both, for the purpose of effecting conversions of shares of
Convertible Preferred Stock, the full number of shares of Class A Common Stock
deliverable upon the conversion of all outstanding shares of Convertible
Preferred Stock not theretofore converted and on or before (and as a condition
of) taking any action that would cause an adjustment of the Conversion Price
resulting in an increase in the number of shares of Class A Common Stock
deliverable upon conversion above the number thereof previously reserved and
available therefor, the Company shall take all such action so required. For
purposes of this Section 3(F), the number of shares of Class A Common Stock
which shall be deliverable upon the conversion of all outstanding shares of
Convertible Preferred Stock shall be computed as if at the time of computation
all outstanding shares of Convertible Preferred Stock were held by a single
holder.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Class A
Common Stock deliverable upon conversion of the shares of Convertible Preferred
Stock, the Company shall take any corporate action (including shareholder
action) which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable shares of
Class A Common Stock at such adjusted Conversion Price.
(G) The Company shall pay any and all documentary stamp, issue or
transfer taxes, and any other similar taxes payable in respect of the issue or
delivery of shares of Class A Common Stock upon conversion of shares of
Convertible Preferred Stock pursuant hereto; provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of shares of Class A Common Stock in
a name other than that of the holder of the shares of Convertible Preferred
Stock to be converted and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the Company the
amount of any such tax or has established, to the satisfaction of the Company,
that such tax has been paid.
(H) Notwithstanding any other provision herein to the contrary, in case
of any merger or consolidation to which the Company is a party (other than a
merger or consolidation in which the Company is the continuing entity and in
which the Class A Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, or the securities or other property of
another entity), or in the case of any sale or transfer of all or substantially
all of the Company's property and assets to another entity, or in the case of
any statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition), there will be no adjustment of the
Conversion Price, and lawful provision shall be made by the entity formed by
such consolidation or the entity whose securities, cash or other property will
<PAGE>
immediately after the merger or consolidation be owned, by virtue of the merger
or consolidation, by the holders of Class A Common Stock immediately prior to
the merger or consolidation, or the entity which shall have acquired such assets
of the Company, such that each share of Convertible Preferred Stock then
outstanding will, without the consent of the holder thereof become convertible
into the kind and amount of securities, cash or other property receivable upon
such merger, consolidation, sale or transfer by a holder of the number of shares
of Class A Common Stock into which such share of Convertible Preferred Stock was
convertible immediately prior to such merger, consolidation, sale or transfer
assuming such holder of Class A Common Stock did not exercise his rights of
election, if any, as to the kind or amount of securities, cash or other property
receivable upon such merger, consolidation, sale or transfer. In the case of a
cash merger of the Company into another entity or any other cash transaction of
the type mentioned in this Section 3(H), each share of Convertible Preferred
Stock will thereafter be convertible at the Conversion Price in effect at such
time into the same amount of cash per share into which each share of Convertible
Preferred Stock would have been convertible had such share been converted into
Class A Common Stock immediately prior to the effective date of such cash merger
or transaction.
The above provisions of this Section 3(H) shall similarly apply to
successive mergers, consolidations, sales or transfers.
(I) The Company covenants that all shares of Class A Common Stock which
may be delivered upon conversion of shares of Convertible Preferred Stock will
upon delivery be duly and validly issued and fully paid and non-assessable.
The Company covenants that if any shares of Class A Common Stock to be
provided for the purpose of conversion of shares of Convertible Preferred Stock
hereunder require registration with or approval of any governmental authority
under any Federal or State law before such shares may be validly issued upon
conversion, the Company will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be.
The Company further covenants that so long as the Class A Common Stock
shall be listed on the New York Stock Exchange or any other national securities
exchange or the Nasdaq National Market, the Company will, if permitted by the
rules of such exchange or market, list and keep listed so long as the Class A
Common Stock shall be so listed on such exchange or market, all Class A Common
Stock issuable upon conversion of the shares of Convertible Preferred Stock.
4. Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, subject to the rights of the Company's
creditors and holders of Senior Equity Securities, each holder of shares of the
Convertible Preferred Stock will be entitled to payment out of the assets of the
Company available for distribution of an amount equal to the Liquidation
Preference per share of Convertible Preferred Stock held by such holder, plus an
amount equal to accrued and unpaid dividends, if any, to the date fixed for
<PAGE>
liquidation, dissolution or winding-up before any distribution is made on any
Junior Securities, including, without limitation, the Common Stock. After
payment in full of the Liquidation Preference and an amount equal to all accrued
and unpaid dividends, if any, to which holders of Convertible Preferred Stock
are entitled, such holders will not be entitled to any further participation in
any distribution of assets of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Convertible Preferred Stock, the Preferred Stock and any Parity
Securities (including the Series B Exchangeable Preferred Stock) are not paid in
full, the holders of the Convertible Preferred Stock, the Preferred Stock and
any Parity Securities (including the Series B Exchangeable Preferred Stock) will
share equally and ratably in any distribution of assets of the Company in
proportion to the full liquidation preference and accumulated and unpaid
dividends, if any, to which each is entitled. However, the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company, or the consolidation or merger of the Company with or into one or more
Persons will not be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Company, unless such sale, conveyance, exchange
or transfer shall be in connection with a liquidation, dissolution or winding-up
of the business of the Company.
The holder of any shares of Convertible Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section 4 until
such holder shall cause to be delivered to the Company (i) the certificate(s)
representing such shares of Convertible Preferred Stock and (ii) transfer
instrument(s) satisfactory to the Company and sufficient to transfer such shares
of Convertible Preferred Stock to the Company free of any adverse interest. As
in the case of the Redemption Price referred to below, no interest shall accrue
on any payment upon liquidation after the date thereof.
5. Optional Redemption.
(A) The Company may not redeem the Convertible Preferred Stock prior to
May 1, 2002. Subject to the requirement of legally available funds therefor, the
Convertible Preferred Stock may be redeemed, in whole or from time to time in
part, at the option of the Company on or after May 1, 2002, on any date set by
the Board of Directors, for shares of Class A Common Stock at a redemption price
of $206.00 per share, or for cash at redemption price of $200.00 per share (in
each case subject to adjustment as provided for in Section 7 hereof) plus, in
each case, an amount equal to all dividends on the Convertible Preferred Stock
accrued and unpaid thereon, whether or not declared or due, to the date fixed
for redemption, such sum being hereinafter referred to as the "Redemption Price"
(subject to the right of the holder of record of shares of Convertible Preferred
Stock on a Record Date to receive the dividend due on such shares of Convertible
Preferred Stock on the corresponding Dividend Payment Date).
(B) In the event that the Company elects to redeem the Convertible
Preferred Stock with shares of Class A Common Stock, the Company shall issue in
payment of the Redemption Price for each share of Convertible Preferred Stock to
be redeemed such number of shares of Class A Common Stock as equals (x) the
then-current Redemption Price of the Convertible Preferred Stock, divided by (y)
the market price (the "Market Price") of the Class A Common Stock. The Market
Price shall be equal to the lower of (i) the average of the daily closing prices
of the Class A Common Stock for the 20 consecutive trading days immediately
preceding the first Business Day immediately preceding the date of the
<PAGE>
applicable redemption notice, and (ii) the closing price of the Class A Common
Stock on the trading day immediately preceding the first Business Day
immediately preceding the date of the applicable redemption notice.
The "closing price" for each day shall be the last reported sale price
regular way of the Class A Common Stock on the New York Stock Exchange or, if
the Class A Common Stock is not listed on The New York Stock Exchange, the
average of the closing sale prices on such day of the Class A Common Stock on
all domestic exchanges on which the shares of Class A Common Stock may at the
time be listed, or if there have been no sales on any such exchange on such day,
the average of the highest bid and lowest asked prices of the Class A Common
Stock on all such exchanges or, if on such day such shares of Class A Common
Stock shall not be so listed, the average of the comparative bid and asked
prices quoted for the Class A Common Stock in the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System as of 4:00 P.M.,
New York City time on such day, or if such shares shall not be quoted in the
NASDAQ System, the average of the high and low bid and asked price of the Class
A Common Stock on such day in the domestic over-the-counter market as reported
by the National Quotation Bureau, Incorporated, or any other successor
organization. If at any time such shares of Class A Common Stock are not listed
on any domestic exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the Market Price shall be the fair market value thereof
determined by the Board of Directors in good faith. For the purposes of this
Section 5, "trading day" shall mean a day on which the securities exchange
specified for purposes of this Section 5 shall be open for business or, if the
shares of Class A Common Stock shall not be listed on such exchange for such
period, a day with respect to which quotations of the character referred to in
the next preceding sentence shall be reported. In lieu of any fractional share
of Class A Common Stock which would otherwise be issued upon any redemption of
Convertible Preferred Stock, the Company shall pay a cash adjustment in respect
of such fractional interest in an amount in cash (computed to the nearest cent)
equal to the Market Price multiplied by the fractional interest to the nearest
1/1,000th of a percent that otherwise would have been deliverable upon such
redemption of such Convertible Preferred Stock.
(C) In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the shares of Convertible Preferred Stock to be
redeemed shall be redeemed pro rata or by lot or in such other manner as the
Board of Directors may determine. Notwithstanding the foregoing, the Company
shall not redeem less than all of the Convertible Preferred Stock at any time
outstanding until all dividends accrued and in arrears upon all Convertible
Preferred Stock then outstanding shall have been paid for the current and all
past dividend periods.
(D) Not more than 60 nor less than 30 days prior to the date specified
therein for redemption (the "Redemption Date"), notice by first class mail,
postage prepaid, shall be given to each holder of record of the Convertible
Preferred Stock to be redeemed, at such holder's address as it shall appear upon
the stock transfer books of the Company. Each such notice of redemption shall
specify the date fixed for redemption, the Redemption Price, whether the
Convertible Preferred Stock will be redeemed for cash or Class A Common Stock,
the place or places of payment, that delivery of cash or shares of Class A
Common Stock will be made upon presentation and surrender of the certificate(s)
evidencing the shares of Convertible Preferred Stock to be redeemed, that on and
after the redemption date, dividends will cease to accrue on such shares, the
<PAGE>
then effective Conversion Price pursuant to Section 3 and that the right of
holders to convert shall terminate at the close of business on the date
immediately prior to the redemption date (unless the Company defaults in the
payment of the Redemption Price).
(E) Any funds deposited with a bank or trust company for the purpose of
redeeming Convertible Preferred Stock shall be irrevocable except that:
(i) the Company shall be entitled to receive from such bank or
trust company the interest or other earnings, if any, earned on any
money so deposited in trust, and the holders of any shares redeemed
shall have no claim to such interest or other earnings; and
(ii) any balance of monies so deposited by the Company and
unclaimed by the holders of the Convertible Preferred Stock entitled
thereto at the expiration of two years from the applicable Redemption
Date shall be repaid, together with any interest or other earnings
earned thereto, to the Company, and after such repayment, the holders
of the shares entitled to the funds so repaid to the Company shall look
only to the Company for payment without interest or other earnings.
(F) Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Convertible
Preferred Stock receives such notice; and failure to give such notice by mail,
or any defect in such notice, to the holders of any shares designated for
redemption shall not affect the validity of the proceedings for the redemption
of any other shares of Convertible Preferred Stock. On or after the date fixed
for redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate evidencing such shares to the Company
at the place designated in such notice and shall thereupon be entitled to
receive delivery of cash or shares of Class A Common Stock as herein provided.
If less than all the shares represented by any such surrendered certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares.
If, on the date fixed for redemption, shares of Class A Common Stock and funds
necessary for the redemption shall be available therefor and shall have been
irrecoverably deposited or set aside, then, notwithstanding that the
certificates evidencing any shares so called for redemption shall not have been
surrendered the dividends with respect to the shares so called shall cease to
accrue after the date fixed for redemption, the shares shall no longer be deemed
outstanding, the holders thereof shall cease to be holders of Convertible
Preferred Stock, and all rights whatsoever with respect to the shares so called
for redemption (except the right of the holders to receive delivery of cash or
shares of Class A Common Stock as herein provided without interest or adjustment
upon surrender of their certificates representing shares of Convertible
Preferred Stock) shall terminate. At the close of business on the redemption
date, each holder of Convertible Preferred Stock so redeemed (unless the Company
defaults on its obligations to deliver cash or shares of Class A Common Stock)
shall be, without any further action, deemed a holder of cash or the number of
shares of Class A Common Stock for which such Convertible Preferred Stock is
redeemable.
(G) The shares of Convertible Preferred Stock shall not be subject to
the operation of any purchase, retirement, mandatory redemption or sinking fund.
<PAGE>
(H) The holder of any shares of Convertible Preferred Stock redeemed
upon any exercise of the Company's redemption right shall not be entitled to
receive cash or shares of Class A Common Stock for such shares until such holder
shall cause to be delivered to the place specified in the notice given with
respect to such redemption (i) the certificate(s) representing such shares of
Convertible Preferred Stock redeemed and (ii) transfer instrument(s)
satisfactory to the Company and sufficient to transfer such shares of
Convertible Preferred Stock to the Company free of any adverse interest.
(I) All shares of Class A Common Stock which may be delivered upon
redemption of the Convertible Preferred Stock will upon delivery be duly and
validly issued and fully paid and non-assessable, and prior to giving any notice
of redemption the Company shall take any corporate action necessary therefor.
(J) In the event that any shares of Convertible Preferred Stock shall
be converted into Class A Common Stock prior to any Redemption Date pursuant to
Section 3, then (i) the Company shall not have the right to redeem such shares
and (ii) shares of Class A Common Stock and any funds which shall have been
deposited for the payment of the Redemption Price for such shares of Convertible
Preferred Stock shall be returned to the Company immediately after such
conversion (subject to declared dividends payable pursuant to Section 3(B)
hereof).
6. Voting Rights
(A) The holders of record of shares of the Convertible Preferred Stock
shall have no voting rights, except as required by law and as hereinafter
provided in this Section 6. In exercising any such voting rights, each
outstanding share of Convertible Preferred Stock will be entitled to one vote,
excluding shares of its own capital stock belonging to the Company or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Company, which shares will have no voting rights.
(B) Whenever dividends on the Convertible Preferred Stock shall be in
arrears in an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors shall be
increased by two, effective as of the time of election of such directors as
hereinafter provided, and (ii) the holders of the Convertible Preferred Stock
(voting separately as a class with all other affected classes or series of
outstanding stock on a parity as to dividends with the Convertible Preferred
Stock upon which like voting rights have been conferred and are exercisable, but
expressly excluding the Preferred Stock) will have the exclusive right to vote
for and elect such two additional directors of the Company at any meeting of
stockholders of the Company at which directors are to be elected held during the
period such dividends remain in arrears. The right of the holders of the
Convertible Preferred Stock to vote for such two additional directors shall
terminate when all accrued and unpaid dividends on the Convertible Preferred
Stock have been declared and paid or set aside for payment. The term of office
of all directors so elected shall terminate immediately upon the termination of
the right of the holders of the Convertible Preferred Stock and such parity
securities to vote for such two additional directors.
<PAGE>
The foregoing right of the holders of the Convertible Preferred Stock
with respect to the election of two directors may be exercised at any annual
meeting of stockholders or at any special meeting of stockholders held for the
purpose of electing directors. If the right to elect directors shall have
accrued to the holders of the Convertible Preferred Stock more than 90 days
preceding the date established for the next annual meeting of stockholders, the
Board of Directors shall, within 20 days after the delivery to the Company at
its principal office of a written request for a special meeting signed by the
holders of at least 25% of the Convertible Preferred Stock then outstanding,
call a special meeting of the holders of the Convertible Preferred Stock to be
held within 60 days after the delivery of such request for the purpose of
electing such additional directors.
The holders of the Convertible Preferred Stock and any parity
securities referred to above voting as a class shall have the right to remove
without cause at any time and replace any directors such holders have elected
pursuant to this Section 6, and such directors shall not be removed without
cause except by such holders.
(C) So long as the Convertible Preferred Stock is outstanding, the
Company shall not, without the affirmative vote of the holders of at least
66-2/3 percent of all outstanding Convertible Preferred Stock (unless the vote
of a greater percentage is required by applicable law or the Certificate of
Incorporation), voting separately as a class, amend, alter or repeal (by merger,
consolidation or otherwise) any provision of the Certificate of Incorporation or
the By-laws of the Company, as amended, so as to affect materially and adversely
the relative rights, preferences, qualifications, limitations or restrictions of
the Convertible Preferred Stock. Except as otherwise set forth herein or in the
Certificate of Incorporation or as otherwise required by law, (i) the creation,
authorization or issuance of any shares or series of preferred stock or (ii) the
increase or decrease in the amount of authorized capital stock of any class or
series, including any preferred stock, shall not require the consent of the
holders of Convertible Preferred Stock and shall not be deemed to affect
adversely the rights, preferences, privileges or voting rights of the
Convertible Preferred Stock.
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of Convertible Preferred Stock shall
have been redeemed or called for redemption upon proper notice and sufficient
shares of Class A Common Stock, if needed, shall have been reserved by the
Company to effect such redemption.
7. Adjustments. The Liquidation Preference and the Redemption Price set
forth herein shall each be subject to equitable adjustment whenever there shall
occur a stock split, combination, reclassification or other similar event
involving the Convertible Preferred Stock. Such adjustments shall be determined
in good faith by the Board of Directors and submitted by the Board of Directors
to the Transfer Agent.
8. Exclusion of Other Rights. Except as may otherwise be required by
law, the shares of Convertible Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this Certificate of Designation or the
<PAGE>
Certificate of Incorporation. The shares of Convertible Preferred Stock shall
have no preemptive or subscription rights.
9. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
10. Severability of Provisions. If any of the voting powers,
preferences and relative, participating, optional and other special rights of
the Convertible Preferred Stock and qualifications, limitations and restrictions
thereof set forth herein is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other voting powers, preferences
and relative, participating, optional and other special rights of Convertible
Preferred Stock and qualifications, limitations and restrictions thereof set
forth herein which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of Convertible Preferred Stock and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of Convertible Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Convertible Preferred Stock
and qualifications, limitations and restrictions thereof unless so expressed
herein.
11. Reissuance of Convertible Preferred Stock. Shares of Convertible
Preferred Stock that (i) have not been issued on or before June 15, 1999 or (ii)
have been issued and reacquired in any manner, including shares purchased or
redeemed or exchanged or converted, shall (upon compliance with any applicable
provisions of the laws of Delaware) have the status of authorized but unissued
shares of preferred stock of the Company undesignated as to series and may be
designated or redesignated and issued or reissued, as the case may be, as part
of any series of preferred stock of the Company, provided that any issuance of
such shares as Convertible Preferred Stock must be in compliance with the terms
hereof.
12. Mutilated or Missing Convertible Preferred Stock Certificates. If
any of the Convertible Preferred Stock certificates shall be mutilated, lost,
stolen or destroyed, the Company shall issue, in exchange and in substitution
for and upon cancellation of the mutilated Convertible Preferred Stock
certificate, or in lieu of and substitution for the Convertible Preferred Stock
certificate lost, stolen or destroyed, a new Convertible Preferred Stock
certificate of like tenor and representing an equivalent amount of shares of
Convertible Preferred Stock, but only upon receipt of evidence of such loss,
theft or destruction of such Convertible Preferred Stock certificate and
indemnity, if requested, satisfactory to the Company and the Transfer Agent.
13. Certain Definitions. As used in this Certificate of Designation,
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
<PAGE>
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Transfer Agent" shall be the American Stock Transfer & Trust Company
unless and until a successor is selected by the Company, and then such
successor.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by James Brown, Vice President of the Company, and attested by Colin
Higgin, its Assistant Secretary, this 30th day of April, 1999.
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ James Brown
Name: James Brown
Title: Vice President
ATTEST:
By: /s/ Colin Higgin
Name: Colin Higgin
Title: Assistant Secretary
<PAGE>
EXHIBIT 3.02
AMENDED AND RESTATED BYLAWS
OF
ADELPHIA COMMUNICATIONS CORPORATION
(As amended through September 30, 1999)
ARTICLE I
Stockholders
Section 1.1 Annual Meetings. An annual meeting of the stockholders
shall be held for the election of directors and the transaction of any other
proper business on the first Thursday of June in each year, if not a legal
holiday, and if a legal holiday, then on the next secular day following at 10:00
a.m., or at such date, time and place either within or without Delaware as may
be designated by the Board of Directors from time to time.
Section 1.2 Special Meetings. Special meetings of the stockholders may
be called at any time by the Chairman of the Board, the President, any Executive
Vice President, or the Board of Directors to be held at such date, time and
place either within or without Delaware as may be stated in the notice of the
meeting.
Section 1.3 Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, such written notice shall be given not
less than ten (10) nor more than sixty (60) days before the day of the meeting
to each stockholder entitled to vote at such meeting. If mailed, such notice
shall be deemed to be given when deposited in the United States mail, postage
prepaid, directed to the stockholder at such stockholder's address as it appears
on the records of the corporation.
Section 1.4 Adjournments. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the stockholders may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 1.5 Quorum. Except as otherwise provided in the certificate of
incorporation or by law, at any meeting of the stockholders, the presence in
person or by proxy of the holders of the majority of the votes of all of the
outstanding shares, in the aggregate, of all classes of stock entitled to vote
at the meeting shall constitute a quorum. The stockholders present at a duly
organized meeting may continue to do business until adjournment notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. If a meeting
cannot be organized because a quorum has not attended, those present may adjourn
the meeting in the manner provided by Section 1.4 of these bylaws until a quorum
shall attend.
Section 1.6 Organization. Meetings of stockholders shall be presided
over by the Chairman of the Board, or in the absence of the Chairman of the
Board, by the President, or in the absence of the President, by any Vice
President, or in the absence of the foregoing persons, by a chairman designated
by the Board of Directors, or in the absence of such designation by a chairman
chosen at the meeting. The Secretary, or in the absence of the Secretary, an
Assistant Secretary, shall act as Secretary of the meeting, but in the absence
of the Secretary and any Assistant Secretary the chairman of the meeting may
appoint any person to act as Secretary of the meeting.
Section 1.7 Voting; Proxies. The stockholders of the Corporation shall
have such voting rights and powers as set forth in the certificate of
incorporation. All questions shall be decided by the vote of the majority of the
votes of all of the voting shares of all classes, in the aggregate, entitled to
vote on the matter in question, represented at any meeting, unless otherwise
provided in the certificate of incorporation or by law. Each stockholder
entitled to vote at a meeting of the stockholders or to express consent or
dissent to corporate action in writing without a meeting may authorize another
person or persons to act for such stockholder by proxy, but no such proxy shall
be voted or acted upon after three (3) years from its date, unless the proxy
provides for a longer period. All proxies must be in writing and filed with the
Secretary of the corporation. A duly executed proxy shall be irrevocable if it
states that it is irrevocable and if it is coupled with an interest sufficient
in law to support an irrevocable power. Revocation of a proxy is not effective
until notice of the revocation has been given to the Secretary of the
corporation.
Section 1.8 Record Date. In order that the corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express written consent to corporate action
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) nor less than ten (10) days before
the date of such meeting, nor more than sixty (60) days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting,
except that the Board of Directors may fix a new record date for the adjourned
meeting. In the event dividends are declared, stock transfer books will not be
closed but that a record date will be set by the Company, upon which date the
transfer agent will take a record of all shareholders entitled to the dividend
without actually closing the transfer books.
Section 1.9 List of Stockholders Entitled to Vote. The officer in
charge of the stock ledger of the corporation shall make, at least ten (10) days
before each meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, with the
address of and the number of shares registered in the name of each, which list
shall be kept on file at the registered office of the corporation and, further,
shall be subject to inspection by any stockholder, for any purpose germane to
the meeting, during usual business hours, for a period of at least ten (10) days
before to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. This list shall also
be produced and kept at the time and place of the meeting, and shall be subject
to inspection by any stockholder during the whole time of the meeting.
Section 1.10 Consent of Stockholders in Lieu of Meeting. Unless
otherwise provided in the certificate of incorporation or by law, any action
required by law to be taken at any annual or special meeting of stockholders of
the corporation, or any action which may be taken at any special meeting of such
stockholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous consent shall be given to those stockholders who have not
consented in writing.
Section 1.11 Voting by Fiduciaries and Pledgees. Persons holding stock
in a fiduciary capacity shall be entitled to vote the shares so held. A person
whose stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he has expressly empowered the pledgee
to vote thereon, in which case only the pledgee, or his proxy, may represent and
vote such stock.
ARTICLE II
Board of Directors
Section 2.1 Powers; Number; Qualifications. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors. The Board shall consist of not less than five (5) nor more than
twenty-five (25) members, the number thereof to be determined from time to time
by the Board. Directors need not be stockholders, unless the certificate of
incorporation so requires.
Section 2.2 Election; Term of Office; Resignation; Removal; Vacancies.
Each director shall hold office until the annual meeting of stockholders next
succeeding his election and until his successor is elected and qualified or
until his death, resignation or removal. Any director may resign at any time
upon written notice to the Board of Directors or to the President, any Vice
President, or the Secretary of the corporation. A resignation shall take effect
at the time it specifies, and unless otherwise specified in the resignation, no
acceptance of the resignation is necessary to make it effective. Any director
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors except that whenever
the holders of any class are entitled by the certificate of incorporation to
elect one or more directors, the director or directors so elected may be removed
with or without cause by a majority of the holders of the outstanding shares of
that class. Unless otherwise provided in the certificate of incorporation or
these bylaws, vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by the sole
remaining director.
Section 2.3 Regular Meetings. Regular meetings of the Board of
Directors may be held at such places within or without Delaware and at such
times as the Board may from time to time determine, and if so determined, notice
thereof need not be given.
Section 2.4 Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board, the President, or any Executive Vice
President. Except as otherwise provided in the certificate of incorporation,
meetings of the Board of Directors may be held at such places within or without
Delaware as a majority of the directors may direct. Notice of all special
meetings of the Board of Directors specifying the place, day and hour shall be
given to each director at least twenty-four (24) hours before the day and time
named for the meeting, either (i) personally (including by phone) or (ii) by
sending a copy thereof by mail or by telegram, charges prepaid, facsimile,
e-mail or other electronic or wireless means, charges prepaid, to his address,
facsimile number or e-mail address, as the case may be, appearing on the books
of the Corporation or supplied by him to the Corporation for the purpose of
notice. Notice may also be given by any other means permitted by law. Any oral
notice given personally or by telephone may be communicated either to the
director or to the person at the office of the director who the person giving
the notice has reason to believe will promptly communicate it to the director.
When a meeting of directors is adjourned, notice need not be given of the
adjourned meeting or of the business to be transacted at an adjourned meeting,
other than by announcement at the meeting at which the adjournment is taken.
Section 2.5 Participation in Meetings by Conference Telephone. Unless
otherwise restricted by the certificate of incorporation, members of the Board
of Directors, or any committee designated by the Board, may participate in a
meeting of the Board or of such committee, as the case may be, by means of
conference telephone, similar communications equipment by means of which all
persons participating in the meeting can hear each other or by any other means
permitted by law.
Section 2.6 Quorum; Vote Required for Action. A majority of the
directors in office is necessary to constitute a quorum for the transaction of
business, and the acts of a majority of the Directors present at a meeting at
which a quorum is present shall be the acts of the Board of Directors. If at any
meeting a quorum is not present, the meeting may be adjourned from time to time
until a quorum is present.
Section 2.7 Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or in the absence of the Chairman of
the Board, by the President, or in the absence of Chairman of the Board and the
President, by any Vice President, or in their absence, by a chairman chosen at
the meeting. The Secretary, or in the absence of the Secretary, an Assistant
Secretary, shall act as Secretary of the meeting, but in the absence of the
Secretary and any Assistant Secretary, the chairman of the meeting may appoint
any person to act as Secretary of the meeting.
Section 2.8 Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of Directors.
Section 2.9 Action by Directors Without a Meeting. Unless otherwise
restricted by the certificate of incorporation, any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or of such
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
Section 2.10 Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its Directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its Directors or officers are Directors or
officers, or have a financial interest, shall be void or voidable solely for
that reason, or solely because the director or officer is present at or
participates in the meeting of the Board or committee which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose, if: (1) the material facts as to his relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and the Board or the committee in good faith
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterest directors, even though the disinterested directors be less than
a quorum; or (2) the material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors, a committee thereof or the
stockholders. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
Section 2.11 Other Powers. In addition to the powers expressly
conferred by these bylaws, the Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts as are not by law, the
certificate of incorporation or these bylaws required to be exercised or done by
the stockholders.
ARTICLE III
Committee
Section 3.1 Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the Directors of the corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the Board, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but, except to the extent otherwise provided
by law, no such committee may (i) approve or adopt or recommend to the
stockholders any action or matter that the Delaware General Corporation Law
requires stockholders to approve or (ii) adopt, amend or repeal any bylaw of the
Corporation.
Section 3.2 Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board may adopt, amend and repeal
rules for conducting its business. In the absence of a provision by the Board or
a provision in the rules of a committee to the contrary, a majority of the
entire authorized number of members of such committee shall constitute a quorum
for the transaction of business, the vote of a majority of the members present
at a meeting at the time of such vote if a quorum is then present shall be the
act of such committee, and in other respects each committee shall conduct its
business in the same manner as the Board conducts its business pursuant to
Article II of these bylaws.
ARTICLE IV
Officers
Section 4.1 Officers; Election. As soon as practicable after every
annual meeting of stockholders, the Board of Directors shall elect a President
and a Secretary, and it may, if it so determines, elect from among its members a
Chairman of the Board and a Vice Chairman of the Board. The Board may also elect
one or more Vice Presidents, one or more Assistant Secretaries, a Treasurer and
one or more Assistant Treasurers, and such other officers as the Board may deem
desirable or appropriate and may give any of them such further designations or
alternate titles as it considers desirable. In addition to the officers elected
by the Board in accordance with this Section 4.1, the Corporation may have one
or more appointed Vice Presidents, Assistant Secretaries or Assistant
Treasurers. Such Vice Presidents, Assistant Secretaries or Assistant Treasurers
may be appointed by the Chairman of the Board, the President or an Executive
Vice President. Vice Presidents, Assistant Secretaries or Assistant Treasurers
appointed by the Chairman of the Board, the President or an Executive Vice
President may be removed in accordance with Section 4.2 or by the Chairman or
the President. Any number of offices may be held by the same person.
Section 4.2 Term of Office; Resignation; Removal; Vacancies. Except as
otherwise provided in the resolution of the Board of Directors electing him,
each officer shall hold office until the first meeting of the Board after the
annual meeting of the stockholders next succeeding his election, and until his
successor is elected and qualified, or until his earlier resignation or removal.
An officer may resign at any time upon written notice to the Board or to the
President or the Secretary of the Corporation. A resignation shall take effect
at the time it specifies, and unless otherwise specified in the resignation, no
acceptance of the resignation is necessary to make it effective. The Board may
remove any officer with or without cause at any time. Any removal shall be
without prejudice to the contractual rights of the officer, if any, with the
Corporation, but the election of an officer shall not of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired portion
of the term by the Board at any regular or special meeting.
Section 4.3 Powers and Duties. The officers of the Corporation shall
have such powers and duties in managing the Corporation as shall be stated in
these bylaws or in a resolution of the Board of Directors not inconsistent with
these bylaws and, to the extent not so stated, as generally pertain to their
respective offices, subject to the control of the Board. The Secretary shall
have the duty to record the proceedings of the meetings of the stockholders, the
Board of Directors and any committees in a book to be kept for that purpose. The
Board may require any officer, agent or employee to give security for the
faithful performance of his duties.
Section 4.4 Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders at
which he is present and shall have and may exercise such powers as may, from
time to time, be assigned to him by the Board and as may be provided by law.
Section 4.5 President. In the absence of the Chairman of the Board, the
President shall preside at all meetings of the Board of Directors and of the
stockholders at which he is present. The President shall be the chief executive
officer and shall have general charge and supervision of the business of the
Corporation and, in general, shall perform all duties incident to the office of
president of a corporation and such other duties as may, from time to time, be
assigned to him by the Board or as may be provided by law.
Section 4.6 Vice Presidents. The Vice President or Vice Presidents, at
the request or in the absence of the President or during the President's
inability to act, shall perform the duties of the President and when so acting
shall have the powers of the President. If there be more than one Vice
President, the Board of Directors may determine which one or more of the Vice
Presidents shall perform any of such duties; or if such determination is not
made by the Board, the President may make such determination; otherwise any of
the Executive Vice Presidents may perform any of such duties. The Vice President
or Vice Presidents shall have such other powers and shall perform such other
duties as may, from time to time, be assigned to him or them by the Board or the
President or as may be provided by law. Vice Presidents shall include Executive
Vice Presidents, Senior Vice Presidents, other similarly designated Vice
Presidents, and Vice Presidents.
Section 4.7 Secretary. The Secretary shall have the duty to record the
proceedings of the meetings of the stockholders, the Board of Directors and any
committees in a book to be kept for that purpose, shall see that all notices are
duly given in accordance with the provisions of these bylaws or as required by
law, shall be custodian of the records of the Corporation, may affix the
corporate seal to any document the execution of which, on behalf of the
Corporation, is duly authorized, and when so affixed may attest the same, and,
in general, shall perform all duties incident to the office of Secretary of a
corporation and such other duties as may, from time to time, be assigned to him
by the Board or the President or as may be provided by law.
Section 4.8 Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation and shall deposit or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by or under
authority of the Board of Directors. If required by the Board, the Treasurer
shall give a bond for the faithful discharge of his duties, with such surety or
sureties as the Board may determine. The Treasurer shall keep or cause to be
kept complete and accurate records of all receipts and disbursements of the
Corporation, shall render to the President and to the Board, whenever requested,
an account of the financial condition of the Corporation, and, in general, shall
perform all the duties incident to the office of treasurer of a corporation and
such other duties as may, from time to time, be assigned to him by the Board or
the President or as may be provided by law.
Section 4.9 Other Officers. Any other officers of the Corporation shall
have such powers and duties in managing the Corporation as shall be stated in a
resolution of the Board of Directors, or the as determined by the Chairman of
the Board or the President, which is not inconsistent with these bylaws and, to
the extent not so stated or determined, as generally pertain to their respective
offices, subject to the control of the Board. The Board may require any officer,
agent or employee to give security for the faithful performance of his duties.
ARTICLE V
Stock
Section 5.1 Certificates. Every holder of the stock in the Corporation
shall be entitled to have a certificate signed by or in the name of the
Corporation by the Chairman of the Board of Directors, or the President or any
Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, certifying the number and class of
shares owned by him in the Corporation. Any of the signatures on the certificate
may be a facsimile. If any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate ceases to be
such officer, transfer agent, or registrar before the certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Section 5.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of
New Certificates. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificates previously issued by the
Corporation alleged to have been lost, stolen or destroyed. When authorizing
such issuance, the Board of Directors may require the owner of the lost, stolen
or destroyed certificate or certificates, or his legal representative, to give
the Corporation a bond sufficient to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of such new certificate.
ARTICLE VI
Indemnification
Section 6.1 Indemnification. Except to the extent prohibited by law,
the corporation shall indemnify (including without limitation indemnification
for all expenses (including attorneys fees), judgments, fines, and amounts paid
in settlement actually and reasonably incurred by such person in connection with
any action, suit or proceeding) any person made, or threatened to be made, a
party to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative ("an Action") by reason of the
fact that the person or such person's representative is or was a director or
officer of the Corporation, and may indemnify (including without limitation
indemnification for all expenses (including attorneys fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred by such person
in connection with any action, suit or proceeding) any person made, or
threatened to be made, a party to any Action by reason of the fact that he is or
was an employee or agent of the Corporation or serves or served as a director,
officer, employee, or agent of any other enterprise at the request of the
Corporation. This indemnification shall not be deemed exclusive of any other
rights to which any person indemnified may be entitled under any agreement, vote
of stockholders or disinterested directors, or otherwise. The Corporation may,
but shall have no obligation to, purchase insurance on behalf of any person who
is or was a director, officer, employee or agent of the Corporation against any
liability asserted against or incurred by him in any such capacity, or arising
out of his status as such to the extent permitted by law. Such insurance may be
provided by the Corporation at the sole discretion of the Board of Directors.
Section 6.2 Right to Advancement of Defense Expenses. Expenses
(including fees and expenses of counsel selected by the person entitled to
indemnification described in Section 6.1) incurred in defending any action shall
be paid by the Corporation in advance upon the written request of such person if
he shall undertake to repay such amounts advanced to the extent that a court of
competent jurisdiction ultimately determines that such person is not entitled to
indemnification under this Article or otherwise, unless the Board of Directors
or independent legal counsel reasonably determines that such person deliberately
breached his duty to the Corporation or its shareholders. Such person's expenses
incurred in connection with successfully establishing his right to
indemnification, in whole or part, in any such proceeding shall also be
indemnified by the Corporation.
Section 6.3 Right to Indemnification. The right to indemnification and
advances as provided in this Article VI shall be a contractual right.
Indemnification under this Article VI shall continue as to a person eligible to
be indemnified even though he may have ceased to be a director or officer, and
shall inure to the benefit of the heirs and legal representatives of persons
entitled to indemnity hereunder, and shall be applicable to any Action commenced
after the adoption hereof, whether arising from acts or omissions occurring
before or after adoption hereof. Any repeal or modification of this Article VI
shall not affect any rights or obligations then existing.
ARTICLE VII
Miscellaneous
Section 7.1 Fiscal Year. The fiscal year of the Corporation shall begin
on January 1 and end on December 31 of each calendar year, commencing with the
fiscal year ended December 31, 1998.
Section 7.2 Office. The registered office of the Corporation shall be
229 South State Street, City of Dover, County of Kent, State of Delaware, or any
other location within Delaware which the Board of Directors may determine.
Section 7.3 Registered Agent. The registered agent of the Corporation
shall be The Prentice-Hall Corporation System, Inc., or such other individual or
domestic corporation (including the Corporation) as the Board of Directors may
designate.
Section 7.4 Seal. The Corporation may have a corporate seal which shall
have inscribed thereon the name of the Corporation, and shall be in such form as
may be approved from time to time by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed or affixed, or in any
other manner reproduced.
Section 7.5 Form of Records. Any records maintained by the Corporation
in the regular course of its business, including its stock ledger, books of
account and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
Section 7.6 Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Whenever any written notice is required to be given by law, the
Certificate of Incorporation or these bylaws, a waiver thereof in writing,
signed by the person entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice. Unless
otherwise required by the certificate of incorporation, neither the business to
be transacted at nor the purpose of the meeting need be specified in the waiver
of notice of such meeting. The attendance of a person, either in person or by
proxy, at any meeting shall constitute a waiver of notice of the meeting, except
where a person attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully called or
convened.
Section 7.7 Amendment of Bylaws. These bylaws may be amended or
repealed, and new bylaws adopted, by the Board of Directors, but the
stockholders entitled to vote may adopt additional bylaws and may amend or
repeal any bylaw whether or not adopted by them.
ARTICLE VIII
Nominating and Proposal Procedures
Section 8.1 Without limiting any other notice requirements imposed by
law, the certificate of incorporation or these bylaws, any nomination for
election to the Board or other proposal to be presented by any stockholder at a
stockholders' meeting (the "Proponent") will be properly presented only if
written notice of the Proponent's intent to make such nomination or proposal has
been personally delivered to and otherwise in fact received by the Secretary of
the Corporation not later than (i) for the annual meeting, at least 120 days
prior to the anniversary date of the mailing of the proxy statement for the
immediately preceding year's annual meeting, provided however, that if the date
of the annual meeting is more than 45 days before or after the anniversary date
of the immediately preceding annual meeting, the notice must have been received
on or before the 15th day after the public announcement, by SEC filing, press
release or otherwise, by the Corporation of the date of the annual meeting, or
(ii) for any special meeting, the close of business on the tenth day after
notice of such meeting is first given to stockholders; provided, however, that
nothing contained herein shall limit or restrict the right of any stockholder to
present at a stockholders' meeting any proposal made by such stockholder in
accordance with Rule 14a-8 promulgated pursuant to the Securities Exchange Act
of 1934, as amended, as it may hereafter be amended, or any successor rule. Such
notice by the Proponent to the Corporation shall set forth in reasonable detail
information concerning the nominee (in the case of a nomination for election to
the Board of Directors) or the substance of the proposal (in the case of any
other stockholder proposal), and shall include: (a) the name and residence
address and business address of the stockholder who intends to present the
nomination or other proposal or of any person who participates or is expected to
participate in making such nomination and of the person or persons, if any, to
be nominated and the principal occupation or employment and the name, type of
business and address of the business and address of the corporation or other
organization in which such employment is carried on of each such stockholder,
participant and nominee; (b) a representation that the Proponent is a holder of
record of stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to present the nomination or
other proposal specified in the notice; (c) a description of all arrangements or
understandings between the Proponent and any other person or persons (naming
such person or persons) pursuant to which the nomination or other proposal is to
be made by the Proponent; (d) such other information regarding each proposal and
each nominee as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
the nomination or other proposal been made by the Board of Directors; and (e)
the consent of each nominee, if any, to serve as a director of the Corporation
if elected. Within fifteen (15) days following the receipt by the Secretary of a
notice of nomination or proposal pursuant hereto, the Secretary shall advise the
Proponent in writing of any deficiencies in the notice and of any additional
information the Corporation is requiring to determine the eligibility of the
proposed nominee or the substance of the proposal. A Proponent who has been
notified of deficiencies in the notice of nomination or proposal and/or of the
need for additional information shall cure such deficiencies and/or provide such
additional information within fifteen (15) days after receipt of the notice of
such deficiencies and/or the need for additional information. The presiding
officer of a meeting of stockholders may, in his or her sole discretion, refuse
to acknowledge a nomination or other proposal presented by any person that does
not comply with the foregoing procedure and, upon his or her instructions, all
votes cast for such nominee or with respect to such proposal may be disregarded.
ARTICLE IX
Non-Applicability of Section 203
of the Delaware General Corporation Law
Section 9.1 Section 203 of the General Corporation Law of Delaware
shall not apply to the Corporation.
ARTICLE X
Non-Applicability of Section 141(c)(1) of the
Delaware General Corporation Law
Section 10.1 Section 141(c)(1) of the General Corporation Law of
Delaware shall not apply to the Corporation, as the Corporation, by resolution
adopted by the Board, has elected to be governed by Section 141(c)(2) of the
General Corporation Law of Delaware.
(As amended through September 30, 1999)
Exhibit 10.01
HIGHLAND HOLDINGS
ONE NORTH MAIN STREET
COUDERSPORT, PA 16915
October 1, 1999
Adelphia Communications Corporation
One North Main Street
Coudersport, Pennsylvania 16915
Re: Purchase of Shares of Adelphia Communications Corporation's
Class B Common Stock, par value $.01 per share
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, at a per share price equal to the Purchase Price per Share (as
hereafter defined), two million five hundred thousand (2,500,000) shares (the
"Shares") of the Class B Common Stock, par value $.01 per share (the "Common
Stock"), of Adelphia Communications Corporation, a Delaware corporation (the
"Company"). The Purchase Price per Share shall equal the sum of (a) the gross
proceeds less underwriting discount received by the Company per share from the
underwritten public offering of the Company's Class A Common Stock, par value
$.01 per share, for which the Company has executed an Underwriting Agreement
with the several underwriters named therein as of the date hereof (the
"Underwritten Public Offering") and (b) the Additional Amount (as hereafter
defined). The Additional Amount shall be equal to an amount computed, to the
eighth decimal place, as though interest were paid at the LIBOR Rate In Effect
(as hereafter defined) plus 75 basis points (0.0075) on the per share amount
determined under clause (a) of the definition of Purchase Price per Share for
each period of three months (or, in the case of the final period, any portion
thereof if less than three months) subsequent to the date of the closing of the
Underwritten Public Offering until the date of the closing hereunder. The "LIBOR
Rate in Effect" shall mean a rate determined on the first day of each period of
three months (or, in the case of the final period, any portion thereof if less
than three months) subsequent to the Underwritten Public Offering equal to the
quotient, expressed as a percentage (rounded to the nearest 1/100th of 1%),
resulting from the division of (x) the average (rounded to the nearest 1/16th of
1%) of the interest rates per annum at which deposits of United States Dollars
are offered to money center banks in the London interbank market for deposits of
three months by (y) the percentage equal to 100% minus the reserve percentage
applicable on that day under regulations issued by the Board of Governors of the
Federal Reserve System for determining the maximum reserve requirement for a
member bank of the Federal Reserve System with respect to Eurocurrency
liabilities having a three-month term. The Company shall determine in good faith
the LIBOR Rate in Effect for each such period.
Each of the parties hereto represents and warrants that it has full
power and is duly authorized to enter into and perform this agreement; that it
has all necessary corporate or partnership approvals (subject in the case of the
Company to any shareholder approval required by law) necessary to do so; that
the execution and performance of this Agreement will not conflict with the
organic corporate or partnership documents of it or any order of a governmental
body or agency (subject to any regulatory approvals or regulatory filings and
expiration of waiting periods required by law) or material agreement to which it
is a party or by which it is bound; and that this Agreement is enforceable in
accordance with it terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors rights and to general equity principles. The
parties hereto agree that the undersigned is entitled to rely on the
representations and warranties made by the Company in any underwriting or
purchase agreement entered into by the Company with the investment banking firm
or firms conducting the Underwritten Public Offering; provided, however, that
the undersigned represents and warrants to the Company that such representations
and warranties will be true and correct to the best of its knowledge.
Each party's obligations hereunder shall be conditioned upon the
Underwritten Public Offering having been consummated, any required approvals
having been obtained, any required filings having been made and any required
waiting periods having expired, and the other party's representations and
warranties being true and correct on and as of the closing date for the sale of
the Shares hereunder (except (i) for representations and warranties which
expressly relate solely to an earlier date or time, which representations or
warranties shall be true and correct on and as of the specific dates or times
referred to therein and (ii) for representations and warranties which are not
true and correct due to matters subsequent to the date of the closing of the
Underwritten Public Offering which have occurred in the Company in the ordinary
course of its business, which have occurred in the Company and been authorized
by the Board of Directors of the Company or which have occurred in the Company
and been authorized by any individual affiliate of the undersigned who is an
executive officer of the Company). A closing on the purchase of the Shares
hereunder shall be held at the principal executive offices of the Company at a
mutually agreeable date following the Underwritten Public Offering; provided,
however, that the closing shall occur no later than 270 days from the date of
the closing of the Underwritten Public Offering. At such closing, (i) the
Company shall deliver to the undersigned certificates for the Shares duly
executed in such name or names as the undersigned shall have requested bearing
appropriate securities laws legends, an opinion of counsel that the Shares have
been duly authorized, are validly existing and fully paid and a registration
rights agreement for the Shares in form similar to the existing registration
rights agreements, entered into in the two years prior to the date hereof,
between the Company and the undersigned or its affiliates and (ii) the
undersigned shall deliver to the Company the purchase price for the Shares in
immediately available funds. In the event that the Underwritten Public Offering
does not occur and close on or before the date which is 365 days from the date
hereof, this Agreement shall be null and void and neither party shall have any
liability to the other hereunder. The obligation of the undersigned to
consummate the purchase of Common Stock hereunder will be subject to termination
in the discretion of the undersigned if, prior to consummation, (i) trading in
the Company's Class A Common Stock has been suspended by the Securities and
Exchange Commission or the Nasdaq National Market or trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market has been
suspended, (ii) a banking moratorium has been declared either by Federal or New
York State authorities, or (iii) there has 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 reasonable judgment of the undersigned, materially
impracticable to proceed with such consummation.
The undersigned agrees not to, and agrees to cause the individual
members of the Rigas family and their affiliates not to, sell any shares of
Class B Common Stock held by it or them for a period of six months after the
closing of the purchase of Class B Common Stock under this Agreement (but such
period shall not in any event terminate later than one year from the closing of
the Underwritten Public Offering), except that such sales shall be permitted (a)
to affiliates of the undersigned or the individual members of the Rigas family,
(b) in connection with a sale of all or substantially all of all outstanding
classes of common stock of the Company, (c) pursuant to the written consent of
the Company authorized by a majority of the members of its Board of Directors
who are not individual members of the Rigas family and who are not financially
interested in such proposed sale of Class B Common Stock, or (d) pursuant to a
default under a bona fide pledge arrangement, provided that the foregoing
provisions and restrictions shall be subject to the terms of any agreement
existing on the date of this Agreement, including without limitation the Class B
Stockholder Agreement among certain holders of Class B Common Stock and the
Company dated July 14, 1986, as amended.
The aggregate liability of the undersigned and any of its officers,
directors, shareholders, partners or other affiliates (collectively, the
"Undersigned Affiliate Group") for any and all losses, claims, demands whether
for specific performance or otherwise, damages, liabilities, obligations, costs
and expenses (including without limitation, reasonable fees and disbursements of
counsel however sustained or incurred, and including, without limitation, any of
the foregoing enumerated items arising from any action or proceeding involving
any third party) sustained or incurred by or claimed against one or several of
the Undersigned Affiliate Group or otherwise with respect to the subject matter
of this Agreement and the transactions contemplated hereby (collectively,
"Damages") is, and shall be, limited to an amount equal to the greater of (i)
the product determined by multiplying the number of Shares to be purchased
hereunder by the positive excess, if any, of the Purchase Price per Share over
the weighted average trading price during the twenty trading days preceding the
270th day from the date of the closing of the Underwritten Public Offering or
(ii) an amount determined by multiplying the number of Shares to be purchased
hereunder by the Additional Amount per share assuming that a closing on the sale
of the Shares had occurred on the 270th day from the date of the closing of the
Underwritten Public Offering. The Company agrees not to seek any recovery for
Damages or otherwise with respect to the subject matter of this Agreement and
the transactions contemplated hereby which when aggregated with any other
recovery of the Company would result in the Company obtaining from the
Undersigned Affiliate Group an amount in excess of the amount permitted by the
preceding sentence for any and all Damages. In no event shall any of the
Undersigned Affiliate Group be liable for any special, indirect, or
consequential damages sustained by the Company or punitive damages as a result
of a breach of this Agreement or arising out of this Agreement and the
transactions contemplated hereby.
No commissions or discounts shall be paid to any placement agent for
the purchase or sale of the Shares. The Shares shall be purchased and shall be
held for investment.
This Agreement may be assigned by the undersigned to any affiliate of
the undersigned provided that a majority of John Rigas, Michael Rigas, Timothy
Rigas and James Rigas consent in writing to such assignment. 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 for contracts made and to be fully
performed in such state without giving effect to the principles of conflicts of
law thereof.
Very truly yours,
Highland Holdings
By: /s/ Michael J. Rigas
Name: Michael J. Rigas
Title: General Partner
Agreed to and accepted on this 1st day of October, 1999 by
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ James M. Kane
Name: James M. Kane
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR ADELPHIA COMMUNICATIONS CORP. FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999.
</LEGEND>
<CIK> 0000796486
<NAME> ADELPHIA COMMUNICATIONS CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 893,191
<SECURITIES> 0
<RECEIVABLES> 97,254<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,875,683<F2>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 4,941,362
<CURRENT-LIABILITIES> 0
<BONDS> 3,968,180
0
0
<COMMON> 622
<OTHER-SE> (211,602)
<TOTAL-LIABILITY-AND-EQUITY> 4,941,362
<SALES> 0
<TOTAL-REVENUES> 672,814
<CGS> 0
<TOTAL-COSTS> 591,773
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191,759
<INCOME-PRETAX> (124,716)
<INCOME-TAX> (7,626)
<INCOME-CONTINUING> (117,090)
<DISCONTINUED> 0
<EXTRAORDINARY> (10,027)
<CHANGES> 0
<NET-INCOME> (127,117)
<EPS-BASIC> (2.74)
<EPS-DILUTED> (2.74)
<FN>
<F1>RECEIVABLES NET OF ALLOWANCE
<F2>PP&E NET OF DEPRECIATION
</FN>
</TABLE>
Exhibit 99.01
Adelphia Announces Sale of Senior Notes
COUDERSPORT, Pa., November 10, 1999-- Adelphia Communications Corporation
(NASDAQ-NNM: ADLAC) announced today that it has sold $500,000,000 aggregate
principal amount of new 9 3/8% Senior Notes due 2009. The Senior Notes due 2009
will be noncallable, and will have other non-interest terms that will be similar
to those of Adelphia's existing publicly held senior debt. Adelphia plans to use
a portion of the net proceeds to redeem the entire $125 million aggregate
principal amount of its 11-7/8% Senior Debentures due 2004 at 104.5% of
principal amount plus accrued interest, and to use the remainder to repay
existing indebtedness of subsidiaries. The transaction is expected to close on
November 16, 1999.
Adelphia Communications Corporation is one of the largest cable television
operators in the United States, now serving approximately 5 million cable
subscribers.
Prospectuses may be obtained from Credit Suisse First Boston, Eleven Madison
Avenue, New York, New York 10010-3629 and Salomon Smith Barney, 390 Greenwich
Street, New York, New York 10013. This press release shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale
of any securities referred to herein in any state in which such offer,
solicitation or sale would be unlawful.
CONTACT: Timothy J. Rigas, Executive Vice President of Adelphia Communications
Corporation, 814-274-9830
Exhibit 99.02
PRESS RELEASE
Contact Information
Timothy J. Rigas
Adelphia Business Solutions
814-274-9830
FOR IMMEDIATE RELEASE:
ADELPHIA BUSINESS SOLUTIONS (ABIZ) ANNOUNCES PUBLIC STOCK OFFERING
Coudersport, PA, November 10, 1999 -- Adelphia Business Solutions, Inc.
(NASDAQ-NNM: ABIZ) announced today that it is filing a supplement to its shelf
registration statement with the Securities and Exchange Commission for a public
offering of Class A Common Stock. The preliminary prospectus supplement
contained in the filing provides for a public offering of approximately
$300,000,000 in shares of Adelphia Business Solution's Class A Common prior to
the exercise of any underwriters' over-allotment option. The offering will be
made only by prospectus. Adelphia Business Solutions, which is a majority owned
subsidiary of Adelphia Communications Corporation (NASDAQ-NNM:ADLAC), was
formerly known as Hyperion Telecommunications, Inc.
In addition to the $300,000,000 in shares of Class A Common Stock to be sold by
Adelphia Business Solutions to the public, Adelphia Communications Corporation
is expected to enter into an agreement to purchase at the closing of the public
offering approximately $150,000,000 in shares of Class B Common Stock of
Adelphia Business Solutions at a price per share equal to the public offering
price for the Class A Common Stock less the underwriting discount.
Adelphia Business Solutions intends to use the proceeds from these offerings for
the funding of its national expansion, working capital requirements, operating
losses and investments in its networks, and for other general corporate
purposes. Adelphia Business Solutions provides integrated communication services
to business customers over its state-of-the-art fiber optic network.
This press release shall not constitute an offer to sell or the solicitation of
an offer to buy nor shall there be any sale of the Class A Common Stock or Class
B Common Stock in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
