SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT of 1934
For the Transition Period From __________ to __________
Commission File No. 0-22616
NTL INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 52-1822078
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
110 East 59th Street, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
(212) 906-8440
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(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
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(Title of Class)
<PAGE>
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 by check mark whether disclosure by delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates at March 20, 1998, valued in all cases in accordance with the
NASDAQ/NMS closing sale price for the Registrant's Common Stock was
approximately $1,289,800,000.
Number of shares of Common Stock outstanding as at March 20, 1998: 32,294,900
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
Document Part of 10-K in which
Incorporated
Definitive proxy statement for the
1998 Annual Meeting of the Stockholders
of NTL Incorporated: Part III
* * * * * *
This Annual Report on Form 10-K for the year ended December 31, 1997, at the
time of filing with the Securities and Exchange Commission, modifies and
supersedes all prior documents filed pursuant to Section 13, 14 and 15(d) of the
Securities Exchange Act of 1934 for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995:
Certain statements contained herein constitute "forward-looking statements"
as that term is defined under the Private Securities Litigation Reform Act of
1995. When used in this Form 10-K, the words, "believe," "anticipate," "should,"
"intend," "plan," "will," "expects," "estimates," "projects," "positioned,"
"strategy," and similar expressions identify such forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Registrant, or industry results, to be materially different from those
contemplated or projected, forecast, estimated or budgeted in or expressed or
implied by such forward-looking statements. Such factors include, among others:
general economic and business conditions, industry trends,the Registrant's
ability to continue to design network routes, install facilities, obtain and
maintain any required government licenses or approvals and finance construction
and development, all in a timely manner, at reasonable costs and on satisfactory
terms and conditions, as well as assumptions about customer acceptance, churn
rates, overall market penetration and competition from providers of alternative
services, and availability, terms and deployment of capital.
<PAGE>
TABLE OF CONTENTS
Page
PART I
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Item 1 Business........................................................ 1
Item 2 Properties...................................................... 46
Item 3 Legal Proceedings............................................... 46
Item 4 Submission of Matters to a Vote of Stockholders................. 46
PART II
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Item 5 Market for the Registrant's Common Stock and Related
Stockholder Matters............................................. 47
Item 6 Selected Financial Data......................................... 48
Item 7 Management's Discussion and Analysis of Results of
Operations and Financial Condition.............................. 49
Item 7A Quantitative and Qualitative Disclosure About Market Risk....... 57
Item 8 Financial Statements and Supplementary Data..................... 58
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................. 58
PART III
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Items 10, 11, 12, 13..................................................... 59
PART IV
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Item 14 Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................................. 59
Exhibit Index............................................................ 60
Signatures............................................................... 70
Index to Financial Statements............................................ F-1
<PAGE>
PART I
------
ITEM 1. BUSINESS.
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INTRODUCTION
NTL Incorporated, formerly International CableTel Incorporated ("NTL" or
the "Company") was incorporated in April 1993 under the laws of the State of
Delaware.
NTL is a leading communications company in the United Kingdom, providing
residential, business and wholesale customers with the following services: (i)
Residential Telecoms and Television Services including residential telephony,
cable television and Internet access services, (ii) National Telecoms Services
including national business telecoms, national and international carrier
telecommunications, and satellite and radio communications services, and (iii)
Broadcasting Services including digital and analog television and radio
broadcast transmission services.
NTL provides its broad range of services over local, national and
international network infrastructure. The Company operates (i) advanced local
broadband networks serving entire communities throughout NTL's regional
franchise areas, (ii) the UK's first synchronous digital hierarchy ("SDH")
backbone telecommunications network, as well as satellite earth stations and
radio communications facilities from NTL's tower sites across the UK, and (iii)
a broadcast transmission network which provides national, regional and local
analog and digital transmission services to customers throughout the UK.
Management's objective is to exploit the convergence of the
telecommunications, entertainment and information services industries to become
a premier new era communications company in the UK, which will offer these
services to residential, business and wholesale customers on a national scale.
Management believes that the Company will be able to deliver its strategy based
on NTL's entrepreneurial approach, innovative marketing and technical
excellence.
In March 1997, the Company changed its name from International CableTel
Incorporated to NTL Incorporated to reflect the integration of the services
provided by the Company following its acquisition of NTL Group Limited in 1996,
and to capitalize on NTL Group Limited's 30 year history in the United Kingdom
as a provider of reliable communications services.
In this Report on Form 10-K, references to "pounds sterling," "pounds
sterling," "pence" or "p" are to the lawful currency of the United Kingdom and
references to "U.S. dollars," "dollars," "$" or "cents" are to the lawful
currency of the United States. Solely for the convenience of the reader, this
Form 10-K contains translations of certain pound sterling amounts into U.S.
dollars and certain U.S. dollar amounts into pounds sterling. These translations
should not be construed as representations that the pound sterling amounts
actually represent such U.S. dollar amounts or vice versa or could have been or
could be or will be converted into U.S. dollars or pounds sterling, as the case
may be, at the rate indicated or at any other rate. Unless otherwise indicated,
the translations of pounds sterling into U.S. dollars and U.S. dollars into
pounds sterling have been made at $1.6517 per 1.00 pounds sterling, the noon
buying rate in The City of New York for cable transfers in pounds sterling as
certified for customs purposes by the Federal Reserve
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Bank of New York (the "Noon Buying Rate") on December 31, 1997. On March 20,
1998, the Noon Buying Rate was $1.6643 per 1.00 pound sterling.
PRINCIPAL BUSINESSES
RESIDENTIAL TELECOMS AND TELEVISION SERVICES
The Company is the third largest operator of local broadband communications
systems in the UK as measured by the number of homes in its franchise areas, and
has achieved the highest customer penetration and lowest churn rates of any
multi-system operator in the U.K. The Company is presently the sole provider of
broadband services in its franchise areas, offering residential telephony, cable
television ("CATV") and Internet access services to customers connected to its
networks. These services are provided over local broadband fiber networks which
have both coaxial and copper connections to the home. Based on operating results
and experience gained by management in the United States telecommunications
market, the Company has developed innovative marketing strategies which have
increased customer penetration rates, customer retention and operating
profitability.
The industry in which the Company participates has demonstrated strong
growth over the last several years. Since January 1, 1992, the industry has
connected over 3.4 million telephone lines. Since January 1, 1994, the industry
has doubled its market share of multi-channel homes to 40%. The following tables
illustrates these statistics:
UK TELEPHONY CABLE INDUSTRY STATISTICS
<TABLE>
<CAPTION>
TELEPHONE LINES
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RESIDENTIAL
TOTAL RESIDENTIAL TELEPHONE LINE
TELEPHONE LINES TELEPHONE LINES HOMES PASSED PENETRATION
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
January 1, 1998..... 3,442,196 3,038,809 10,693,809 28%
January 1, 1997..... 2,278,113 2,039,081 8,351,310 24%
January 1, 1996..... 1,419,819 1,287,248 6,042,296 21%
January 1, 1995..... 717,566 649,350 4,116,971 16%
January 1, 1994..... 314,381 279,728 2,786,202 10%
January 1, 1993..... 106,989 92,715 1,954,829 5%
January 1, 1992..... 21,225 N/A 1,343,557 -
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Source: ITC
</TABLE>
<TABLE>
<CAPTION>
MULTI-CHANNEL HOMES
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BROADBAND TOTAL
CABLE MULTI-CHANNEL BROADBAND CABLE
SUBSCRIBERS DTH HOMES HOMES AS A % OF TOTAL
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<S> <C> <C> <C> <C>
January 1, 1997..... 2,373,548 3,583,000 5,956,548 40%
January 1, 1997..... 1,872,962 3,446,000 5,318,962 35%
January 1, 1996..... 1,326,842 3,170,000 4,496,842 30%
January 1, 1995..... 908,018 2,818,000 3,726,018 24%
January 1, 1994..... 611,423 2,438,000 3,049,423 20%
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Source: ITC; BSkyB
</TABLE>
2
<PAGE>
As of December 31, 1997, the Company had 321,300 residential customers,
approximately 90% of which subscribed to both telephone and television services.
At the end of 1997 the Company had a total of 608,500 RGUs resulting in 37.3%
telephone penetration, 37.8% cable penetration and 75.1% RGU penetration of
homes marketed. By comparison, based on published statistics of the Independent
Television Commission ("ITC") dated March 9, 1998, as of January 1, 1998, UK
cable penetration averaged approximately 28.4% for telephone and approximately
22.1% for cable television. As of January 1, 1998, the UK telephony cable
industry had connected approximately 3.4 million telephone lines and
approximately 2.4 million broadband cable customers.
The following table illustrates operating statistics for the Company's
newly constructed network:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Homes passed (1)............................ 1,007,000 779,100 463,000 144,000
Homes marketed.............................. 810,000 467,300 176,200 7,200
Homes marketed (as % of homes passed)....... 80% 60% 38% 5%
Total customers (2)......................... 321,300 168,200 57,700 2,280
Dual..................................... 287,200 133,800 44,630 1,680
Telephone-only........................... 15,300 15,950 6,620 370
CATV-only................................ 18,800 18,450 6,450 230
Total RGUs (3).............................. 608,500 302,000 102,330 3,960
Customer penetration........................ 40% 36% 33% 32%
RGU penetration (4)......................... 75% 65% 58% 55%
Telephone penetration....................... 37% 32% 29% 29%
CATV penetration............................ 38% 33% 29% 27%
Annualized churn............................ 11% 10% NM NM
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(1) "Homes passed" is the expression in common usage in the cable industry as the measurement of the size of a cabled area,
meaning the total number of residential premises which have the potential to be connected to the Company's network.
(2) As of December 31, 1997, the Company also provided service to approximately 36,250 customers connected to acquired cable
systems over which it does not offer a full range of services.
(3) An RGU (revenue generating unit) is one telephone account or one CATV account; a dual customer generates two RGUs.
(4) RGU penetration is the number of RGUs per 100 homes marketed. As defined, maximum RGU penetration is 200%.
NM Not meaningful due to the limited customer base and recent commencement of services.
</TABLE>
The Company's customer base and RGUs both increased by nearly 100% in 1997
compared to year-end 1996. The Company believes that much of its success during
this period has been due to its marketing strategies and the introduction of
innovative residential services packages which bundle telephone and a small
selection of CATV channels within a single product offering. The Company also
gives customers the opportunity to purchase additional channel packages and
premium channels. Consistent with the Company's objectives, the high penetration
rates generated by this strategy have led to increased levels of gross profit
contribution per home passed.
The Company believes it has also maintained high levels of customer
satisfaction as indicated by the Company's low rates of churn. During 1997, the
Company maintained an annualized churn rate of less than 11%, a rate which is
significantly lower than the published churn rates of all other UK telephony
cable operators. In a recent survey of a sample of its
3
<PAGE>
customers conducted by the Oxford Research Agency, NTL found that 89% of its
customers would recommend the service to a friend or relative, and that only 15%
had ever considered changing their telephone service back to British
Telecommunications plc ("BT").
LOCAL BROADBAND NETWORK CONSTRUCTION
NTL's local franchise areas cover approximately 2.1 million homes, spanning
a wide geography across England, Scotland, Wales and Northern Ireland. As of
December 31, 1997 the Company had constructed its broadband network past over
one million homes and had invested approximately $1.4 billion in the
construction of the network and associated plant, property and equipment. NTL's
local broadband networks use advanced high capacity SDH fiber rings which serve
entire communities, bringing fiber connections directly to businesses and
"Siamese" coaxial/copper connections to residences. The Company's local networks
currently cover approximately 2,500 route miles of fiber backbone network, with
approximately 175,000 fiber miles, and an estimated 5,000 route miles of
"Siamese" coaxial/copper connections.
The Company is installing a full-service network capable of providing a
high speed, high capacity, two-way voice, data and video communications pathway
to the customer. This approach allows the Company to pursue four revenue streams
(residential telephony, residential cable television, business
telecommunications services and Internet access services) on its network without
a significant increase in fixed investment.
The Company's licenses require it to roll out its network past a specified
number of premises (or homes) each year. The total requirement for all the
Company's licenses is to pass a minimum of 2,090,000 homes, which is less than
the actual total of homes available to the Company should it wish to construct
its network past them. Under the terms of its current telecommunications
licenses, by the end of 2005 the Company is required to construct cable
television systems past an aggregate of approximately one million additional
premises (residential and business). The Company believes it will be able to
satisfy its milestones, but there can be no assurance that such milestones will
be met or that any application to modify those milestones would be accepted. If
the Company is unable to meet the construction milestones required by any of its
licenses and is unable to obtain modifications to the milestones, the relevant
license or licenses could be revoked, which would have a material adverse effect
on the Company.
LOCAL FRANCHISE AREAS
The Company has 16 separate franchises clustered into six Regional Areas.
The Regional Areas span a wide geography across the United Kingdom and give the
Company an operating presence not only in England, but in Scotland, Wales and
Northern Ireland. In 1996, the Company acquired the remaining minority interests
in its Suburban London and South Wales Regional Areas and now has 100% ownership
interests in the licenses in all of its franchise areas.
4
<PAGE>
Summary information for the franchises in each of the Regional Areas is set
forth below:
<TABLE>
<CAPTION>
COMPANY'S TOTAL
OWNERSHIP HOMES IN
REGIONAL AREA FRANCHISES PERCENTAGE FRANCHISE(1)
<S> <C> <C> <C>
Central Scotland............... N.W. Glasgow/Clydebank 100% 128,000
Greater Glasgow 100 254,000
Bearsden/Milngavie 100 14,000
Paisley/Renfrew 100 73,000
Inverclyde/Eastwood 100 30,000
---------
499,000
---------
South Wales.................... Cardiff/Penarth 100% 103,000
Newport 100 85,000
Swansea/Neath 100 122,000
Glamorgan/Gwent(2) 100 230,000
---------
540,000
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Suburban London (Surrey)....... Surrey/Hampshire 100% 136,000
---------
Suburban London (Luton)........ Central Hertfordshire 100% 102,000
East Hertfordshire 100 56,600
North Bedfordshire 100 95,000
South Bedfordshire 100 95,000
---------
348,600
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West Yorkshire................. Huddersfield/Dewsbury 100% 138,400
---------
Northern Ireland(3)............ 100% 428,000
---------
Total all Franchises........... 2,090,000
=========
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(1) Total Homes in Franchise represents the Company's regulatory milestones which were derived from the 1981 census (being
the census statistics at the date each license was granted).
(2) The final regulatory milestone for the Gwent and Glamorgan local delivery operator license ("LDL") is 230,000 homes of
the total of 330,000 homes in the LDL.
(3) The final regulatory milestone for the Northern Ireland LDL is 428,000 homes of the total of 530,000 homes in the LDL.
</TABLE>
NATIONAL TELECOMS SERVICES
The Company offers national business telecoms, national and international
carrier telecoms services, radio communications, satellite services and national
Internet services. Based on the quarter ended December 31, 1997, the Company
generated approximately $217 million in annualized National Telecoms Services
revenue.
The Company's objective in National Telecoms Services is to successfully
integrate its strategies for developing, operating and marketing local
telephony/cable systems with its national network to provide high-quality voice,
data and video communications services throughout the UK. The Company has
constructed a national SDH fiber telecoms network, which is one of only five
independent national telecoms networks in the UK. The NTL national network
currently covers approximately 1,500 route miles and 40,000 fiber miles
throughout England, Scotland and Wales. During 1998, the Company plans to extend
the network and to include the first resilient fiber connection between Northern
Ireland, the Republic of Ireland and England.
The Company intends to compete in the major segments of the UK telecoms
market. According to published Office of Telecommunications ("OFTEL")
statistics, the total telecoms market in the UK in 1996 was estimated at
approximately 21 billion pounds sterling. Of the total telecoms market, the
Company estimates that approximately 7 billion pounds sterling represents
national business
5
<PAGE>
telecoms, 2 billion pounds sterling represents carrier services and 1 billion
pounds sterling represents international carrier telecom services. The NTL
national network has significantly expanded the Company's telecoms opportunities
from the business within its franchise areas to the much greater UK national
market.
COMBINING LOCAL AND NATIONAL NETWORKS
A total of nine of the Company's local switches have been connected to the
NTL national network, and the Company expects an additional switch in Belfast to
be connected during 1998. The Company has already begun carrying a portion of
its own long distance voice and data traffic on the network.
The integration of its local networks with the national telecoms network
creates strategic advantages for the Company's telephony business. The national
network allows the Company to carry telecommunications traffic between each of
its franchise areas and throughout the United Kingdom and, therefore, achieve
significant savings on the interconnection fees it pays to other carriers. In
addition, using the national telecoms network gives the Company greater pricing
flexibility and will enable the Company to design and offer new telephony
service packages to its customers, which management believes should have a
positive effect on the Company's penetration rates.
NATIONAL BUSINESS TELECOMS
NTL currently offers a variety of telecommunications services to businesses
located in its franchise areas. The Company's local networks are designed to
reach entire communities in the regional areas and are connected to major
business parks, office buildings, local hospitals, universities and government
agencies.
In the business market, NTL positions itself as a new provider of
state-of-the-art communications services, with broadband capabilities that
enable new potential applications for businesses, institutions and government.
The Company offers a choice of telephony services to its business customers,
from Business Exchange Lines ("BELs"), typically single or multiple lines
delivered via twisted copper pair, to Enhanced Telephony Services (ETS). The
latter is delivered via a high quality digital connection to a customer's PBX
based on a minimum connection of 15 lines. The Company also offers managed data
services (FibreLink2), Central Exchange ("CENTREX") services and its ISDN Basic
Rate Access ("BRA") service. The Company also actively markets Closed Circuit
Television/Surveillance Systems ("CCTV") to local and public authorities,
private developments and multi-occupancy situations.
To date, the Company has been successful in obtaining telecoms contracts
from businesses located within its franchise areas. As of December 31, 1997, the
Company had a total of 6,600 business customers, which represented more than a
95% increase over year-end 1996. In 1997, the Company provided one of the
largest CENTREX orders in the UK to date -- over 600 lines to a health care
trust in the Company's Luton franchise. The Company currently provides a
155Mbit, ATM network to a group of universities and hospitals in its South Wales
franchise as
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part of the UK's "Super Janet" network. This metropolitan area network links 13
sites with approximately 16,500 work stations (PCs), and generates approximately
2 million e-mail messages and approximately 12 million connections (web hits) to
the Internet per month.
The following sets forth the Company's business customers within its
franchise areas:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31,
1997 1997 1997 1997 1996
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Total Businesses (1)..... 140,000 140,000 140,000 140,000 140,000
Business Customers....... 6,600 6,100 5,460 4,360 3,375
Customer Penetration..... 4.7% 4.4% 3.9% 3.1% 2.4%
Business Lines........... 25,500 20,000 16,100 12,400 8,930
</TABLE>
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(1) Represents total estimated businesses in the Company's six regional
franchise areas.
Capitalizing on the extended reach of its national network, the Company
intends to compete for a share of the business telecoms market on a national
basis. Management believes that it can build on the strengths gained in its
local franchise areas to approach targeted business users located in other areas
of the UK, initially focusing on users with multiple business locations. NTL
launched its national business telecoms service in November 1997 and its
strategy is to target medium and large businesses, beginning with those located
near the major urban areas currently served by the NTL national network.
NTL has a variety of methods to connect the "last mile" to the customers'
premise from the national network. First, as a certified national public
telecommunications operator (PTO), NTL can readily obtain the permits to
construct telecoms networks, and can therefore simply build out its network to
reach customers. Although this is clearly the most costly, the expense can be
justified in the case of large customers or when a significant level of traffic
is obtained from several customers. Second, NTL has already been successful in
utilizing its significant tower infrastructure to efficiently connect to
customers using microwave radio links. As a result of its long history in
broadcasting and other communications businesses, NTL owns or has direct access
to approximately 1,000 tower sites in attractive locations all across the UK.
Microwave radio represents an efficient and reliable method for connecting
customer locations to the national network. Third, NTL can lease circuits on the
local networks of other service providers to connect to the customers premises.
Although this may reduce the operating margin on a particular account, it
requires no capital expense, it can often be installed relatively quickly, and
the circuit can be replaced at a later date if a more profitable connection
method can be justified.
In addition, the Company has been awarded a license to operate radio fixed
access services at 10 GHz throughout the UK. The Company is currently undergoing
trials of the service. If the trials are successful, and if the Company
determines to seek and deploy the additional capital resources to pursue this
opportunity and the networks are developed, the 10 GHz license would further
facilitate the development of the Company's local access reach.
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<PAGE>
As a complement to its national business telecoms effort, the Company's
Vision Services group offers CCTV and remote monitoring services. Current
customers include shopping centers, hospitals, railways and prisons. Vision
Services is also currently developing a radio link camera system with potential
applications for emergency services, police patrols, broadcasters and inspection
workers. Management believes that CCTV services offer the potential to increase
network traffic, broaden the Company's product base, enhance relationships with
customers and reinforce the NTL image as a leading communications company.
CARRIER SERVICES AND INTERNATIONAL
NTL competes in the growing market for bandwidth and leased line services
as a nationwide wholesale telecommunications carrier. The Company provides
digital leased lines from 2 Mbits/sec to 155 Mbits/sec, which can be used for
voice, data, video and audio traffic to major regions of the UK. Customers
include fixed line and mobile telecommunications operators, cable operators,
Internet service providers, and various information technology and facilities
management companies. The Company's international facilities license allows it
to carry international traffic, and NTL has recently entered into an agreement
for a 25 year lease of international telecoms capacity on a new transatlantic
fiber optic cable connecting The Netherlands, Germany, the UK and the United
States. NTL is also expanding its product portfolio to include virtual private
networks, managed data networks, ATM and frame relay services and multi-media
services.
NTL first entered the trunk communications business in 1993 by building
digital networks for Westcountry TV, Yorkshire Tyne Tees Television, Anglia
Television and S4C to link their independent studio facilities with NTL's
transmission facilities. In 1994, NTL broadened the scope of this business by
expanding into competitive trunk communications when it commissioned a network
to link Vodafone's main cellular telephone exchanges. This network employed SDH
technology and was the first of its kind in the United Kingdom. NTL has since
expanded its network's geographic scope and capacity, increased its share of
Vodafone's traffic and added a number of new customers including Orange Plc.
("Orange"), the Civil Aviation Authority and Birmingham Cable.
The expansion of the Company's national digital network allows the Company
to offer state-of-the-art network alternatives for large carriers of data,
including cable/telephony companies, as well as managed network facilities
ensuring high levels of availability and service. The Company believes the
integrated network offers other potential customers a viable alternative to BT,
Cable & Wireless Communications ("C&WC") and Energis in the provision of long
distance services throughout the United Kingdom.
RADIOCOMMS
The Company's Radio Communications group ("RadioComms") offers a full range
of services including the design, build and operation of radio based networks,
and the provision of infrastructure and support services to customers with
"mission critical" communications needs.
8
<PAGE>
RadioComms is involved in two main activities-mobile communications
maintenance support and facilities leasing. RadioComms includes the business
operations of DTELS, the emergency services communications business that NTL
Group Limited acquired from the Home Office of the United Kingdom Government in
1994. In addition to network maintenance, the Company provides a range of
installation and commissioning services for new network design and build
projects. This division serves an estimated 70% of the radio installation and
maintenance market for police and fire services in England and Wales, as well as
other major customers such as HM Coast Guard and Prison Service. These customers
provide a steady source of revenues for NTL, but are also very effective selling
references for business telecoms and demonstrate NTL's track record of
reliability.
The Company has been engaged by Ericsson Telecommunications Ltd. to assist
in the design, planning and procuring of radio sites for the Mercury One-2-One
mobile telephone network in the United Kingdom. In addition, during 1997, Page
One Communications, UK's second largest paging operator, chose NTL's RadioComms
group to project manage the roll-out of its new paging network, including site
acquisition, installation and commissioning of several hundred sites nationally.
The major growth in the radio communications market over the next five
years is expected to arise from the outsourcing of maintenance services by
public and private network operators. The Company intends to obtain maintenance
service customers by targeting those with a national or wide area
infrastructure. Management believes that the facilities leasing market will
continue to grow with the expanding market for the provision of mobile and fixed
wireless telephony services. The Company currently intends to continue to
maximize the use of its sites through effective marketing, provision of
end-to-end services and its continued responsiveness to customer needs.
SATELLITE SERVICES
NTL provides worldwide connectivity and offers a range of satellite
uplinking services to a number of satellites, including ASTRA 1C, INTELSAT,
EUTELSAT and Orion. The Company provides connections for clients requiring
video, digital audio and data services. Customers include CBS, United Artists,
Turner Broadcasting Systems and Virgin. This division operates three teleports,
in Winchester, Croydon and central London, which are connected by fiber and
radio circuits and provide uplinking services to a number of United Kingdom
cable television programming suppliers. This group also offers an international
gateway service, which is capable of providing long distance and corporate
communications.
NTL INTERNET
NTL Internet provides residential, wholesale and business Internet access
and support services, consulting and systems integration services, and Intranet
design and implementation. In 1995, the Company launched its Internet access
service as a national service throughout the United Kingdom. This service
provides access to the World Wide Web to customers in and
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outside its Regional Areas. NTL Internet provides Internet service on a
wholesale basis to other Internet service providers as well as on a retail
basis.
NTL Internet has become one of the fastest growing Internet carriers in the
UK. The Company currently services more than 100,000 Internet users, primarily
through its wholesale relationships with Virgin.Net, Which? Online and others.
The Company also provides the Internet service for cable operators such as
Diamond Cable and Telecential.
In 1996, the Company established the Virgin.Net joint venture with Virgin
Communications Limited ("Virgin"), which began offering service in November 1996
under the name Virgin.Net. The joint venture is owned 49% by a subsidiary of the
Company and 51% by Virgin and is intended to offer Internet access and
interactive services to United Kingdom consumers and small office/home users. In
addition, Virgin.Net has contracted NTL Internet to provide the dial-up national
network and back office structure necessary for access to Virgin.Net and the
Internet. In 1997, Virgin.Net was awarded "Internet Service Provider of the
Year-Dial-up" by Internet magazine.
As with the Company's local telephony business, management believes that
access to the national telecoms network will have strategic benefits for NTL
Internet and the Company's Internet services businesses. Management expects
utilization of the Company's national telecoms network to reduce operating
costs, increase flexibility and national reach and improve the overall marketing
and product opportunities of NTL Internet.
BROADCAST SERVICES
The Company's Broadcast Services group includes the original core business
of NTL Group Limited which has been providing television and radio broadcasters
with broadcast transmission services for more than 30 years. This group designs,
installs, operates and maintains new transmitter networks and has a spectrum
planning service to plan the coverage of television and radio networks. It
operates a national infrastructure in the UK of over 1,200 owned and shared
transmission sites which deliver broadcast signals for ITV, Channel 4, S4C,
Channel 5, Teletext and many of the United Kingdom's independent local, regional
and national radio broadcasters. In addition to transmission services, the
Broadcast Services division markets value added services to its existing
television customers including additional monitoring services, reserve system
services and contribution/ distribution services.
NTL has been involved in broadcast television since the 1950s when it
designed and built the television transmission system for the United Kingdom's
first independent commercial television network. The Broadcast Services group
provides the Company with a stable contracted revenue stream from a variety of
customers through long-term contracts generally with eight to ten year terms.
The projected total value of the Company's currently contracted revenues for
national telecoms and broadcast services from January 1, 1998 through December
31, 2007 is approximately 783 million pounds sterling.
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The foregoing projection of the expected approximate revenues receivable
pursuant to existing contracts, which includes Channel 3, Channel 4 and S4C
transmission contracts, is based on various factors and was derived utilizing
several assumptions. Important assumptions and other important factors that
could cause actual revenues to differ include, among other things, general
economic conditions, the regulatory regime prevailing from time to time,
adherence to the construction, service and other obligations of such contracts,
absence of labor or weather difficulties, absence of defaults, particularly
payment defaults, by the counter-parties to such contracts or the termination or
non-renewal of such contracts. The Company assumes no obligation to update this
projection to reflect actual revenues received by the Company, changes in
assumptions or changes in other factors affecting the information presented. The
contracts with the ITV companies and Channel 4/S4C terminate on December 31,
2002. Although historically the ITV companies and Channel 4/S4C have renewed
their contracts there can be no assurance that they will do so upon expiration
of the current contracts, that they will not seek to obtain more favorable terms
or that they would not seek to obtain from third parties all or a portion of the
transmission services currently provided by the Company. The loss of any one of
these contracts could have a material adverse effect on the business of the
Company.
TELEVISION BROADCASTING
The Company currently provides broadcast transmission services for three of
the five national television channels in the UK. Channel 3, Channel 4/S4C and
Channel 5 are all currently broadcast from NTL's network of over 1,200 owned and
shared transmission sites. Two of the four recipients of the Digital Terrestrial
Television ("DTT") multiplexes awarded to date have selected the Company as the
preferred supplier of transmission services. The Company has successfully
concluded contractual arrangements with these multiplex operators.
RADIO BROADCASTING
The Broadcast Services division also offers a range of services to local
and national radio broadcasting licensees in the United Kingdom including:
target service area planning; site location, installation and construction; and
equipment selection, procurement, operation, monitoring and maintenance. This
division offers total broadcast contract services ("TBCs"), where it designs,
builds, owns and maintains the operator's transmission facilities, and facility
management contract services ("FMCs"), where it maintains customer-owned
equipment and administers the operation of the transmission service. It
maintains over 60 TBCs and 50 FMCs. Classic FM is one of two national
independent radio networks served by the Company. In 1997, NTL was successful in
winning eight-year transmission contracts with all of the nine new independent
regional radio licensees that commenced service in 1997. NTL also recently
renewed, for periods of up to ten years, all but one of the 24 expiring
contracts of its existing customers.
The Company believes that it has positioned itself to be one of the leading
suppliers of Digital Audio Broadcasting ("DAB") services. In 1995, NTL
demonstrated the United Kingdom's
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first commercial radio DAB multiplex. Currently, the Company is engaged in an
extended DAB marketing trial in London with the support of key radio customers.
The Broadcasting Act 1996 created a licensing regime for digital terrestrial
sound broadcasting and raises the prospect of full-time commercial DAB service,
which will offer CD-quality radio for the first time.
NTL INTERNATIONAL
NTL International, formerly known as Nexus, provides broadcasting systems
design, and specializes in services associated with the design and construction
of radio and television studio centers and technical facilities. These services
include installation, commissioning, equipment procurement, training and
consultancy for projects ranging from production and post production studio
facilities to full turnkey systems involving transmitter network planning and
installation.
NTL International was responsible for designing and constructing the
international broadcast facility for NBC at the Barcelona Olympic Games, for
which it received an Emmy award in recognition of the project. NTL International
also designed and built a 60 channel digital audio play-out center for
Music-Choice-Europe, a digital music supplier which is uplinked by the Company
and distributed throughout Europe by satellite.
BUSINESS STRATEGIES
Management's objective is to exploit the convergence of the
telecommunications, entertainment and information services industries to become
a premier new era communications company in the UK, which will offer these
services to residential, business and wholesale customers on a national scale.
Management believes that NTL will be able to deliver its strategy based on its
entrepreneurial approach, innovative marketing, state-of-the-art network and
technical excellence. The Company is currently employing several strategies to
achieve its objectives:
Installing Flexible Integrated Full-service Networks. This strategy allows
the Company to pursue four revenue streams-residential cable television,
residential telephony, business telecommunications services and Internet access
services-without significant incremental cost in fixed investment. The
integrated full-service networks provide a high speed, high-capacity, two-way
communications pathway to the consumer that is capable of delivering new
services which may emerge from the convergence of telecommunications,
information and entertainment. Such embedded flexibility would also allow NTL to
adapt its national network to offer Fram Relay and Asynchronous Transfer Mode
(ATM).
Focusing on Target Market Segments. The Company believes that tailoring its
services to the needs of its customers will increase the penetration of these
services. Examples of tailored services include the development of local
television programming and advertising and of private telecommunications
networks geared to "captive" local organizations such as governmental and
educational institutions. NTL has a track record of differentiating itself by
providing flexible and customized solutions to meet its customers' individual
requirements.
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Maximizing Network Capacity Utilization. The fixed cost structure of
building communications networks allows the Company to gain significant
operating leverage from incremental services provided over its networks. In its
local franchises areas, the Company's strategy is to maximize gross profit
contribution per home passed, rather than revenue per customer, by increasing
overall penetration of the number of services provided over its network.
Examples of this strategy are the development of bundled product offerings that
encourage subscriptions to multiple services, multiple television pricing plans
that appeal to differing and distinct market segments and price points, and more
"a la carte" and transaction-oriented services which increase network
utilization. This strategy resulted in the design and launch of the Choices
marketing packages, which increased the Company's overall penetration rates as
well as its percentage of dual subscribers.
The Company's strategy in national telecoms is to continue to expand both
the geographical reach and breadth of services provided, so as to increase the
potential market of national business and wholesale customers. In its national
business telecoms, management is seeking to increase network utilization by
identifying cross-selling opportunities within NTL's existing customer base
through new services that capitalize upon the convergence of telecoms,
entertainment and information services. For example, NTL views its CCTV activity
as a vehicle for increasing network utilization by facilitating and improving
the quality of video transmission between sites.
Providing Superior Customer Service. The Company believes customer service
and attentiveness to the needs of customers are critical to the continued growth
of its residential and business services and places great significance on
consistently servicing customer requirements. The Company operates multiple
customer call centers, including three large centers in Luton, South Wales and
Central Scotland. Calls are answered 24 hours a day, 365 days a year. The
customer call centers currently employ approximately 200 people, who are
specially trained to deal with customers' inquiries and needs with respect to
the Company's various products and services. Each customer representative
attends a four week in house specialized training program, which is focused on
increasing a representative's knowledge of NTL's corporate culture and products
and providing the individual with specific sales skills as well as a better
understanding of the level of service expected to be provided to potential and
existing customers on an ongoing basis. Finally, as NTL recognizes the
importance of the installation in the customer's satisfaction with the services,
management has focused on monitoring installers' performance closely to ensure
compliance with strict quality standards and scheduling installations to suit
customers' requirements.
Developing Advanced Management Information Systems. NTL believes that
advanced management information systems are critical to effectively, efficiently
and accurately serving its customers. The Company uses proprietary software to
handle its subscriber management functions from one central location. The system
uses Windows-based software and can handle both business and residential
customers as well as telephony and CATV on a single platform. It is capable of
managing the Company's tariff and discounting structures, and will also allow
for the introduction of new telephony and CATV services, such as 0800 numbers.
Additionally, the system provides the functionality to support the customer
representatives inquiry handling and contributes to NTL's high level of customer
service. For example, customer representatives have
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on-line access to customers' billing, payment and subscription histories.
Gaining Cost Efficiencies. The Company gains cost efficiencies by
centralizing certain services provided to the Regional Areas in the Company's
head office in Farnborough. Examples include network planning, marketing,
information systems, legal affairs and overnight network monitoring and customer
service. Alternatively, those cost centers which are critical to penetration,
customer service, and retention are located as close to the customer as
possible. Examples include construction management, sales, customer service, and
network maintenance, which are all located in each of the Regional Areas. In its
continuing effort to gain cost efficiencies, in 1997 the Company commenced a
reorganization of certain of its operations; in order to serve customers more
efficiently, the Company is in the process of consolidating the Customer
Operations departments currently serving its three English franchise areas into
one department, based in Luton.
MARKETING STRATEGIES
The Company increases its customer base and improves market penetration for
its services by implementing separate marketing strategies tailored to its
residential and business customers. The Company believes that separately
marketing to residential and business customers based on the specific benefits
they receive from the Company's services is the most effective means of
maximizing the Company's customer base.
RESIDENTIAL MARKETING
The Company markets its local telecoms and television service under the
brand name CableTel and promotes its brand image as an integral part of the
emerging information super-highway. The Company is constructing its integrated
full-service fiber optic networks in order to bring a wide variety of services
to the consumer. This branding strategy includes the following concepts in the
Company's advertising, literature and other materials:
- positioning NTL as a local telephone company;
- introducing alternative telephone service, multi-channel television
and Internet access as the first of an expanding array of services
which will be carried on the network in the future;
- emphasizing that the Company is bringing "more choice" in television
viewing, "better value" in telephone service and "state of the art"
communications technology in providing access to the Internet;
- demonstrating the Company's commitment to quality, value and service
in its offerings as evidenced by its Code of Practice approved by
OFTEL;
- building interest, awareness, and credibility for the Company's
services.
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The Company employs an extensive direct marketing and selling approach to
gain customers. The Company begins to build a relationship with customers before
construction commences in a given area by closely coordinating its upcoming
activities with local government authorities and community groups and eliciting
feedback on ways to minimize disruptions and inconvenience. Information packages
and construction notices are delivered to each household prior to construction.
The Company's consumer affairs advisors personally visit affected neighborhoods
and households in order to meet the special needs of the residents. All written
and telephonic inquiries from residents are input by name into a lead-tracking
database, so that when areas are released to marketing, the Company's sales
personnel have complete customer profiles of the residents in their selling
area.
The Company initiates its marketing in an area by direct mail, which is
followed by a personal appointment with a Company sales advisor. In some
regions, the sales visit is also preceded by the hand delivery to every
household of a videotape (estimated to cost approximately 45p each) which
describes NTL and its services. All information regarding both current and
future sales opportunities is entered into the database, and current sales
information is updated in the Company's provisioning, billing and subscriber
management system. Unsold household data is maintained for future telemarketing,
direct mail, and re-marketing by the sales force.
Management is currently reviewing several alternative sales and marketing
techniques. For example, NTL has launched telemarketing trials in its Luton and
Wales franchise areas to existing and new residential customers. To existing
customers, NTL promotes its second telephone line, second set top box and
channel upgrades. In addition, the Company offers a "Friend get a Friend"
program under which it offers the current subscriber and its friend one month's
free line rental.
As an additional service, the Company launched pay-per-view services to its
customers in March 1998. The Company has entered into a joint venture with
Telewest, General Cable and Diamond Cable for the provision of a cable-only
movie, sport and event pay-per-view television service called Front Row. The
joint venture comprises nearly 50% of the UK cable television industry and
represents the alternative to BSkyB's dominant position in movie and sports
rights for pay television. The pay-per-view service will be available to other
cable operators subject to agreeing terms of carriage. Front Row has signed
content output contracts with major Hollywood studios, including Warner
Brothers, Sony Pictures Entertainment (Columbia/Tristar) and the Walt Disney
Company (Walt Disney Studios, Miramax, Hollywood Pictures and Touchstone).
Additionally, as part of NTL's focus in ensuring and maximizing customer
retention, the Company usually charges an installation fee (currently 49.99
pounds sterling including VAT), which is often discounted. It also adopts a one
year service agreement and encourages direct debit payment as the "standard,"
although no discount is offered for such method of payment. The installation fee
and one year contract provide qualifying mechanisms to ensure that the customer
understands and recognizes the value of the services, while the encouragement of
direct debit payment helps to avoid non-payment or non-payment related
cancellations.
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Bundled Product Offerings. The Company's product and pricing strategies
emphasize choice, value, and quality and are designed to encourage subscription
to multiple services and maximize long-term customer retention. With its
integrated dual service network, the Company has the opportunity to offer
bundled telephony and CATV services. Following the success of a trial in certain
of the Company's franchises, in November 1996, the Company announced the
introduction of a new promotional pricing and packaging structure called
"Choices" for its telephony and CATV service. The First Choice entry package
offers the customer the Company's telephone service, which includes call waiting
and CableTel 1471 (call return feature) at no extra charge, as well as a limited
selection of television channels which includes all the terrestrial channels,
four popular CATV channels and one NTL exclusive local TV channel. The current
price for First Choice is 8.87 pounds sterling, which is approximately the same
as BT's current line rental charge. This means that NTL's customers can receive
their telephone line and sample cable television for the price of the monthly
telephone line rental alone from BT. The customer is encouraged to choose from
several genre-based tiers of mini packages called Choice Collections and the
Popular Collection, each of which includes a number of additional cable
channels. The Premium Choices packages enable the customer to select from
several premium channels each of which can be purchased for an additional
charge.
The Company believes that this type of bundled and flexible service package
is responsive to the desires and tastes of its customers. The packages give the
customer the opportunity to trade up or down rather than churn. NTL seeks to
gain incremental revenues by pulling customers through to higher tier packages.
The promotional offer of Sample Choice serves as a shop window for other
incremental services. In addition, the Company encourages subscription to
multiple services by offering a "two for one" discount on installation charges.
Value for Money. The Company also emphasizes the "value" of its residential
telephone service. By bundling its telephone service with a limited selection of
cable channels for the price of BT's telephone line rental, the Company believes
that it offers its customers greater value for their money.
In addition to these savings incentives, using the national telecoms
network should give the Company greater pricing flexibility and therefore would
enable the Company to design and offer new telephony service packages to its
customers. By integrating its national telecoms network with its local networks,
the Company will be able to bypass the wholesale long distance fees charged by
BT and other carriers for carrying calls to and from the Company's local
telephone networks. This increased flexibility positions the Company to
introduce more volume-oriented and/or geographically based calling plans
designed to give the customer even greater choice and value. Management believes
that increased ability to design attractive marketing plans and to better
package services versus its competitors should have a positive effect on the
Company's penetration rates.
Internet Access and Other Interactive Services. As part of the Company's
multiple services product strategy, NTL Internet offers retail Internet access
at speeds of up to 56.6 Kbits/sec. Particular emphasis is being placed on
jargon-free customer service and support. The Internet-access service is
currently being offered for a monthly charge of 9.95 pounds sterling. The
Company is testing
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the provision of Internet access at substantially higher speed through either
Ethernet access (10 Mbits/sec.), cable modems (4 Mbits/sec.) or ISDN access (128
Kbits/sec.).
BUSINESS MARKETING
In the business market, NTL positions itself as a new provider of
state-of-the-art communications services, with broadband capabilities that
enable new potential applications for businesses, institutions and government.
The Company's sales strategy for the business market employs a consultative
direct marketing and sales technique. It begins with detailed market surveys
designed to quantify the current and future needs of targeted businesses. The
Company's sales advisors call on potential customers with pertinent information
regarding the customer and with all products in the Company's portfolio at their
disposal. Regional customer service centers have been set up to ensure that the
needs of business customers post-sale can be met effectively. Service quality is
demonstrated by the Company's commitment to service guarantees and standards
which meet or exceed the best competitive practices, and is ensured through the
reliability of the Company's new, state-of-the-art network.
Business Telephony Services. The Company offers a choice of telephony
services to its business customers: Business Exchange Lines ("BELs"), typically
single or multiple lines delivered via twisted copper pair, or Enhanced
Telephony Services. The latter is delivered via a high quality digital
connection to a customer's PBX based on a minimum connection of 15 lines.
Enhanced features and facilities, such as Caller Line Identification, are
available on both services. Additional features, such as Direct Dialing Inward
("DDI"), are available only on the Enhanced Telephony Service. Two usage rates
are currently available, offering customers a choice based on their calling
patterns. Both usage and rental charges are competitively priced, and automatic
volume discounts give further savings to customers.
The Company based its initial entry into the market on its core business
telephony products and has since introduced the first managed data service,
FibreLink2, CENTREX services and its ISDN BRA service. The Company also actively
markets Closed Circuit Television/Surveillance Systems ("CCTV") to local and
public authorities, private developments and multi-occupancy situations.
CENTREX services give customers the equivalent of their own telephone
system (PBX or key system) without the expense of having to purchase, operate
and maintain one. The Company believes that the CENTREX market in the United
Kingdom is currently underserved, especially among small and medium businesses.
The pricing of CENTREX services is based on value provided to the customer
rather than pricing lower than competitors. The Company's CENTREX Services
include CENTREX Select, a single site service, and CENTREX Network, a multi-site
service giving transparency of voice communications between multiple locations.
In 1997, the Company provided one of the largest CENTREX orders in the UK to
date-over 600 lines to a health care trust in the Company's Luton franchise.
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Managed Data Services. The Company's offerings in this area emphasize the
immediate availability of large, flexible bandwidth circuits to meet the growing
needs of the market, while meeting the demands of existing and emerging
standards. The Company's first managed data service, FibreLink2, was introduced
in January 1996 and is aimed at large businesses which need data or voice
communications between different locations and provides a bandwidth of 2
Mbits/sec. Higher bandwidth services (34-155 Mbits/sec.) are available on
request, as are lower bandwidth (64 Kbits/sec.) services. Broadband services
will be offered to address emerging multi-media and data-intensive applications,
with rates designed to reflect the value provided to the customer. The Company
currently provides a 155Mbit, ATM network to a group of universities and
hospitals in its South Wales franchise as part of the UK's "Super Janet"
network. This metropolitan area network links 13 sites with approximately 16,500
work stations (PCs), and generates approximately 3 million e-mail messages and
approximately 20 million connections (web hits) to the Internet per month.
THE NTL NETWORKS
LOCAL BROADBAND NETWORKS
The Company believes that its advanced network design is sufficiently
flexible to permit it to deliver a wide variety of existing entertainment,
telecommunications and information services and will enable it to offer
anticipated new services in the future without incurring significant additional
construction costs to adapt its existing underground network.
Network Design and Functionality. The Company is installing its
cable/telephone and telecommunications network using established
state-of-the-art technology, deploying fiber optics directly to business
concentrations and residential nodes averaging 600 telephone lines or 500 homes
respectively, and employing spare duct and transmission capacity in excess of
anticipated needs. In this manner, the Company achieves the cost efficiencies
and rapid deployment that using standardized equipment entails, while retaining
the flexibility to expand and adapt its network over time with little or no
additional underground or construction investment.
The design and construction of a new network varies depending upon factors
including the number of route miles to be installed, density of homes and
businesses, type of surface, and the architecture of the network backbone. Each
system has been designed with at least one head-end and at least one telephone
switching office. Each system's head-end and telephone switching office is
directly connected to each node by fiber optic cable. Each node is then
connected to a subscriber's premises. Construction of each system has been
planned on a neighborhood by neighborhood basis to allow revenue generating
operations to commence in a neighborhood as construction of the portion of the
system serving such neighborhood is completed.
Fiber Optics. The evolution of fiber optic technology over the past decade,
including increases in the capacity of laser transmitters and decreases in the
price of optical receivers, has enabled the economic deployment of fiber optic
cable much closer to the customer than in traditional coaxial cable CATV and
twisted copper pair telephone networks, thereby improving the quality and
capacity of the CATV and telephone service. The main advantages of deploying
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fiber in place of both coaxial cable or copper wire are its smaller size,
greater capacity, freedom from electrical interference, and significant
reduction of the requirement for periodic maintenance. The Company is deploying
fiber to nodes serving 500 homes which are no more than several hundred meters
from the furthest home.
THE REGIONAL AREAS
The Company, through its Local Telecoms and Television Services group,
operates 16 separate franchises as six Regional Areas. Each Regional Area is
managed and operated by a local management team led by a local managing
director. The head-ends, telephone switches and technical and customer services
facilities in the Regional Areas are connected by a wide-area fiber optic
network to the Company's National Network Management Center.
Central Scotland. The Central Scotland Regional Area covers nearly 500,000
homes and includes Glasgow, the fourth largest metropolitan area in the United
Kingdom and the largest City in Scotland. It is generally considered the
commercial and industrial center of Scotland and has a higher density of
households per kilometer of cable communications network than the United Kingdom
as a whole. The Company offers locally orient and originated programming and
advertising.
South Wales. South Wales is the commercial and industrial center of Wales
and one of the United Kingdom's major contiguous urban areas. Cardiff, the
capital of Wales, Swansea (in West Glamorgan) and Newport (in Gwent) are the
region's major cities. The Company's licenses in South Wales cover approximately
540,000 homes and a substantial portion of the Welsh business community.
Suburban London (Surrey and Luton). The two Suburban London Regional Areas
comprise the Surrey and East Hampshire license area to the southwest of London
totaling 136,000 homes, and the Central and East Hertfordshire and North and
South Bedfordshire (Luton) license areas to the north of London, totaling
approximately 348,600 homes. The Company believes that the licenses in these
commuting residential communities offer an attractive blend of household density
and demographic characteristics and above average levels of disposable income.
Located between Heathrow and Gatwick international airports, the borough of
Guildford and surroundings in Surrey have become the headquarters for many
multinational high technology companies (including the cable/telephone operators
Telewest and Partners, as well as British Airways, General Motors and the
General Electric Company). To the north of London, Luton is a commercial and
industrial center hosting such manufacturers as British Aerospace and Vauxhall
(General Motors' United Kingdom division) and is the home of the fourth largest
international airport in the South of England.
West Yorkshire. Covering over 138,000 homes, Kirklees is one of the five
districts that constitute the West Yorkshire region in north central England and
is comprised of the towns of Huddersfield, Batley, Clackheaton and Dewsbury. A
manufacturing area known for textiles and engineering products, Kirklees has
recently begun to develop an active service sector which has helped to create a
stronger economy. Kirklees is geographically located between three major
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cities in the United Kingdom, Leeds, Sheffield and Manchester. Each of these
cities already has an established cable network.
Northern Ireland. The Northern Ireland franchise, covering approximately
530,000 homes, was the largest remaining cable television, telephone and
telecommunications franchise to be awarded by the ITC. The franchise covers the
entire socio-economic area of Northern Ireland, with approximately 40% of the
population located in the Greater Belfast area in the east and another major
population area centered on Londonderry in the west. Although the economy of
Northern Ireland has traditionally been oriented more towards primary industries
such as agriculture, forestry and fishing than the United Kingdom as a whole,
service industries now employ over 70% of the population. The Company believes
that because the birth rate in the area is higher than the United Kingdom as a
whole, the population is younger and household sizes are larger than the United
Kingdom average. The Company's experience and market research has shown that the
presence of children in a household significantly increases the propensity to
subscribe to CATV.
Network Architecture. The Company's cable network is being built with four
2-way channels having an initial capacity of 750 MHz, which is sufficient to
carry over 60 analog channels of television. With digital compression of the
television signal, many more channels can be transmitted. The system is
upgradeable to 1 GHz. Generally, a maximum of one amplifier is required between
the head-end optical receivers and a home. Traditional cable systems often
employ "cascades" of more than 5 amplifiers which degrade signal quality and
increase the chances of system failure.
NTL's local telecommunications network uses a SDH redundant-ring based
architecture, which improves the Company's ability to flexibly deploy capacity
and further enhances system resilience. Telephone signals are carried from the
node to the home over traditional copper pair, over a shorter distance than in
traditional telephone networks, which improves signal quality and allows higher
bandwidth services to be more easily deployed. To connect its residential
customers, the Company uses a "dual drop" consisting of "Siamese" coaxial cable,
capable of transmitting 1 GHz of bandwidth, and two copper twisted pairs capable
of providing two telephone connections. Large business customers are connected
to the telephone network directly through fiber optic cable.
NATIONAL TELECOMS NETWORK
The Company's national network was designed specifically for the high
volume telecommunications market in the UK and it incorporates many customer
sites directly into the backbone network. Expertise in designing and installing
this network was gained through nearly 40 years of managing its television
transmission network. The NTL national network covers approximately 1,500 route
miles and 40,000 fiber miles across England, Scotland and Wales. During 1998,
the Company plans to extend the network to include the first resilient fiber
connection between Northern Ireland, the Republic of Ireland, and England.
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The network consists of two fully redundant, SDH digital fiber/microwave
networks. The major fiber routes are complemented with microwave radio
connections which increase the capacity and reach of the network. SDH is an
advanced technology which is being increasingly adopted by the telecoms industry
for the high speed transmission of voice, data and video. The Company believes
that SDH technology improves network reliability and performance and provides
greater flexibility than conventional network architecture. Provision speeds are
also generally higher with SDH because it is remotely driven by software. In
addition, network availability, reliability, management, and routing are also
superior to conventional network architecture because signals are automatically
re-routed to the best path available if another is degraded. Management believes
that NTL has a competitive advantage over other carriers such as BT and C&WC
because SDH technology has been built in its networks from the start, thus
avoiding integration problems with older technology. On its 62 microwave radio
routes, the Company uses primarily Nera SDH digital microwave radios.
The NTL national network has been designed with significant existing
capacity as well as the ability to efficiently increase capacity in the future.
The fiber optic backbone network consists of fiber optic cable which generally
contains 24 pairs (48 fibers), each pair providing 16 x 155Mbits/sec (STM-16).
NTL has also provided for spare fiber optic pairs as well as duct space. For
example, the trunk route specification provides for two large ducts, each with
capacity for 4 sub-ducts, only one of which is currently used. Therefore, the
network capacity can be increased by a further 7 times with minimal incremental
capital cost.
In an effort to exploit synergies between its local and national networks,
the Company created its engineering support division in 1997. This division
centrally manages, monitors, and operates both the local and national networks
from a combined network management center. From one location, NTL operators will
be able to remotely monitor the networks, identify faults and contact local
field operators for repair (if necessary) and maximize network capacity
utilization by accessing information about both the local and national networks
simultaneously.
NATIONAL BROADCAST TRANSMISSION NETWORK
The Company's television transmission network consists of over 1,200 owned
and shared transmission sites, with towers ranging from fifteen feet to nearly
twelve hundred feet in height. The division's transmission tower at Emley Moor
in Yorkshire is the United Kingdom's tallest free-standing structure at over
1,000 feet. These towers are complemented by other transmission sites and relay
stations situated throughout the United Kingdom.
In addition to the transmission sites owned by this division, this division
also shares sites formerly held by the BBC (now held by Castle Transmission),
allowing it to complete its nation-wide coverage. In all, the Company maintains
over 2,000 transmitters, currently monitored from four regional centers and
maintained by 22 strategically positioned service centers.
The transmitters of the Broadcast Services division range in size from a 2
watt repeater which serves a small village to 500 kilowatt main stations that
cover large metropolitan areas. All of the transmitters are analog and can be
divided into two categories, solid state circuitry and
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klystron tube. The klystron tube transmitters have been manufactured by Pye and
Marconi, while the solid state units were manufactured by Harris, all reputable
manufacturers of transmission equipment. Klystron tube-type television
transmitters have a useful life of 20 to 25 years, while the solid state
transmitters can last well beyond this time frame. Solid state transmitters
require less maintenance than klystron transmitters but are not available in the
high power capacity that is needed to cover the major metropolitan areas.
In addition, this division has built and currently operates and maintains
radio transmission facilities for a number of independent local radio operators.
These facilities share components of the Company's television transmission
network infrastructure.
PROPOSED PARTNERS ACQUISITION
On February 5, 1998, the Company entered into an Agreement and Plan of
Amalgamation (the "Agreement") with Comcast UK Cable Partners Limited
("Partners"). Under the Agreement, Partners' shareholders will receive 0.3745
shares of the Company's Common Stock for each share of Partners Common Stock.
Based on the closing price of the Company's Common Stock on the date of the
Agreement, the transaction is valued at approximately $600 million.
The Agreement contains provisions such that if the purchase price per
Partners' share falls below $10.00, Partners has the right to terminate the
transaction, subject to the Company's right to adjust the exchange ratio such
that Partners' shareholders would receive an amount of the Company's Common
Stock having a value of $10.00 for each Partners share. Under certain
circumstances, the consideration payable to Partners' shareholders may be
adjusted based on the proceeds of the potential exercise of certain rights of
first refusal with respect to Partners' interests in the London and Birmingham
operations described below. Completion of the transaction is subject to a number
of closing conditions including regulatory approvals, shareholder approval by
the Company and Partners and consents from their respective banks and
bondholders.
NTL believes that the acquisition of Partners will provide the Company with
the opportunity to achieve certain strategic and financial benefits including:
(i) improved operating performance and reduced operating costs, (ii) an enhanced
return on its national telecoms assets through increased network capacity
utilization, (iii) increased penetration in the national business telecoms
market by expanding its local presence and increasing its geographic coverage,
and (iv) benefits of scale in equipment procurement and programming acquisition.
PARTNERS
Partners was incorporated in 1992. As of December 31, 1997, Partners had
interests in four operations (the "Partners Operating Companies"): Birmingham
Cable Corporation Limited, in which the Partners owns a 27.5% interest, Cable
London PLC, in which Partners owns a 50.0% interest, Cambridge Holding Company
Limited, in which Partners owns a 100% interest and two companies holding the
franchises for Darlington and Teesside, England, in which Partners owns a 100%
interest.
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The Partners Operating Companies' systems are reported to have the
potential to serve approximately 1.6 million homes and the businesses within
their franchise areas when their build-out is complete. As of December 31, 1997,
Partners' reported that the Partners Operating Companies' systems passed more
than 1,197,000 homes or approximately 75% of the homes in their franchise areas,
and served approximately 360,000 residential telephony subscribers, 298,000
cable subscribers and 11,400 business telephony subscribers.
COMPETITION
The Company faces significant competition from established and new
competitors in the areas of residential telephony, business telecommunications
services and cable television. The Company believes that competition will
intensify in each of these business areas, particularly business
telecommunications.
Residential Telephony. The Company competes primarily with BT in providing
telephone services to residential customers. BT, formerly the only major
national PTO in the United Kingdom, has an established market presence, fully
built networks and resources substantially greater than those of the Company.
According to OFTEL, at March 31, 1997, nearly 90% of United Kingdom residential
telephone exchange line customers are customers of BT. The Company's growth in
telecommunications services, therefore, depends upon its ability to convince
BT's customers to switch to the Company's telecommunications services. The
Company believes that value for money is currently one of the most important
factors influencing the decision of United Kingdom customers to switch from BT
to a cable telecommunications service. BT has, however, introduced price
reductions in certain categories of calls and, due to regulatory price controls,
BT will be making further reductions in its telecommunications prices.
Accordingly, although the Company intends to remain competitive, in the future
it may be unable to offer residential telephone services at rates lower than
those offered by BT. In such case, the Company may experience a decline in its
average per line residential telecommunications revenues, may not achieve
desired penetration rates and may experience a decline in total revenues. There
can be no assurance that any such decline in revenues or penetration rates will
not adversely affect the Company. In addition to BT, other telecommunications
competitors which may have substantially greater resources than those of the
Company could prevent the Company from increasing its share of the residential
telecommunications market.
On February 8, 1996, the Department of Trade and Industry ("DTI") announced
the award of two licenses to operate radio fixed access services in the 2 GHz
band. These new licenses enable the two licensees, BT and RadioTEL Systems, to
provide telecommunications services to customers living in defined remote rural
areas mainly in Scotland, Wales and Northern Ireland and create potential
additional competition for the Company's residential telephony services in
certain remote rural areas of the Company's Northern Ireland franchise. The
Company also competes with mobile networks. This technology could grow to become
a competitive threat to the Company's networks, particularly if call charges are
reduced further on the mobile networks. The Company's Radio Communications group
may enable the Company to benefit from the growth in this technology. There can
be no assurance, however, that the Company will be able to
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compete successfully with BT or such other telecommunications operators.
The Company believes that it has a competitive advantage in the residential
market because of its ability to offer integrated telephone, CATV,
telecommunications services (including interactive and on-line services) and
dual product packages designed to encourage customers to subscribe to both
services. However, there can be no assurance that this competitive advantage
will continue. Indeed, BT, C&WC and other national PTOs will be entitled to
convey CATV services from 2001 and, subject to a review by the Director General
(which is already underway), possibly from as early as 1998.
British Sky Broadcasting Limited ("BskyB") is currently marketing
telecommunications services both independently and on behalf of BT. BSkyB's
joint marketing efforts with BT enable BSkyB's customers to earn additional
discounts on BT's residential telecommunications volume discount plans. In
addition, it has been reported from time to time that BT and BSkyB are
discussing the formation of cooperative arrangements. Given the respective
market positions of BT and BSkyB, the Company believes that, if the two
companies successfully combine their respective marketing strengths, the
resulting combination would provide significant competition to cable operators
including the Company.
Business Telecommunications. BT is also the Company's principal competitor
in providing business telecommunications services. In addition, the Company
competes with C&WC, Energis, Scottish Telecom in Scotland and with other
companies that have recently been granted telecommunications licenses such as
WorldCom and Colt. In the future, the Company may compete with additional
entrants to the business telecommunications market, such as AT&T U.K.
Competition is based on price range and quality of services, and the Company
expects price competition to intensify if C&WC, Energis and other new market
entrants compete aggressively. Most of these competitors have substantial
resources and there can be no assurance that these or other competitors will not
expand their businesses in the Company's existing markets or that the Company
will be able to continue to compete successfully with such competitors in the
business telecommunications market.
CATV. The Company's CATV systems compete with direct reception over-the-air
broadcast television, direct-to-home ("DTH") satellite services and satellite
master antenna systems. In addition, pay television and pay-per-view services
offered by the Company compete to varying degrees with other communications and
entertainment media, including home video, cinema exhibition of feature films,
live theater and newly emerging multimedia services. The Company expects that,
in the future, it may face competition from programming provided by
video-on-demand services, including those that may be provided by PTOs with
national licenses (i.e., national PTOs). Certain companies associated with BT
and Mercury (which recently merged with three cable operators that hold such
licenses-NYNEX CableComms, Bell Cablemedia plc and Videotron Holdings plc-to
form C&WC) hold licenses to provide cable telephone/television systems that
cannot, under current ITC policy, be built in any of the Company's franchises.
This ITC policy position may change. Any such change in policy could have a
material adverse effect on the Company.
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On September 29, 1993, the ITC issued a statement pursuant to which it took
the position (shared by OFTEL and DTI) that BT and the other national PTOs may
provide "video-on-demand" service under their existing licenses. No assurance
can be given that video-on-demand will not provide substantial competition to
the Company within its markets in the future.
The Broadcasting Act 1996 provides for the regulation of digital
terrestrial television ("DTT") that will initially provide an additional 18 or
more new terrestrial channels serving between 60% and 90% of the United
Kingdom's population. Some of the channels are reserved for digital simultaneous
broadcasting by the existing terrestrial broadcasters. The introduction of DTT,
as well as digital satellite television will provide both additional programming
sources as well as increased competition for the Company and its subsidiaries.
There can be no assurance that satisfactory (or any) terms of carriage will be
obtained by the Company for digital satellite programs or channels.
The full extent to which existing or future competitors using existing or
developing media will compete with cable television systems may not be known for
several years. There can be no assurance, however, that existing, proposed or as
yet undeveloped technologies will not become dominant in the future and render
cable television systems less profitable or even obsolete.
Broadcast Services. In February, 1997, the United Kingdom Government sold
the BBC's Home Service and World Service transmission businesses to a consortium
led by Castle Tower Corporation. There can be no assurance that the Company will
not encounter significant competition from Castle Transmission for its
transmission business from expiration of the Company's current contracts with
the ITV contractors and Channel 4/S4C.
REGULATION
The following section summarizes certain regulatory matters relating to the
businesses of the Company.
LOCAL TELECOMS AND TELEVISION SERVICES
CATV and cable telephony/telecommunications operators in the United Kingdom
are governed by legislation under the Broadcasting Act 1990 (the "1990 Act")
(which replaced the Cable and Broadcasting Act 1984 (the "CBA")), the
Broadcasting Act 1996 (the "1996 Act") and the Telecommunications Act 1984 (the
"Telecommunications Act"). An operator of a cable television and cable telephony
franchise in the United Kingdom covering more than 1,000 homes requires the
following two licenses for each cable franchise area:
(a) a CATV license, which authorizes the provision of cable television
services within a defined geographical area and which may be either:
(i) a prescribed diffusion service license ("PDSL") (issued
pursuant to the CBA prior to January 1, 1991 and continued in effect
under the 1990 Act) which allows an operator to provide cable
television services by means of a cable network; or
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(ii) a local delivery operator license ("LDL") issued since
January 1, 1991 pursuant to the 1990 Act which allows an operator to
deliver television and other licensed programming services by means of
a licensed telecommunications network, including a cable network or
microwave distribution system; and
(b) a telecommunications license, issued under the Telecommunications
Act by the Secretary of State for Trade and Industry (the "Secretary of
State"), which authorizes the installation and operation of the
telecommunications network used to provide CATV and telecommunications
services.
The CATV licenses and telecommunications licenses contain various
conditions which are enforced by the ITC, or OFTEL as appropriate. It is ITC
policy to grant licensees the exclusive right to provide cable television
services in the area governed by their licenses ("ITC Licenses"). The Company
holds such licenses for each of its 16 franchise areas. The ITC or the Secretary
of State has the power ultimately to revoke such licenses.
The Company's United Kingdom businesses are further subject to regulation
by the European Union ("EU").
THE BROADCASTING ACTS
LICENSING
The television services provided by the Company are regulated principally
by the ITC, which was established under the 1990 Act to license commercial
television services (except for BBC services and services provided by the Welsh
Authority), whether delivered terrestrially, by cable or satellite. Subsequent
to the 1996 Act the ambit of the ITC also extends to digital services. The ITC
regulates these services by monitoring compliance with license conditions and
has a range of enforcement powers if licensees fail to comply with them.
Before the 1990 Act, the ITC Licenses awarded by the Cable Authority (under
the CBA) were PDSLs. PDSLs are no longer granted, but they continue in effect
unchanged under the 1996 Act. Now ITC Licenses are granted as LDLs. The main
distinction between a PDSL and an LDL is a competitive tendering process and the
role the ITC plays in monitoring the development of services by licensees and
the opportunity to apply for the 40Ghz microwave video distribution service
license within the LDL area.
A local delivery service is a service using a telecommunications system
including cable or microwave systems for the purpose of delivering television or
radio services to two or more homes, and is licensable only if more than 1,000
homes can be served. In advertising a new LDL franchise the ITC specifies the
percentages of qualifying revenue ("PQRs") payable by any successful applicant
for each year for the period of the license. An LDL is then awarded on the basis
of competitive tendering usually to the applicant submitting the highest cash
bid (payable annually over the 15-year period of the license and indexed for
inflation) although the ITC will
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not make a license award to the applicant who has submitted the highest cash
bid, where it appears to the ITC that the proposed coverage by an alternative
applicant is much higher than the ITC or the highest bidding applicant, proposed
to achieve. When awarding a licence the ITC may make it conditional on meeting
certain specified financing requirements. The fees payable to the ITC, in
addition to the original cash bid and PQR payments, consist of an initial fee
payable on grant of the license and annual fees thereafter as may from time to
time be fixed by the ITC and representing a proportion of the costs incurred by
the ITC in carrying out its functions.
A prescribed diffusion service, the forerunner to the local delivery
service, is a service involving a cable system capable of serving at least
10,000 homes. The ITC has inherited the responsibility for monitoring the way in
which the licensee develops the services which were originally proposed by the
applicant for distribution throughout its franchise areas (such as a local
channel). The fee currently payable to the ITC for a PDSL is an annual fee based
on a proportion of the ITC's costs and expenses.
DURATION OF ITC LICENSES
The duration and terms for renewal of the Company's PDSLs and LDLs are as
follows:
PDSLs. PDSLs are issued for an initial period of 15 years, although the
Company is entitled to seek an extension for a further 8-year period. If the
Company elects to extend a PDSL, upon expiration of an extended license, the
Company must apply for a new LDL under the competitive tendering process
described above. If the Company does not elect to extend a PDSL the Company is
entitled to apply for the grant of an LDL for the same area for a further 15
year period, and the ITC will set the amount of notional cash bid and PQR
payments payable over the period of the license. The ITC can only refuse to
grant the LDL to the existing licensee in such circumstances if (i) they propose
to grant a new LDL in respect of a different area, (ii) the licensee is not
operating throughout the whole of the franchise area, (iii) the licensee's
proposed service under the LDL would not cover the entire franchise area or (iv)
its proposed telecommunications system is not acceptable.
LDLs. LDLs are issued for a period of 15 years and can be renewed on one or
more occasions for 15 years. On renewal of the LDL, the ITC will set the amount
of notional cash bid and PQR payments payable over the period of the renewed
LDL. The ITC can only refuse to renew the LDL if: (i) the ITC proposes to grant
a new LDL for a different area; or (ii) in the case of a licensee that fails to
achieve the required coverage specified in its technical plan, the ITC is not
satisfied that the licensee would be able to achieve the required coverage on
renewal of the license.
The majority of the Company's ITC licenses will expire in December 2005 and
are not currently due for renewal or extension. Applications for renewal of the
LDL may be made within five years of the expiry of the LDL and not later than
the date the ITC would need to invite applicants for a new LDL for the relevant
franchise to replace the LDL upon its expiry.
The Company has a number of "transitional" LDLs ("LDTs") for areas in South
Wales
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acquired from Metro Cable TV Limited ("Metro") in 1995. LDTs were issued under
the 1990 Act to replace old diffusion service licenses which were not PDSLs and
which were outside a cable franchise area. These are issued for an initial
period of 5 years, and may be renewed for further 5-year periods. On renewal,
the ITC may specify the amount of a notional cash bid and PQR payments over the
period of the LDT. All the Company's LDTs have been renewed without any cash bid
or PQR payment requirements and will expire in 1999. The Company will be
entitled to seek a renewal of its LDTs for further 5-year periods.
ENFORCEMENT AND REVOCATION
The ITC is empowered to revoke a license where it considers it necessary to
do so for the purpose of complying with the restrictions on ownership contained
in the 1990 Act as amended by the 1996 Act. Where the licensee is a corporate
entity, the ITC may revoke the license if any change in the nature or
characteristics of that corporate entity, or any change in the persons having
control over or interests in it, are such that, had they occurred before the
granting of the license, they would have induced the ITC to refrain from
granting the license. A license can also be revoked if the operator fails to
comply with any license condition (including, in the case of an LDL, the
establishment of the service in accordance with the technical plan submitted by
the licensee) or direction from the ITC and the ITC considers revocation to be
in the public interest or if the ITC is satisfied that the licensee ceases to be
a fit and proper person. With respect to LDLs and other licenses issued under
the 1990 Act, the ITC can also impose fines and shorten license periods.
OWNERSHIP RESTRICTIONS
The 1996 Act has substantially amended the media ownership rules set out in
the 1990 Act. The amended rules came into force on November 1, 1996.
The new rules do not change the foreign ownership rules affecting cable
operations; therefore, non-EC bodies will not be prevented from owning cable
licenses, but they are restricted from holding a Channel 3 license and licenses
for certain other broadcasting and commercial radio services.
The ITC remains under a duty to ensure that certain entities, including
local authorities, political bodies and religious bodies, do not hold ITC
Licenses. The Secretary of State for Culture, Media and Sport has a wide
discretion to amend the rules restricting participation in ITC Licenses.
The 1996 Act introduces new ownership rules on licensed television
interests in the UK which will, broadly speaking, relax the existing
restrictions. It revokes all the existing ownership rules applying between the
various means of television distribution and applies one overriding rule, namely
that no one person may hold two or more licenses where his audience time exceeds
15% of the total United Kingdom audience time for the last 12 months. The type
of licenses referred to include all terrestrial television services (whether
analog or digital licenses, licensed satellite program services, or licensable
program services). ITC Licenses are not included within
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the new restrictions. The intention is that cable is treated as a method of
delivery only, and will only be included where the cable operator in question is
responsible for the editorial content of that programming.
LOCAL SERVICES REQUIREMENT
The Company's PDSLs (i.e. all its ITC Licenses except the Northern Ireland
and Gwent and Glamorgan LDLs) require the provision of local services (including
text information, community access and programming dedicated to the Company's
local communities). In recent meetings with the ITC, the Company has begun the
formulation of a plan to develop and provide some of these services. In January
1997, the Company successfully applied for, and was awarded, a license for its
proposed new local program series to be called "On T.V." In 1997, the Company
launched On T.V. in each of its Regional Areas in partnership with local
organizations such as local universities, technical colleges, radio stations and
newspapers.
RESTRICTIONS ON TRANSFER
The 1990 Act permits the transfer of an ITC License to a third party with
the prior written consent of the ITC. The ITC has absolute discretion to refuse
any proposed transfer of such a license.
PROGRAM ORIGINATION
Under the 1990 Act, cable operators with PDSLs and LDLs may only carry
licensed program services on their systems and present only advertising and
programs (including foreign satellite programs) which conform to the
restrictions set forth in codes produced by the ITC in relation to advertising,
program sponsorship and programming content.
The 1996 Act introduced two main changes to cable "must carry" provisions:-
(i) PDSL holders were required under the 1990 Act to carry the public
analog terrestrial channels of BBC1 and 2, the regional ITV channel and
Channel 4. This obligation has been extended under the 1996 Act to include
teletext services carried on the above channels; and
(ii) the 1996 Act provides that when a cable system (PDSL or LDL) is
transmitting programs in a digital format and the ITC is satisfied that it
is appropriate to treat the system as a digital system, the ITC will serve
a notice on the licensee, at which point the licensee is required to carry
all free to air services provided by the BBC, BBC teletext, Channels 3, 4
and 5 and the public teletext on Channels 3 and 4.
Cable operators have no copyright liabilities for "must carry" services.
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THE TELECOMMUNICATIONS ACT
LICENSING
The installation and operation of the Company's United Kingdom cable
systems, over which it provides its television and other telecommunications
services, requires a license issued under the Telecommunications Act by the
Secretary of State for Trade and Industry (a "DTI License"). The Company has a
number of DTI Licenses covering areas which coincide with the areas covered by
its ITC Licenses, as well as national and international services PTO licenses.
A DTI License authorizes a cable operator to install and operate the
physical network used to provide entertainment and telecommunications services
in its franchise. It also authorizes the operator to connect its system to other
television and telecommunications systems, including those operated by the
terrestrial broadcasting authorities, satellite broadcasters and PTOs. Although
the DTI License granted to a cable operator is for a particular franchise area,
other operators can be granted DTI licenses for that same area.
A cable operator's DTI License contains conditions regulating the manner in
which the licensee operates its telecommunications system, provides
telecommunications services, connects its systems to others and generally
operates its business. A cable operator's DTI License also contains a number of
detailed provisions relating to the technical aspects of the licensed system
(e.g., numbering, metering and the use of technical interfaces) and the manner
in which the licensee conducts its business (e.g., publicity of certain prices,
terms and conditions). In addition, a cable operator's DTI License contains
prohibitions on undue preference and discrimination in providing certain
services and unfair cross-subsidy of certain services. The cable operator's DTI
License also requires the licensee to comply with certain codes of practice and
fair trading conditions and to provide information which the Director General of
OFTEL (the "Director General") may require to carry out his statutory functions.
The fees payable for the DTI License consist of an initial fee payable on
the grant of the license and annual fees thereafter. The fees are based on a
proportion of the costs of the Director General in exercising his functions
under the Telecommunications Act. OFTEL is currently considering basing
licensing fees on a percentage of turnover.
A DTI License is not transferable. However, a change of control of a
licensee may be permitted subject to compliance with a notification requirement
provided that, among other things, the proposed change is not, in the opinion of
the Secretary of State, against the interests of national security or relations
with the government of a country or territory outside the United Kingdom.
The Telecommunications Act provides a licensing and regulatory framework
for telecommunications activities in the UK and established the office of the
Director General as an independent regulatory authority. Telecommunications
policy is overseen by the DTI. The Secretary of State also has primary licensing
authority under the Telecommunications Act, although he may delegate that
authority to the Director General. The principal functions of the
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Director General are, among other things, to monitor and enforce compliance with
DTI License conditions, establish and administer standards for
telecommunications equipment and contractors, investigate complaints and
exercise certain functions concurrently with other regulators to promote or
ensure competition in telecommunications markets. The Director General may
modify DTI Licenses either with the agreement of the licensee following a
statutory period of public consultation or following a report of the Monopolies
and Mergers Commission (the "MMC"). The Director General is also empowered to
issue enforcement orders requiring compliance with DTI License conditions which
have been breached.
TERM, RENEWAL AND REVOCATION
DTI Licenses originally were granted for an initial period of either 15 or
23 years (depending on the technology used by the licensee), commencing on the
date service was first provided to customers. In July 1992 following the Duopoly
Review (a review of a government policy not to license operators other than BT
and Mercury (now part of C&WC)), technology-related discrimination in DTI
License length was abandoned. The United Kingdom government invited all holders
of 15-year DTI Licenses to apply for new 23-year licenses. However, a licensee
also had the right to extend a 15-year DTI License to 23 years if it provided
certain technical undertakings within five years of the date of the original
grant of license. The Company has given such undertakings with respect to all of
its DTI Licenses and, consequently, the Company's DTI Licenses will expire at
various times between 2008 and 2017.
Upon expiration, a DTI License cannot be renewed and application must be
made for a new license. If the ITC License is renewed for a franchise, a new DTI
License for the same area covered by the ITC License is likely although not
guaranteed to be issued.
A DTI License may be revoked if the licensee fails to pay the license fee
when due, if the licensee fails to comply with an enforcement order, upon the
occurrence of certain insolvency-related events or if any ITC License relating
to a licensee's system is revoked. A DTI License may also be revoked if, among
other things, the licensee fails to give the required notification to the DTI of
changes in shareholders and agreements affecting control of the licensee or if
the DTI concludes that any such change would be against the interests of
national security or the United Kingdom government's international relations.
NETWORK CONSTRUCTION
DTI Licenses for PDSL areas specify the build schedule of the system which
the cable operator is required to implement (by reference to the numbers of
premises passed) and the particular technical characteristics to which the
system must adhere. It is OFTEL's responsibility to enforce compliance with the
build schedules. The DTI Licenses for LDL areas, such as Northern Ireland and
Glamorgan and Gwent, do not specify a build schedule. This schedule is contained
in the LDL issued by the ITC, and it is the ITC's responsibility to enforce
compliance with those build schedules. Persistent failure to comply with the
build schedules could result in license revocation.
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Under a DTI License, the cable operator is subject to and has the benefit
of the Telecommunications Code promulgated under the Telecommunications Act. The
Telecommunications Code provides certain rights and obligations with respect to
installing and maintaining equipment such as ducts, cables and cabinets on
public or private land (including the installation of equipment on public
highways). Cable operators also have the benefit of the New Roads and Street
Works Act 1991 (and equivalent legislation in Northern Ireland) which provides
them with the same rights and responsibilities with respect to construction on
public highways as other public utilities. Cable operators generally are
required to post bonds with local authorities in respect of their obligation to
ensure reinstatement of roads and streets in the event the operator becomes
insolvent, ceases to carry on business or has its DTI License terminated. In
order to install equipment on private property, cable operators should first
seek the agreement of occupiers, property owners and others, but where such
agreement is not forthcoming, they may apply for a court order dispensing with
the requirement for such an agreement.
A planning order issued in April 1994 imposes planning consent requirements
on certain works carried out under the Telecommunications Code. Under this
planning order, installation, alteration or replacement of any
telecommunications apparatus on, or within the land surrounding, a dwelling
house is deemed to be development for which planning consent is required. There
is some uncertainty as to the extent to which this restriction could affect the
development and maintenance of television and telecommunications systems. The
Department of the Environment, however, takes the view that cabling a house is a
"minor operation" and is not, therefore, "development" unless it alters the
external appearance of a building.
TELEPHONE OPERATIONS
The ability of cable television operators to provide telephony services is
subject to the restrictions contained in their DTI Licenses. All the Company's
DTI Licenses permit the Company to provide voice telephony services and to
switch their own traffic. Additionally, under the UK regulatory regime, the
Company has the right to require BT, C&WC and other public telephone operators
("PTOs") (including cable operators) to provide interconnection and, failing
agreement on the interconnection terms, the right to request OFTEL to determine
the interconnection conditions. The Company has interconnection agreements with
BT and C&WC.
Telephone Number Portability. At the request of a DTI licensed operator,
and if so directed by the Director General, BT is obligated to offer customers
number portability (i.e. the ability of telephone customers to retain their
telephone numbers when changing to another telephony operator).
Pursuant to a hearing by the MMC, BT's license was amended on July 29, 1996
in accordance with the MMC's findings. The license modifications require that BT
split total number portability costs 70:30 with the cable operator requesting
number portability. This meant that BT bore the systems' set up costs; the other
operator paid the per line set up costs; and BT and the other operator shared
extra costs associated with routing a call to a ported number until October 1997
when BT was due to introduce a new method of routing ported number calls,
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called the "call dropback" method under which BT will bear any costs associated
with call dropback as well as any additional costs which BT incurs should they
fail to introduce the "call dropback" method by October 1997. These costs are
expected to be minimal. The Company intends to offer number portability for
customers in the future.
In December 1997, OFTEL also modified all other PTO Licenses (including
those held by the Company) to require the provision of number portability when
requested by another operator able to offer reciprocal number portability.
DTI licensees are obliged to notify OFTEL of the rates for licensed
services. The Company is required to publish rates with OFTEL for cable
television. BT is currently subject to controls on certain prices it may charge
customers.
BT has been permitted to offer retail discounts nationally to high volume
users, albeit subject to several conditions. Importantly, BT is restricted in
the manner in which it can offer discounted services by virtue of the obligation
not to show undue preference to or exercise undue discrimination against
particular persons or persons of any class or description (cable operators are
also subject to a similar prohibition on undue preference or discrimination in
relation to services). Except as mentioned above, BT is not, therefore, allowed
to offer discounted services in local markets without offering them nationally.
For so long as this policy of geographic averaging remains in effect, BT will be
restricted in its ability to respond through differential pricing to local
competition from cable operators. OFTEL has indicated that it remains firmly
committed to the principle of geographic averaging for the majority of BT's
services including voice telephony.
OFTEL also imposes controls on BT's retail pricing which is proposed to
apply for a 4 year period from July 1997. OFTEL has chosen to adopt a more
deregulated approach to permit market forces to determine pricing where
competition exists in particular markets. The principal features of the regime
are: (i) to control retail prices through 2001 only where consumer protection is
required (namely, low to medium spending residential customers (approximately
the first 80% by bill spend) and additional guarantees for small businesses-this
control is expected to cover only approximately 25% of BT's revenues; (ii) a
value of X, for the purposes of the price cap formula (RPI minus X), of 4.5% for
those residential customers and protection for the top 20% of customers by bill
spend and small businesses; (iii) that this be the last retail price control;
(iv) the introduction of price controls on network charges (the input costs of
operators competing with BT); and (v) the so-called "fair trading" condition in
BT's license which enables the Director General more effectively to deal with
anti-competitive behavior by BT. OFTEL's price cap scheme represents a first
step towards deregulation of pricing in the United Kingdom telecommunication
markets.
On October 1, 1996, the fair trading condition was introduced into BT's
license and came into effect on January 1, 1997. This fair trading condition
provides similar prohibitions to those set out in Articles 85 and 86 of the EC
Treaty in relation to anti-competitive agreements and the abuse of a dominant
position in the United Kingdom. OFTEL has incorporated this fair trading
condition into all other significant telecommunications operators licenses.
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Interconnection and Accounting Separation. The commercial viability of
voice and other telecommunications services provided by cable operators depends
on their ability to connect with other telecommunications systems in a cost
effective manner. Cable operators' systems must connect with systems operated by
other PTOs for calls that do not originate or terminate on their system. Each
holder of a public telecommunications license (including NTL, BT and C&WC as
well as cable operators) is required to negotiate an interconnection agreement
with any other license holder that seeks one and either party may request
intervention from the Director General if there is a failure to agree on terms.
The Director General also has the power, at present, to make determinations and
directions in respect of certain obligations of any party to an interconnection
agreement. However, determinations by the Director General may be liable to
challenge in the courts. In addition, BT is required by its license to make all
interconnection agreements that it has entered into publicly available.
On March 31, 1995, OFTEL modified BT's license to implement accounting
separation for BT's "retail", "access" and "network" businesses.
OFTEL announced in July 1997 changes to the regime controlling BT's
interconnection services, to take effect from October 1997 until September 2001.
The principle elements of these changes were a new price cap for BT's wholesale
interconnection charges for call termination, call origination and within
network conveyance of RPI-8%, with additional safeguard caps of RPI-0% on
certain other wholesale services. The basis for calculating BT's costs (and
hence charges) was changed from Fully Allocated Historic Costs to Long-Run
Incremental Current Costs, the effect being to impose a further one-off
reduction in charges of about 10% on average. The review also introduced further
developments of BT's management accounts and cost information to provide greater
transparency to those purchasing or competing with BT's wholesale services.
OFTEL has stated that operators may be required to provide network
information to BT for interconnection purposes in much the same way as BT must
publish information about its own network and, once BT is subject to
quality-of-service targets and publication requirements in relation thereto,
similar requirements may apply to other operators. Such "symmetry" will be
applied to other operators in respect of wider interconnection obligations (such
as accounting separation and transparency of charge calculation for
interconnection) if OFTEL concludes that any such operator has market power and
is in a position to distort competition to the detriment of consumers. OFTEL
does not currently propose to require other operators to publish their
interconnection agreements.
Indirect Access. In July 1996, OFTEL published a Statement of its policy on
indirect access and equal access. It defined indirect access as the situation
where a customer buys a telecommunications service from an operator to which it
is not directly connected and where that operator pays another operator, to
which the customer is connected, for use of that connection. This statement
confirmed that while OFTEL has implemented a policy of indirect access to BT's
customers, it remains of the view that it is generally undesirable to oblige
non-dominant operators to provide indirect access. Accordingly, if a
telecommunications operator does not
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have 25% of the connections in a relevant market, OFTEL would be unlikely to
conclude that indirect access should be required. If the operator did have 25%
or more of connections, OFTEL would want to consider other market conditions,
such as the share of connections held by other operators, the existence of any
barriers to switching or whether, in the long run, mandating indirect access
under such circumstances was likely to enhance competition or diminish it.
Consideration of these factors would create a framework in which a request to
mandate indirect access could be considered.
Equal Access. The licenses of BT, and C&WC enable OFTEL to require them to
make available to customers the ability to have their long-distance or
international calls carried by another operator without extra procedures, either
by pre-selection or on a call-by-call basis.
OFTEL's statement of July 1996 also confirmed that in accordance with BT's
DTI License, a full cost-benefit analysis of equal access had been undertaken.
This analysis raised doubts about the overall economic benefit of introducing
equal access. Accordingly, OFTEL has concluded that, on balance, there is no
case at present for directing BT to provide equal access.
In December 1997, the European Telecommunications Council of Ministers
approved an amendment to the Interconnection Directive which would require
Member States to ensure that operators with Significant Market Power (SMP)
introduced equal access-or carrier pre-selection (CPS) by January 1, 2000.
(OFTEL has indicated that in the UK it considers BT and Kingston Communications
to be the only operators to have SMP for this purpose.) The UK Government argued
unsuccessfully that this measure was unnecessary, given the doubts over the
benefits which would result. The Directive would enable the UK to argue that
introducing CPS in the UK should be deferred if it would be excessively
burdensome on an operator or category of operators. The proposals do not however
allow for balloting or proportional assignment of customers which may limit the
effect of CPS compared with other countries which have introduced it.
There can be no assurance that the implementation of equal or indirect
access by the Director General or the effect of the European Union's
Interconnection Directive will not adversely affect the ability of cable
television/telecommunications operators to market their telecommunications
services.
TECHNICAL AND REPORTING REQUIREMENTS
The principal technical requirements for the cable systems are contained in
the DTI Licenses and address technical requirements for transmissions,
performance requirements specified as British Standards relating to wideband
cable distribution systems and, in all cases, radio interference restrictions.
The Company's DTI Licenses impose obligations to provide any information
which OFTEL may require for the purpose of exercising their statutory functions.
This includes financial reporting, market data, and information on customer
complaint and fault handling procedures.
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EUROPEAN UNION LEGISLATION
TELECOMMUNICATIONS REGULATION
Most of European Union (EU) States' communications regimes are not as
liberal as the UK's. Member States are now however typically in agreement on the
importance of liberalizing their communications sectors, which is facilitating
the European Commission attempts to fully liberalize the voice telephony market
and infrastructure across the EU as from January 1, 1998 (subject to
transitional periods for certain Member States). Some of the key Commission
Directives which became effective on January 1, 1998 in this field are:
A Directive requiring Member States to abolish all restrictions on the
supply of transmission capacity by CATV network operators to service operators
and allow the use of cable networks for the carriage of telecommunications
services, other than voice telephony, within Member States from January 1, 1996.
The Directive does not affect the provision of CATV services.
A Directive which provides for full competition in telecommunication
services and network infrastructure by January 1, 1998. This Directive also
provided for the liberalization of self-provided infrastructure (such as
utilities' networks) for the provision of services other than voice telephony
from July 1, 1996. Voice telephony was liberalized on January 1, 1998. The
Directive's provisions are generally comparable to the existing United Kingdom
regime which is already liberalized with respect to the provision of
telecommunication services and infrastructure. Following industry consultation,
the duopoly which had allowed BT and Mercury to operate international facilities
has been abolished and the Company was awarded a license to run international
facilities on December 19, 1996.
A Directive on the application of open network provision ("ONP") to voice
telephony. This Directive sets rules and targets for basic telephone service in
areas such as telephone directories, tariffs, billing procedures and quality of
service. It also requires telephone companies to provide interconnection on
open, objective and non-discriminatory terms, (which is now generally the case
for cable operators in the United Kingdom). The Commission has proposed a new
Directive to replace this ONP voice telephony Directive during 1998. This new
Directive does not deal with interconnection which is the subject of a further
Directive.
A Directive on Interconnection in telecommunications with regard to
ensuring universal service and interoperability through application of the ONP
principles came into force on January 1, 1998. The Directive sets out a
harmonized framework to be implemented by Member State regulatory authorities
regarding the interconnection of public telecommunications networks and services
utilizing the ONP principles of transparency, objectivity and
non-discrimination. This proposal aims to ensure open access to networks and
services and to guarantee the rights and obligations of operators and service
providers for interconnection with the networks and services of others. The
Directive is broadly in line with the approach which OFTEL is implementing
through its interconnection and accounting separation program in the United
Kingdom. The Directive links obligations in these areas to the concept of SMP.
OFTEL has said that it does not regard companies such as NTL as having SMP at
present. This situation could
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change if NTL were to substantially increase its market share. The Directive
does contain an obligation for operators with "Special and Exclusive Rights" in
a sector other than telecommunications to introduce accounting separation
between their activities in that sector and the telecommunications sector. The
UK authorities have said that they consider companies with cable television
franchises to have such rights. It is unclear at this stage whether this will
result in significant or onerous obligations.
A European Directive on telecommunications licensing came into force on
January 1, 1998 and introduced some changes to the licensing regime. The main
effect was to require license terms and conditions to be non-discriminatory as
between different categories of operations, to introduce greater transparency
into the process of granting or refusing a license; to prescribe that fees which
can be charged for licenses must be no more than necessary to cover the costs of
administering and enforcing the license; to set out the administrative procedure
to be followed when revoking a license, and to prescribe the broad categories of
conditions which may be included in individual and general licenses. During
1998, the DTI and OFTEL intend to review and if necessary amend all existing PTO
licenses under the Telecommunications Act 1934 in order to fully implement this
Directive. It is not envisaged at this time that this will have a material
effect on the rights and obligations which NTL faces under its licenses.
OTHER REGULATORY ISSUES
Following a review completed by the Office of Fair Trading ("OFT") in July
1996, BSkyB has accepted new undertakings to the OFT to address concerns in
respect of its wholesale pricing in addition to modifications to those
undertakings agreed to in March 1995 (which addressed concerns about the
bundling of programs and rate card discount schemes). The OFT also announced
that a new industry ratecard would be approved only after consultation with the
cable industry.
This consultation ended on November 5, 1996. On December 16, 1996, the OFT
approved the structure of the ratecard. Since this date, subsequent ratecards
have been approved by the OFT to reflect changes in BSkyB's programming and
pricing. BSkyB's wholesale prices for cable operators are contained in the
industry ratecard, the structure of which (although not the level of pricing) is
subject to approval by the OFT. Changes to the structure of the ratecard must be
approved by the OFT although further changes to the ratecard may occur as a
result of commercial negotiations between BSKyB and the cable operators
regarding the pricing levels within the ratecard structure or following further
regulatory developments.
BSkyB's wholesale prices for its premium channels are calculated as a
percentage of its own DTH retail price. Following its review of BSkyB in 1996,
the OFT concluded that there was no evidence that such linkage between the
direct-to-home ("DTH") retail price and its wholesale price charged to cable
operators was anti-competitive and that no action was required on this issue.
Additionally, the OFT said that it had reviewed BSkyB's accounts and will
continue to do so every six months, to ensure that BSkyB is not
cross-subsidizing its retail DTH business from revenues of its wholesale cable
supply business to the detriment of competition.
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However in relation to BSkyB's requirement that cable operators carry its
basic channels to 100% of their subscribers, the OFT found in its 1996 review
that this was inhibiting cable operators in their ability to offer tailored
packages and was inhibiting the growth of local cable industry. BSkyB has
accepted an undertaking not to require carriage in excess of 80% in the future,
although BSkyB will be permitted to increase the prices of its basic channels by
1.25% for each percentage point by which carriage of the channels falls short of
100%. BSkyB also accepted an undertaking not to bundle bonus programs (such as
occurred in respect of the Disney Channel) with premium channels in the future.
The ITC is currently investigating the handling of channels at all levels and is
including within such investigation a complaint concerning the terms of supply
of the Disney Channel.
REGULATION OF COMPETITION
The Company is subject to UK and European Community competition law regimes
administered by the OFT and OFTEL in the UK, and by the Commission and civil
courts in each member state of the EU and to individual national regimes in the
countries where it operates, presently the UK.
UK REGIME
UK law controls agreements and arrangements which affect competition
through the Restrictive Trade Practices Act 1976 ("RTPA"), monopolies and
mergers through the Fair Trading Act 1973 ("FTA") and unilateral
anti-competitive practices through the Competition Act 1980 ("CA").
In relation to the mergers provisions of the FTA, the Secretary of State
must either take certain undertakings or assurances from the enterprises
concerned or refer them to the MMC for investigation and consideration against a
broad public interest test laid down in the FTA. Monopolies and anti-competitive
practices are considered by the MMC against the same test. Monopolies and
anti-competitive practices references to the MMC are made by the DGFT, although
in the latter case, he may accept undertakings or assurances instead of making a
reference. In all three cases, the MMC may recommend action where they find that
there are matters operating, or which can be expected to operate against the
public interest. Ultimately, the Secretary of State has extensive powers to
impose remedial action in respect of matters operating against the public
interest (including divestment and the imposition of conditions on the
contracts, pricing policies and other conduct of the enterprises) either through
undertakings negotiated by the DGFT or by secondary legislation.
Under the Telecommunications Act, the Director General has concurrent
jurisdiction with the DGFT under the CA in relation to courses of conduct which
may restrict, distort or prevent competition in the markets for
telecommunications apparatus and telecommunications services and under the FTA
relating to monopoly situations (as defined in the FTA) in relation to
commercial activities connected with telecommunications and in relation to
courses of conduct which may affect interests of consumers of telecommunications
apparatus, and telecommunications services.
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A legislative bill is currently passing through the UK Parliament which
would introduce new and stronger competition law within the UK. The proposals
envisage a regime modelled on Articles 85 and 86 of the EC Treaty, which
prohibit agreements that have the effect of preventing, restricting or
distorting competition in the UK and abuses of market power. It is proposed that
the prohibitions will be accompanied by strong investigatory powers including a
right of forcible entry, rights to third party actions, and fines of up to 10%
of a company's turnover. The government proposes the powers will be enforceable
in the telecommunications sector by the Director General of Telecommunications.
The company envisages that this will provide a much stronger framework than
hitherto for addressing anti-competitive behaviour by dominant firms in
telecommunications and broadcasting markets.
EUROPEAN COMMUNITY REGIME
EC competition law governs agreements which prevent, restrict or distort
competition and the abuse of dominant market positions through Articles 85 and
86 of the EC Treaty.
Article 85(1) renders unlawful agreements and concerted practices which may
affect trade between member states and which have as their object or effect the
prevention, restriction or distortion of competition within the common market
(that is, the member states of the EC/EEA collectively). Article 85(2) makes
offending provisions (if severable from the main agreement) void. Article 85(3)
allows for exemption (on an individual basis or by category of agreements) from
the provisions of Article 85(1) and 85(2) for agreements whose beneficial
effects in improving production or distribution or promoting technical or
economic progress outweigh their restrictive effects, provided that consumers
receive a fair share of the benefit, that competition will not be eliminated and
that no unnecessary restrictions are accepted. The word "agreement" in this
context is not confined to legally binding agreements and agreements may be
written or oral and can consist in an informal continuing business relationship.
The Commission is entrusted with the principal enforcement powers, and the
exclusive right to grant exemptions under Article 85(3). It has power to impose
heavy fines (up to 10% of a group's annual revenue) in respect of breaches of
Article 85(1). A prohibited agreement will also be unenforceable before the
national courts. In most cases notification of potentially infringing agreements
to the Commission under Article 85 with a request for an exemption under Article
85(3) protects against the risk of fines from the date of notification.
Article 86 prohibits abuse by one or more enterprises of a dominant market
position in the EU or a substantial part of it, insofar as the abuse may affect
trade between member states. A company may be dominant in several Member States
or part of a single Member State. A company enjoys a dominant position whenever
it possesses such market strength that it can act to an appreciable extent
independently of its competitors and customers. Determining whether an
undertaking occupies a dominant position is a complex question of law and
economics, but broadly a market share of as little as 40% may confer dominance
in a market for a product. However, dominance is not unlawful per se; only the
abuse of a dominant position is prohibited by Article 86. An enterprise may
abuse a dominant position under Article 86, for example,
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engaging in excessive pricing of its products or services, or by denying other
enterprises access to an essential facility or asset which it controls. Any
action that is designed to, or could, seriously injure competitors, suppliers,
or distributors is likely to raise issues under Article 86. The Commission has
the same powers to fine in relation to abusive conduct as in relation to breach
of Article 85, but there is no procedure for obtaining exemption.
It is possible that a third party who suffers loss as a result of the
performance by an entity of an agreement which infringes Article 85(1) could
claim damages against such entity to compensate it for its quantifiable loss.
The position in relation to infringement of Article 86 is similar. The Directors
believe that no such claim is pending or likely to be brought successfully in
respect of any agreement to which the Company is currently party or in respect
of its business practices.
BROADCAST AND NATIONAL TELECOMS SERVICES
A significant proportion of the Company's total revenues is attributable to
the provisions of television and radio transmission and distribution services
and the provision of telecommunications services. In the United Kingdom, the
provision of such services is governed by the Telecommunications Act and The
Wireless Telegraphy Act 1949 (the "Wireless Telegraphy Act"). Set forth below is
a brief summary of the principal licenses of the Company's National Telecoms and
Broadcast Services divisions granted pursuant to these Acts.
TELECOMMUNICATIONS ACT LICENSES
The Company holds five licenses under the Telecommunications Act (in
addition to Telecommunications Act licenses for its cable franchises).
License to run telecommunications systems for the provision of television
and radio transmission services (the "Transmission License"). The Transmission
License enables the Company to run telecommunications systems for the provision
of television and radio transmission services. It permits NTL to carry out its
core business of providing transmission services to television and radio
broadcasters. The Transmission License was granted on December 20, 1990 for a
period of 25 years from January 1, 1991. It is subject to revocation thereafter
on 10 years' notice in writing. No notice may be given before the end of the
fifteenth year.
The Company's Transmission License contains conditions and other provisions
which, among other things: (i) require the Company to provide specified
telecommunications services to specified persons on request; (ii) specify
certain criteria to be met by the Company in providing those services; (iii)
require the connection of the Company's telecommunications systems with those of
certain other transmission operators and the transmission over those systems by
such operators of messages for general reception; (iv) require the Company to
publish its charges and terms and conditions of business and not to show undue
preference to or exercise undue discrimination against particular persons in the
provision of certain telecommunications services; (v) requires the Company to
hold Wireless Telegraphy Act licenses in respect of each item of
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wireless telegraphy comprised in its system; (vi) impose on the Company an
obligation to share its transmission sites with other transmission operators;
(vii) restrict the prices which the Company is allowed to charge for the
provision of certain services. (see "-Price Cap Review" below); (viii) prohibit
the Company from cross-subsidizing the unregulated side of its business, and
(ix) impose a requirement for separate accounts to be produced in relation to
both the regulated and unregulated parts of the Company's business. However, the
Company is not obliged to do anything "not reasonably practicable."
The Secretary of State may revoke the Transmission License in the
circumstances described under "The Telecommunications Act-Term, Renewal and
Revocation" above.
License to run telecommunications systems for the provision of outside
broadcasting services by means of satellite systems (the "OBS License"). The OBS
License, which permits the Company to run telecommunications systems for the
provision of outside broadcasting services by means of satellite systems,
enables the Company to operate satellite up-links from outside broadcast sites
(sites which are not permanently equipped or adapted for television or radio
broadcasting). The OBS License was granted on February 6, 1991 for a period of
25 years from February 7, 1991, thereafter revocable on 10 years' notice in
writing. No notice may be given before the end of the fifteenth year. The OBS
License contains conditions similar to those in the Transmission License. The
OBS License specifies the circumstances in which it may be revoked by the
Secretary of State which include on revocation of the Transmission License.
License to run telecommunications systems ("Telecoms License"). The
Telecoms License enables the Company to convey messages (including voice and
data) between points on NTL's telecommunications networks. The Telecoms License
also contains conditions and revocation provisions similar to those in the
Transmission License. The Telecoms License was granted on December 30, 1992 for
a period of 10 years from 30 December 1992. Thereafter it is revocable on 5
years' written notice. No notice may be given before the end of the fifth year.
License to run telecommunications systems ("PTO License"). The PTO License
permits the Company to run telecommunications systems of every description
within the United Kingdom and to provide telecommunications services both
authorizations are subject to certain exceptions. The Company's PTO License was
granted on February 14, 1996 for a period of 25 years from that date.
Thereafter, it is revocable on 10 years' written notice. No notice may be given
before the end of the fifteenth year. The Company's PTO License also includes a
condition obliging it, subject to certain exceptions, to enter into an agreement
to connect its system to the system of any operator which requires it to do so,
provided that operator has been granted a license authorizing it to connect its
system to the Company's system. The PTO License details the exceptions and
conditions subject to which the Telecommunications Code will apply to the
Company. The Telecommunications Code confers certain important rights on PTO's
in relation to network construction, buildings and land.
International Facilities License. The international facilities license
permits the Company to provide direct international facilities based services,
without being required to do so via BT or Mercury. The license will enable the
Company to take advantage of the expanding volumes of
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international telecommunication traffic, especially data services such as the
internet, and substantially reduce the Company's international call conveyance
costs. In this connection, the Company has been awarded a telecommunications
license in the Republic of Ireland and intends to submit applications for
further such licenses in the United States, France, Germany, Italy, Greece and
The Netherlands.
WIRELESS TELEGRAPHY ACT LICENSES
The Company holds a number of Wireless Telegraphy Act licenses of which the
most important are the following:
License for the Transmission of Broadcasting Services. This license was
granted on January 1, 1991 and permits the licensee to operate wireless
telegraphy stations at those sites set out in a schedule to the License. In
respect of each station, site and mast heights, power, polarisation and
frequency to be used are specified.
Microwave Fixed Link License. This license permits the licensee to
establish and use fixed stations for sending and receiving wireless telegraphy
at those sites as detailed in the schedule to the license.
Private Mobile Radio License. This license permits the licensee to
establish sending and receiving stations for wireless telegraphy (both base
stations and mobile stations) and to use these stations for the purpose of
sending and receiving spoken messages concerning the business of the licensee.
Earth Station Licenses. The Company holds 12 earth station licenses. These
licenses permit the licensee to establish earth stations at specified locations
in the UK for the purpose of providing wireless telegraphy up-links between the
earth station and specified geo-stationary satellites.
Each of the four types of license referred to above continue in force from
year to year unless revoked by the Secretary of State or unless any of the
license fees are unpaid by the licensee in which case the relevant license
expires.
Licenses for the Transmission of Broadcasting Services (special status).
The Company provides transmission services for a large number of radio stations
pursuant to its License for the Transmission of Broadcasting Services dated
January 1, 1991 (see above). In respect of two radio stations, Classic FM and
Virgin Radio, NTL has been issued licenses which are specific for those radio
stations. This has been done for the sake of administrative convenience because,
in both cases, the license fees are paid direct to the Radio Communications
Agency by the radio station concerned.
Radio Fixed Access License. A Radio Fixed Access License has been granted
for services provided at 10 GHz. This license allows the Company to provide
short-range radio-links between business customers and its network.
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Miscellaneous Licenses. The Company holds a number of miscellaneous
Wireless Telegraphy Act licenses including testing and development licenses and
commissioned programme makers licenses.
Conditions in NTL's Wireless Telegraphy Act Licenses. The Company's
Wireless Telegraphy Act licenses contain conditions relating to revocation of
the Licenses and notifications to the Secretary of State. In general, the
Secretary of State may revoke a Wireless Telegraphy Act license at any time.
There are no notification requirements in respect of a change of control. The
license for the transmission of broadcasting services contain provisions which
enable the Secretary of State to revoke the license if, among other things, (1)
the licensee is, in the opinion of the Secretary of State, not a fit and proper
body to hold such a license; (ii) it appears to him requisite or expedient to do
so for purposes connected with the EU or any other international organization or
obligation or co-operation; (iii) the licensee ceases to hold any contracts for
the broadcasting of television or sound broadcasting services or (iv) the
licensee's license granted under the Telecommunications Act is for any reason
revoked.
At present, Wireless Telegraphy License fees are set as to recover
administration costs only. Under new legislation, the DTI has published
proposals to supplement this system with additional fees designed to reflect the
scarcity value of certain types of spectrum, notably congested microwave fixed
link bands. These proposals would not affect broadcasting spectrum, nor that
allocated in connection with the Company's 10GHz license.
DAB Testing. The Company is currently testing DAB under a series of
temporary licenses in anticipation of applying for a local or national radio
multiplex license in accordance with proposals contained in the Broadcasting
Act. These temporary licenses are issued by the Radio Authority under the
Broadcasting Act 1990. Under this Act, a body which is, or which is controlled
by a body which is, not formed under the law of an EC member state is currently
disqualified from holding a license to test DAB. The current license is,
therefore, held by an independent industry association on behalf of the Company.
However, under the present Broadcasting Act, a non-EC company will not be
prohibited from holding a license to provide local or national radio multiplex
services, and this interim position will be regularized in due course.
PRICE CAP REVIEW
The Company's regulated business may be divided into two categories: Price
Regulated Business and Applicable Rate Business. Price Regulated Business
comprises those telecommunication services which the Company is obliged to
provide pursuant to its Transmission License and in respect of which price
controls are imposed. The Company's Applicable Rate Business comprises those
telecommunications services which the Company is obliged to provide but which do
not fall within the definition of Price Regulated Business. Charges for
Applicable Rate Business are agreed between the Company and the relevant
customer. If despite all reasonable efforts agreement cannot be reached between
the Company and a significant proportion of its customers in respect of any
particular telecommunications service, the charge will be determined by the
Director General.
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In respect of any services provided by the Company which are not Price
Regulated Business or Applicable Rate Business, the prices charged by the
Company are wholly unregulated, except for the overriding duty not to engage in
any pricing policy which constitutes undue preference or undue discrimination
against any person or class of person in respect of telecommunications services.
The Company's unregulated income would include, for example, charges for site
rentals to PCN operators.
The Company's Price Regulated Business is, essentially, the television
transmission service provided to the ITV (Channel 3) companies and Channel 4/S4C
including the operation and maintenance of transmission equipment and the
provision to third party transmission operators of the accommodation, masts and
antennae necessary for the operation of broadcast transmission services.
On December 24, 1996, the Director General issued the formal modification
to the Company's Telecommunications Act Licenses to effect the price controls
which are to apply to the Company for the period from January 1, 1997 to
December 31, 2002. The Price Cap Review had two purposes: (1) to establish a new
"Po" (the Company's allowable revenues for the first year of the next control
period, 1997, in respect of the Company's Maximum Price Regulated Business) and
(2) to establish a new "X" (the percentage by which such revenues must, after
allowing for consumer price inflation, be reduced each year thereafter). The
Director General's review concluded that, on present assumptions, the new Po is
53.15 million pounds sterling and the new X is 4.0%.
In addition to price control, the Price Cap Review raised a number of other
issues which will impact upon the Company's Price Regulated Business in the
future. In particular, the Director General suggested that it would be desirable
for the Company to "unbundle" the prices for operational services and required
site rentals which it charges to each broadcaster (such as Channel 3 and Channel
4/S4C) in the form of a transmission fee in order to expose those elements of
the service which are potentially competitive and allow broadcasters to choose
an alternative supplier if they wish. OFTEL has proposed to review whether the
Company should publish a ratecard with a menu of prices for unbundled services
in 2002 when the Company's regulated business is next due for full review. At
present, the system for calculating the proportion of Channel 3's total
transmission fee which is charged to each individual franchisee is based on net
advertising revenues ("NAR") accruing to each franchisee, rather than the costs
of actually providing the transmission service to each of the franchisees.
OFTEL proposed that the Company should continue to charge Channel 3 as a
group a single price for each component of its transmission service, albeit that
each component would be separately distinguished. This arrangement would
continue unless and until NAR arrangements no longer applied. This decision
could only be taken after agreement with the Department of Culture, Media and
Sport and consultation with other interested bodies.
44
<PAGE>
EUROPEAN UNION LEGISLATION
NTL's business is further regulated by the EU under various European
Commission Directives. In addition, EU law, in particular Directive 94/46,
regulates the provision of satellite services within the EU. In addition,
possible future EU legislation (Green Paper on Convergence) NTL may be subject
to additional controls as a result of dealing both with broadcasting and
telephony services on a single network.
GENERAL
RESEARCH AND DEVELOPMENT
The Company's research and development activities involve the analysis of
technological developments affecting its cable television, telephone and
telecommunications business, the evaluation of existing services and sales and
marketing techniques and the development of new services and techniques.
PATENTS, COPYRIGHTS AND LICENSES
The Company does not have any material patents or copyrights nor does it
believe that patents play a material role in its business. The Company is
substantially dependent on the licenses and franchises granted by the
legislative agencies which regulate their respective businesses. The loss of any
one or more of the licenses and franchises of the Company could have a material
adverse effect on the Company's business and financial condition. There are no
material intellectual property licenses used by the Company the loss of which
would have such an effect.
CUSTOMERS
Except for the Company's broadcast services business, no material part of
the Company's business is dependent upon a single customer or a few customers,
the loss of any one or more of which would have a materially adverse effect on
the Company. The broadcast services business is, however, substantially
dependent on the revenues it receives pursuant to its contracts with the ITV
companies, Channel 4/S4C and Vodafone the loss of one or more of which may have
a material adverse effect on the Company.
EMPLOYEES
At December 31, 1997 the Company and its subsidiaries had approximately
4,135 employees. Approximately 1,200 employees are represented by the
Broadcasting, Entertainment, Cinematographic and Theatre Union which has entered
into a collective bargaining agreement with NTLIH. No other employees of the
Company are represented by any labor organization. The Company believes that its
relationship with its employees is good.
45
<PAGE>
ITEM 2. PROPERTIES
- -------------------
PROPERTIES
The Company's subsidiaries own, lease or occupy under license eight
business unit and regional head-offices in Glasgow, Cardiff, Newport,
Huddersfield, Fleet, Belfast, Luton and London and the corporate head-office in
Farnborough. In addition, the Company's subsidiaries own or lease eight
switching centers/head-ends and 38 operational hub-sites together with
warehouses and other non-operational properties, as well as various cable
television, telephone and telecommunications equipment used in each of its
regional systems.
The Company through NTL Investment Holdings Limited ("NTLIH"), an indirect
wholly-owned subsidiary of the Company and the parent company of NTL Group
Limited, also owns, leases or occupies under license approximately 770
properties, of which approximately 700 are used as transmitter sites. The
Company's staff are present at 72 of such properties, which are used either as
operational bases or as offices. Approximately 200 of the sites are freehold,
approximately 440 leasehold and approximately 130 occupied under license. In
addition, the Company through NTLIH also is the lessee or licensee of
approximately 600 transmitter sites which are owned by Castle Transmission and
shared between the two organizations pursuant to a site sharing agreement.
Substantially all the Company's assets and properties are subject to fixed and
floating charges securing the amounts outstanding under the Company's
outstanding bank facility.
The Company maintains offices under lease for its corporate staff in New
York City and in Princeton, New Jersey.
The Company believes that its facilities are presently adequate for their
current use. The Company intends to continue to expand its systems in accordance
with the requirements of its network build schedules and acquire new sites as
part of the ongoing expansion of its transmission networks.
ITEM 3. LEGAL PROCEEDINGS.
- --------------------------
LEGAL PROCEEDINGS
The Company is involved in, or has been involved in, certain disputes and
litigation arising in the ordinary course of its business, including claims
involving contractual disputes and claims for damages to property and personal
injury resulting from the construction of the Company's networks and the
maintenance and servicing of the Company's transmission masts, none of which are
expected to have a material adverse effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS.
- --------------------------------------------------------
There were no matters that were submitted to a vote of the Company's
stockholders during the quarter ended December 31, 1997.
46
<PAGE>
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
- ------------------------------------------------------------------------
The Company's Common Stock is traded on the Nasdaq Stock Market's National
Market under the symbol "NTLI" and on EASDAQ under the symbol "NTLI.ED". From
October 14, 1993 through March 26, 1997, the Common Stock traded on Nasdaq Stock
Market's National Market under the symbol "ICTL". The following table sets
forth, for the periods indicated, the high and low last sale prices as reported
on Nasdaq Stock Market's National Market.
LAST SALE PRICE
HIGH LOW
-----------------------
1996
----
First Quarter $30.13 $22.00
Second Quarter 33.25 28.00
Third Quarter 30.00 22.63
Fourth Quarter 28.00 23.13
1997
----
First Quarter 26.75 18.25
Second Quarter 27.00 19.25
Third Quarter 27.63 20.75
Fourth Quarter 29.13 25.25
1998
----
First Quarter (through March 20) 44.50 27.06
On March 20, 1998, the closing sale price for the Company's Common Stock,
as reported on the Nasdaq Stock Market's National Market was $44.50. As of March
20, 1998, there were approximately 522 record holders of the Common Stock. This
figure does not reflect beneficial ownership of shares held in nominee name.
The Company has never paid cash dividends on its Common Stock. Pursuant to
the indentures governing the Company's Senior Notes and the Certificates of
Designation governing the Company's Preferred Stock, certain provisions
currently materially limit the Company's ability to pay dividends on the
Company's equity securities. In addition, there are legal and contractual
restrictions on the ability of the Company's subsidiaries to transfer funds to
the Company in the form of cash dividends, loans or advances. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition -
Liquidity and Capital Resources". The Company does not currently intend to pay
cash dividends in the foreseeable future on shares of its capital stock. The
Company anticipates that for the foreseeable future any cash flow generated from
subsidiaries' operations will be used to develop and expand the Company's
business and for debt service. Any future determination as to the payment of
dividends will be at
47
<PAGE>
the discretion of the Company's Board of Directors and will depend upon the
Company's operating results, financial condition and capital requirements,
indenture and other contractual restrictions, general business conditions and
such other factors as the Company's Board of Directors deems relevant. There can
be no assurance that the Company will pay dividends at any time in the future.
ITEM 6. SELECTED FINANCIAL DATA.
- --------------------------------
The following table sets forth certain financial data for the years ended
December 31, 1997, 1996, 1995, 1994 and 1993. This information should be read in
conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------------------------
(1)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues $ 491,755 $ 228,343 $ 33,741 $ 13,745 $ 10,078
(Loss) before extraordinary item (328,557) (254,454) (90,785) (29,573) (11,076)
Net (loss) (333,057) (254,454) (90,785) (29,573) (11,076)
Basic and diluted net (loss) per
common share:
(Loss) before extraordinary item (2) (10.60) (8.20) (3.01) (.98) (.83)
Net (loss) per common share (2) (10.74) (8.20) (3.01) (.98) (.83)
Weighted average number of common
shares used in the computation of
basic and diluted net loss per common 32,117 31,041 30,190 30,175 13,327
share (2)
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------------------------
(1)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency) $ (51,916) $ 242,102 $ 76,128 $251,544 $410,421
Fixed assets, net 1,756,985 1,459,528 639,674 191,725 36,422
Total assets 2,421,639 2,454,611 1,010,669 664,366 594,976
Long-term debt 2,015,057 1,732,168 513,026 143,488 130,553
Senior Redeemable Exchangeable
Preferred Stock 108,534 - - - -
Shareholders' equity (deficiency) (61,668) 328,114 339,257 436,534 452,402
</TABLE>
(1) In May 1996, the Company purchased NTL Group Limited for an aggregate
purchase price of approximately $439,000,000, including goodwill of
approximately $263,000,000. The net assets and results of operations of NTL
Group Limited are included in the consolidated financial statements from
the date of the acquisition.
(2) After giving retroactive effect to the four-for-three stock split by way of
stock dividend paid in August 1995.
The Company did not declare or pay any cash dividends during the years
indicated.
48
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
- --------------------------------------------------------------------------
RESULTS OF OPERATIONS
As a result of the acquisition of NTL Group Limited in May 1996, the
Company consolidated the results of operations of NTL Group Limited from the
date of acquisition.
Years Ended December 31, 1997 and 1996
- --------------------------------------
Local telecommunications and television revenues increased to $189,407,000
from $89,209,000 as a result of customer growth that increased the Company's
current revenue stream.
National and international telecommunications revenues increased to
$162,738,000 from $45,430,000 as a result of the acquisition of NTL Group
Limited in May 1996, plus the new site acquisition, installation, design and
construction projects and additional site sharing revenue in 1997.
Broadcast transmission and other revenues increased to $130,799,000 from
$83,618,000 as a result of the acquisition of NTL Group Limited in May 1996,
plus the revenues from NTL Group Limited's ten-year contract to broadcast
Channel 5 in the United Kingdom which commenced in 1997.
Operating expenses increased to $301,644,000 from $144,315,000. NTL Group
Limited operating expenses in the year ended December 31, 1997 and in the period
from May 9, 1996, the date of acquisition, to December 31, 1996 were
$185,995,000 and $71,871,000, respectively. The remainder of the increase was
primarily the result of increases in programming and interconnection costs.
Selling, general and administrative expenses increased to $169,133,000 from
$114,992,000. NTL Group Limited selling, general and administrative expenses in
the year ended December 31, 1997 and in the period from May 9, 1996, the date of
acquisition, to December 31, 1996 were $18,799,000 and $9,384,000, respectively.
The remainder of the increase was the result of increases in telecommunications
and CATV sales and marketing costs and in additional personnel and overhead to
service the increasing customer base.
Franchise fees of $23,587,000 and $13,117,000 in 1997 and 1996,
respectively, are for the Northern Ireland license. Franchise fee expense was
incurred upon the start of operations in Northern Ireland in June 1996.
Corporate expenses increased to $18,324,000 from $14,899,000 primarily due
to an increase in personnel and related costs. The 1997 and 1996 amounts include
$1,852,000 and $2,906,000, respectively, of non-cash expense related to
non-compete agreements.
49
<PAGE>
Nonrecurring charges of $20,642,000 in 1997 include restructuring costs of
$15,629,000 and deferred costs written-off of $5,013,000. Restructuring costs
include costs of employee severance and related costs, lease exit costs and
penalties associated with the cancellation of contractual obligations. The
deferred costs of $5,013,000 written-off arose in connection with the Company's
unsuccessful bid for DTT multiplex licenses.
Depreciation and amortization expense increased to $150,509,000 from
$98,653,000. The increase was primarily due to an increase in depreciation of
telecommunications and CATV equipment. Depreciation and amortization expense of
NTL Group Limited and amortization of goodwill as a result of the acquisition
was $37,724,000 and $20,339,000 in the year ended December 31, 1997 and in the
period from May 9, 1996, the date of acquisition, to December 31, 1996,
respectively.
Interest expense increased to $202,570,000 from $137,032,000 due to the
issuance of the 10% Senior Notes in February 1997, the issuance of the 7%
Convertible Subordinated Notes in June 1996 and the increase in accretion of the
original issue discount on the deferred coupon notes. Interest of $78,817,000
and $37,889,000 was paid in the years ended December 31, 1997 and 1996,
respectively.
Other gains of $21,497,000 in 1997 include a gain on sale of fixed assets
of $11,497,000 and a $10,000,000 payment from LeGroupe Videotron Ltee pursuant
to the settlement of a lawsuit.
In connection with the repayment of debt, a subsidiary of NTL Group Limited
recorded an extraordinary loss in 1997 of $4,500,000 from the write-off of
unamortized deferred financing costs.
Years Ended December 31, 1996 and 1995
- --------------------------------------
Local telecommunications and television revenues increased to $89,209,000
from $24,804,000 as a result of customer growth that increased the Company's
current revenue stream.
National and international telecommunications revenues increased to
$45,430,000 from none as a result of the acquisition of NTL Group Limited.
Broadcast transmission and other revenues increased to $83,618,000 from
none as a result of the acquisition of NTL Group Limited.
Operating expenses increased to $144,315,000 from $24,415,000. NTL Group
Limited operating expenses from May 9, 1996, the date of acquisition, through
December 31, 1996 were $71,871,000. The remainder of the increase was the result
of increases in programming costs, interconnection costs and costs of operating
the telecommunications and CATV network.
Selling, general and administrative expenses increased to $114,992,000 from
$57,932,000. NTL Group Limited selling, general and administrative expenses from
May 9, 1996, the date of acquisition, through December 31, 1996 were $9,384,000.
The remainder of the increase was the
50
<PAGE>
result of increases in telecommunications and CATV sales and marketing costs and
in additional personnel and overhead to service the increasing customer base.
Franchise fees of $13,117,000 in 1996 are for the Northern Ireland license
and were payable to the ITC beginning in January 1997. Franchise fee expense was
incurred upon the start of operations in Northern Ireland in June 1996.
Corporate expenses increased to $14,899,000 from $14,697,000 due to an
increase in personnel and related costs. The 1996 and 1995 amounts include
$2,906,000 and $3,256,000, respectively, of non-cash expense related to
non-compete agreements.
Depreciation and amortization expense increased to $98,653,000 from
$29,823,000. Depreciation and amortization expense of NTL Group Limited and
amortization of goodwill as a result of the acquisition was $20,339,000 from May
9, 1996, the date of acquisition, through December 31, 1996. The remainder of
the increase was primarily due to an increase in depreciation of
telecommunications and CATV equipment.
Interest and other income increased to $33,634,000 from $21,185,000 due to
an increase in funds available for short-term investment.
Interest expense increased to $137,032,000 from $28,379,000 due to the
interest on the bank loan in connection with the NTL Group Limited acquisition
in 1996 plus the issuance of the 11-1/2% Series B Senior Deferred Coupon Notes
and the 7% Convertible Subordinated Notes in 1996. Interest of $37,889,000 and
$13,918,000 was paid during the years ended December 31, 1996 and 1995,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company will continue to require significant amounts of capital to
finance construction of its local and national networks, for connection of
telephone, telecommunications and CATV customers to the networks, for other
capital expenditures, as well as for cash interest payments. Based on the
information currently available, the Company estimates that, from January 1,
1998 through December 31, 1998 (assuming conversion of the 7-1/4% Convertible
Subordinated Notes due to the March 1998 call for redemption in April 1998),
these requirements will aggregate 436 million pounds sterling (approximately
$720 million). The Company intends to fund its requirements from cash, cash
equivalents and marketable securities on hand of $103.9 million as of December
31, 1997 and from the aggregate proceeds of approximately $1.25 billion (after
discounts, commissions and expenses) from the issuance in March 1998 of
125,000,000 pounds sterling principal amount, 9-1/2% Senior Notes due 2008,
300,000,000 pounds sterling accreted value, 10-3/4% Senior Deferred Coupon Notes
due 2008 and $1,300,000,000 accreted value, 9-3/4% Senior Deferred Coupon Notes
due 2008 (together the "New Notes"). The Company's commitments for equipment and
services at December 31, 1997 of approximately $78 million are included in the
anticipated requirements.
51
<PAGE>
In 1997, NTL (UK) Group, Inc., a wholly-owned subsidiary of the Company,
which is the holding company for its United Kingdom operations and the parent
company of NTLIH, and NTLIH entered into an agreement with The Chase Manhattan
Bank pursuant to which Chase has agreed to fully underwrite a 555 million pounds
sterling, eight-year term loan facility with an initial four-year revolving
period (the "New Credit Facility"). By April 14, 1999, Chase's commitment will
be reduced to no less than 480,000,000 pounds sterling or such greater amount as
is necessary to ensure that the Company's United Kingdom operations remain fully
funded by reference to an agreed business plan. The New Credit Facility will be
used to finance capital expenditures and working capital for the Company's
United Kingdom operations, including its local broadband, national
telecommunications and national digital television networks. A portion of the
New Credit Facility (75 million pounds sterling) is conditional upon the
execution of contracts to provide digital television transmission services to
certain third parties. Chase has provided a portion of the New Credit Facility
in the form of a 350 million pounds sterling facility to the Company on the same
terms as to restrictions, covenants, guarantees and security as the 555 million
pounds sterling facility. As of March 20, 1998, the Company had 10 million
pounds sterling outstanding under the New Credit Facility. The principal amount
outstanding under the 350 million pounds sterling facility is required to be
repaid on December 31, 2005. Interest is payable either monthly, quarterly or
semi-annually, at the option of NTLIH, at LIBOR plus, at a maximum, 2.25% per
annum. The commitment fee is .375% per annum on the unutilized portion of the
350 million pounds sterling facility and is payable quarterly in arrears. The
New Credit Facility is secured by first fixed and floating charges over all
present and future assets and undertakings of the United Kingdom group. The New
Credit Facility contains customary financial covenants, and certain restrictions
relating to, among other things: (i) incurrence of additional indebtedness or
guarantees, (ii) investments, acquisitions and mergers and (iii) dividend and
other payment restrictions. In the absence of a default, the New Credit Facility
generally permits payments to the Company to pay interest and principal of
existing indebtedness of the Company.
In connection with the New Credit Facility, the Company entered into a
European Currency Option with a bank in which the Company may purchase U.S.
dollars at a fixed rate of 1 pound sterling to $1.40. The option is exercisable
on specified dates through June 2001 for specified amounts of U.S. dollars. The
dates and U.S. dollar amounts correspond to the Company's interest payment dates
and amounts for its U.S. dollar denominated debt and anticipated amounts of
parent company expenses.
The Company is highly leveraged. After giving effect to the issuance of the
New Notes, the accreted value at December 31, 1997 of the Company's total
long-term indebtedness (including the Redeemable Preferred Stock) is
approximately $3.4 billion, representing approximately 102% of total
capitalization. The following tables summarizes the terms of those
52
<PAGE>
notes and redeemable preferred stock issued by the Company.
<TABLE>
<CAPTION>
11-1/2% 12-3/4% 10-7/8% 10-3/4% 9-3/4%
Series B Senior Series A Senior Senior Deferred Senior Sterling Senior
Deferred Coupon Deferred Coupon Coupon Deferred Coupon Deferred Coupon
Notes Notes Notes Notes Notes
<S> <C> <C> <C> <C> <C>
Denomination................ $ $ $ Pounds Sterling $
Net Proceeds (in 000's)..... 582,000 145,125 119,797 170,584 778,340
Issue Date.................. January 30, 1996 April 20, 1995 October 7, 1993 March 13, 1998 March 13, 1998
Issue Price(1).............. 57.155% 53.995% 58.873% 58.62% 61.724%
Aggregate Principal Amount
at Maturity (in 000's).... 1,050,000 277,803 212,000 300,000 1,300,000
Maturity Date............... February 1, 2006 April 15, 2005 October 15, 2003 April 1, 2008 April 1, 2008
Yield or Interest Rate(2)... 11-1/2% 12-3/4% 10-7/8% 10-3/4% 9-3/4%
Interest or Dividend February 1 and April 15 and April 15 and April 1 and April 1 and
Payment August 1 October 15 October 15 October 1 October 1
Dates..................... from 8-1-01 from 10-15-00 From 4-15-99 from 10-1-2003 from 10-1-2003
Earliest Optional
Redemption Date(4)........ February 1, 2001 April 15, 2000 October 15, 1998 April 1, 2003 April 1, 2003
Redemption 105.75 (2001) 103.64 (2000) 103.107 (1998) 105.375 (2003) 104.875 (2003)
Price(%)(5)............... to 100 (2003) to 100 (2002) to 100 (2000) to 100 (2006) to 100 (2006)
Conversion Price(6)......... N/A N/A N/A N/A N/A
Senior/Subordinated......... Senior Senior Senior Senior Senior
</TABLE>
(table continues on the following page)
53
<PAGE>
<TABLE>
<CAPTION>
7% 7-1/4%
Convertible Convertible 9-1/2% 10% Redeemable
Subordinated Subordinated Senior Sterling Series B Preferred
Notes Notes (7) Notes Senior Notes Stock
<S> <C> <C> <C> <C> <C>
Denomination................ $ $ Pounds Sterling $ $
Net Proceeds (in 000's)..... 267,437 186,065 121,161 389,000 96,625
Issue Date.................. June 12, 1996 April 20, 1995 March 13, 1998 February 14, 1997 February 14, 1997
Issue Price(1).............. 100% 100% 99.670% 100% 100%
Aggregate Principal Amount
at Maturity (in 000's).... 275,000 191,750 125,000 400,000 100,000
Maturity Date............... June 15, 2008 April 15, 2005 April 1, 2008 February 15, 2007 February 15, 2009
Yield or Interest Rate(2)... 7% 7-1/4% 9-1/2% 10% 13%
Interest or Dividend June 15 and April 15 and April 1 and February 15 and May 15, August 15,
Payment December 15 October 15 October 1 August 15 November 15 and
Dates..................... from 12-15-96 from 10-15-95 From 10-1-98 from 8-15-97 February 15
from 5-15-97(3)
Earliest Optional
Redemption Date(4)........ June 15, 1999 April 15, 1998 April 1, 2003 February 15, 2002 February 15, 2002
Redemption 104.9 (1999) 105.08 (1998) 104.75 (2003) 105 (2002) 106.5 (2002)
Price(%)(5)............... to 100 (2006) to 100.73 (2004) to 100 (2006) to 100 (2005) to 100 (2005)
Conversion Price(6)......... 37.875 27.56 N/A N/A N/A
Senior/Subordinated......... Subordinated Subordinated Senior Senior N/A
- -------------------------
(1) Percent of aggregate principal amount at maturity (or aggregate liquidation preference in the case of the Redeemable Preferred
Stock).
(2) Percent per annum.
(3) Dividend payments on the Redeemable Preferred Stock are payable in cash or additional shares of Redeemable Preferred Stock, at
the Company's option. From May 15, 2004, dividend payments are payable in cash.
(4) This is the first date when redeemable at the Company's option. The Redeemable Preferred Stock is mandatorily redeemable for
cash on February 15, 2009.
(5) Expressed as a percentage of principal amount or liquidation preference, as applicable, plus, in each case, accrued and unpaid
interest or dividends thereon to the applicable redemption date.
(6) This is the conversion price per share of the Company's common stock, adjusted for the four-for-three stock split in August 1995
and subject to further adjustments in certain events.
(7) These notes have been called for redemption effective April 20, 1998, unless converted on or prior to April 19, 1998.
</TABLE>
Pursuant to the terms of the Northern Ireland LDL, CableTel Northern
Ireland Limited (a wholly-owned subsidiary of the Company) is required to make
annual cash payments to the ITC for fifteen years in the amount of approximately
14.4 million pounds sterling (subject to adjustments for inflation). CableTel
Northern Ireland Limited began making payments of 1.2 million pounds sterling
per month in January 1997. Such payments are in addition to the percentages of
qualifying revenue already set by the ITC of 0% for the first ten years and 2%
for the last five years of the fifteen year
54
<PAGE>
license. Pursuant to the terms of the Glamorgan and Gwent LDL, CableTel South
Wales Limited (a wholly-owned subsidiary of the Company) is required to make
annual cash payments to the ITC for fifteen years, commencing in the first full
calendar year after the start of operations, in the amount of 104,188 pounds
sterling (subject to adjustment for inflation). Such payments are in addition to
the percentages of qualifying revenue already set by the ITC of 0% for the first
five years, 2% for the second five years and 4% for the last five years of the
fifteen year license.
The Company has significant capital requirements for the completion of its
telephone, telecommunications and CATV network passed the total of 2,090,000
homes required by its regulatory build schedules, for its LDL payments and for
scheduled cash interest and principal payments, as well as requirements for
other capital expenditures. The Company expects to fund these requirements with
cash on hand, proceeds from the New Notes, funds from the New Credit Facility
and cash from operations. There can be no assurance that: (i) actual
construction costs will not exceed the amounts estimated or that additional
funding substantially in excess of the amounts estimated will not be required,
(ii) conditions precedent to advances under the New Credit Facility will be
satisfied when funds are required, (iii) the Company and its subsidiaries will
be able to generate sufficient cash from operations to meet capital
requirements, debt service and other obligations as they fall due when required,
(iv) the Company will be able to access such cash flow or (v) the Company will
not incur losses from its exposure to exchange rate fluctuations or be adversely
affected by interest rate fluctuations.
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries. As a holding company, the Company holds no
significant assets other than its investments in and advances to its
subsidiaries. The Company is therefore dependent upon the receipt of sufficient
funds from its subsidiaries to meet its own obligations. Accordingly, the
Company's ability to make scheduled interest and principal payments when due to
holders of indebtedness of the Company and the Company's ability to pay cash
dividends to its stockholders is dependent upon the receipt of sufficient funds
from its subsidiaries.
To the extent that the Company obtains financing in United States dollars
and incurs costs in the construction and operation of the Company's regional
systems in the United Kingdom in British pounds sterling, it will encounter
currency exchange rate risks. At December 31, 1997, the Company had
approximately $42 million in pounds sterling cash accounts to reduce this risk.
In addition, the Company's New Credit Facility and the pounds sterling
denominated New Notes will also reduce this risk. Furthermore, the Company's
revenues are generated primarily in British pounds sterling while its interest
and principal obligations with respect to most of the Company's existing
indebtedness are payable in dollars. The Company has entered into an option
agreement to hedge some of the risk of exchange rate fluctuations related to
interest payments on U.S. dollar denominated debt.
The information in the preceding paragraphs does not include the impact of
the proposed Partners acquisition. In addition, the information in the preceding
paragraphs includes projections; in reviewing such information it should be kept
in mind that actual results may differ materially from those in such
projections. These projections were based on various factors and were derived
utilizing numerous assumptions. Important assumptions and factors that could
55
<PAGE>
cause actual results to differ materially from those in these projections
include the Company's ability to continue to design networks, install
facilities, obtain and maintain any required governmental licenses or approvals
and finance construction and development, all in a timely manner at reasonable
costs and on satisfactory terms and conditions, as well as assumptions about
customer acceptance, churn rates, overall market penetration and competition
from providers of alternative services. The failure of such assumptions to be
realized as well as other factors may also cause actual results to differ
materially from those projected. The Company assumes no obligations to update
these projections to reflect actual results, changes in assumptions or changes
in other factors affecting such projections.
YEAR 2000
Many computer systems experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. The Company is assessing
both the internal readiness of its computer systems and the compliance of the
computer systems of certain significant customers and vendors for handling the
year 2000. The Company expects to implement successfully the systems and
programming changes necessary to address year 2000 issues, and does not believe
that the cost of such actions will have a material adverse effect on the
Company. There can be no assurance, however, that there will not be a delay in,
or increased costs associated with, the implementation of such changes, and the
Company's inability to implement such changes could have an adverse effect on
the Company. In addition, the failure of certain of the Company's significant
customers and vendors to address the year 2000 issue could have a material
adverse effect on the Company.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash used in operating activities was $17,271,000 and $21,405,000 in the
years ended December 31, 1997 and 1996, respectively. The decrease in cash used
in operating activities is primarily due to changes in operating assets and
liabilities.
Purchases of fixed assets were $503,656,000 in 1997 and $505,664,000 in
1996 as a result of the continuing fixed asset purchases and construction in
1997. In May 1997, the Company paid $57,330,000 to the former shareholders of
NTL Group Limited in respect of the final payment of deferred purchase price.
56
<PAGE>
Proceeds from borrowings and sale of preferred stock, net of financing
costs, of $490,302,000 in 1997 is comprised of the proceeds from the 10% Notes
and the Redeemable Preferred Stock of $500,000,000, net of financing costs
incurred of $15,660,000, plus proceeds from borrowings under the NTLIH Term Loan
and Revolving Facility (the "NTLIH Facility") of $13,104,000 less $7,142,000 of
financing costs paid in connection with the New Credit Facility. Principal
payments of $242,424,000 represent the repayment of the NTLIH Facility (which
was a requirement of the New Credit Facility).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
- ------------------------------------------------------------------
NTL is required to provide these disclosures in its Annual Report on Form
10-K for the year ending December 31, 1998.
57
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ---------------------------------------------------
The consolidated financial statements of the Company are filed under this Item
commencing on page F-1 of this Report.
The following is a summary of the quarterly results of operations for the years
ended December 31, 1997 and 1996.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1997
THREE MONTHS ENDED
-----------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $106,817 $114,822 $126,734 $143,402
Operating loss (45,231) (51,772) (54,438) (40,623)
Loss before extraordinary item (85,761) (87,674) (83,357) (71,765)
Net loss (85,761) (87,674) (83,357) (76,265)
Basic and diluted loss per common
share before extraordinary item (2.73) (2.84) (2.70) (2.34)
Basic and diluted net loss per common share (2.73) (2.84) (2.70) (2.48)
</TABLE>
<TABLE>
<CAPTION>
1996
THREE MONTHS ENDED
-----------------------------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 18,434 $ 47,783 $ 77,256 $ 84,870
Operating loss (28,183) (33,751) (44,390) (51,309)
Net loss (42,724) (59,158) (74,070) (78,502)
Basic and diluted net loss per common share (1.41) (1.95) (2.35) (2.45)
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
- ---------------------------------------------------------
Not applicable.
58
<PAGE>
PART III
--------
ITEMS 10, 11, 12, AND 13.
- ------------------------
The information required by PART III (Items 10, 11, 12 and 13) is
incorporated by reference from the Company's definitive proxy statement
involving the election of directors which the Company expects to file, pursuant
to Regulation 14A, within 120 days following the end of its fiscal year.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
- -------------------------------------------------------------------------
(a)(1) Financial Statements - See list of Financial Statements on page F-1.
(2) Financial Statement Schedules - See list of Financial Statement
Schedules on page F-1.
(3) Exhibits - See Exhibit Index on page 60.
(b) During the fourth quarter of 1997, the Company filed a Current Report
on Form 8-K dated October 20, 1997 (reporting a matter under Item 5 -
Other Events). No financial statements were filed with this report.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules - See list of Financial Statement
Schedules on page F-1.
59
<PAGE>
EXHIBIT INDEX
Exhibit No.
- ----------
2.1 Amended and Restated Agreement of Reorganization and Plan of Merger,
dated as of May 28, 1993, among the Company, OCOM and CableTel Merger
Inc. (Incorporated by reference to Exhibit 2, Registration File No.
33-63570)
2.2 Deed of Irrevocable undertaking dated March 28, 1996 by and among
Addroute Limited, certain shareholders in the NTL Group Limited, NTL
Group Limited and the Company (Incorporated by reference to the
Company's Registration Statement on Form S-4, File No. 333-1010).
2.3 Form of Offer Document dated March 28, 1996 of Addroute Limited for
NTL Group Limited (Incorporated by reference to the Company's
Registration Statement on Form S-4, File No. 333-1010).
2.4 Deed of Adjustment dated March 28, 1996 by and among Addroute Limited
and Mercury Asset Management plc. (Incorporated by reference to the
Company's Registration Statement on Form S-4, File No. 333-1010).
2.5 Share Exchange Agreement, dated as of August 30, 1996, by and among
the Company, B/G Co., Booth American Company, Columbia Management,
Inc. and Robert T. Goad (Incorporated by reference to the Company's
Registration Statement on Form S-3, File No. 333-16751).
2.6 Share Purchase Agreement, dated October 7, 1996, by and among the
Company, South Wales Electricity plc and Swalec Telco Investment
Limited (Incorporated by reference to the Company's Registration
Statement on Form S-3, File No. 333-16751).
3.1 Restated Certificate of Incorporation. (Incorporated by reference from
the Company's Registration Statement on Form S-3, Registration File
No. 333-07879)
3.1(a) Certificate of Ownership and Merger, dated as of March 26, 1997
(Incorporated by reference to Company's Form 8-K, dated and filed with
the Commission on March 26, 1997).
3.2 Restated By-Laws (Incorporated by reference to Exhibit 3.2,
Registration No. 33-63570)
4.1 Specimen of Common Stock Certificate (Incorporated by reference to
Exhibit 4.1, Registration File No. 33-63570)
60
<PAGE>
4.2 Warrant Agreement dated February 14, 1996 between the Company and
Chemical Bank as Warrant Agent (Incorporated by reference to the
Company's Registration Statement on Form S-4, File No. 333-00118)
4.3 Form of Warrant to Purchase Common Stock (included in Exhibit 4.2)
4.4 Indenture, dated as of October 1, 1993, by and between the Company and
Chemical Bank with respect to the 10-7/8% Senior Notes (Incorporated
by reference to Exhibit 4.1, Registration File No. 33-63572)
4.5 Indenture, dated as of April 20, 1995, by and between the Company and
Chemical Bank as Trustee, with respect to the 12-3/4% Senior Notes
(Incorporated by reference from the Company's Registration Statement
on Form S-4, File No. 33-92794)
4.6 Indenture, dated as of January 30, 1996, by and between the Company
and Chemical Bank as Trustee, with respect to the 11-1/2% Senior Notes
(Incorporated by reference from the Company's Registration Statement
on Form S-4, File No. 333-00118)
4.7 First Supplemental Indenture, dated as of January 22, 1996, by and
among the Company and Chemical Bank, as Trustee, with respect to the
12-3/4% Senior Notes (Incorporated by reference from the Company's
Registration Statement on Form S-4, File No. 333-00118)
4.8 First Supplemental Indenture, dated as of January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with respect to the
10-7/8% Notes (Incorporated by reference from the Company's
Registration Statement on Form S-4, File No. 333-00118)
4.9 Indenture, dated as of February 12, 1997, by and between the Company
and The Chase Manhattan Bank, as Trustee, with respect to the 10%
Senior Notes (Incorporated by reference from the Company's 1996 Form
10-K)
4.10 Indenture, dated as of March 13, 1998, by and between the Company and
The Chase Manhattan Bank, as Trustee, with respect to the 9-1/2%
Senior Notes
4.11 Indenture, dated as of March 13, 1998, by and between the Company and
The Chase Manhattan Bank, as Trustee, with respect to the 9-3/4%
Senior Deferred Coupon Notes
4.12 Indenture, dated as of March 13, 1998, by and between the Company and
The Chase Manhattan Bank, as Trustee, with respect to the 10-3/4%
Senior Deferred Coupon Notes
61
<PAGE>
4.13 Certificate of Designation, dated February 12, 1997, with respect to
the 13% Redeemable Preferred Stock (Incorporated by reference from the
Company's 1996 Form 10-K)
4.14 Certificate of Designation, dated October 7, 1996, in respect of the
Company's Series A Preferred Stock (Incorporated by reference to the
Company's Form 8-K, filed on October 9, 1996).
4.15 Registration Rights Agreement, dated February 12, 1997, by and among
the Company and Donaldson, Lufkin & Jenrette Securities Corporation,
Chase Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated with respect to the 10% Senior Notes (Incorporated by
reference from the Company's 1996 Form 10-K)
4.16 Registration Rights Agreement, dated February 12, 1997, by and among
the Company and Donaldson, Lufkin & Jenrette Securities Corporation,
Chase Securities, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated with respect to the 13% Senior Notes (Incorporated by
reference from the Company's 1996 Form 10-K)
4.17 Registration Rights Agreement, dated as of March 13, 1998, by and
among the Company and Donaldson, Lufkin & Jenrette International,
Morgan Stanley & Co. International Limited, BT Alex. Brown
International, Chase Securities Inc. and Salomon Brothers
International Limited with respect to the 9-1/2% Senior Notes
4.18 Registration Rights Agreement, dated as of March 13, 1998, by and
among the Company and Donaldson, Lufkin & Jenrette Securities
Corporation, Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, Chase Securities Inc. and Salomon Brothers Inc with
respect to the 9-3/4% Senior Deferred Coupon Notes
4.19 Registration Rights Agreement, dated as of March 13, 1998, by and
among the Company and Donaldson, Lufkin & Jenrette International,
Morgan Stanley & Co. International Limited, BT Alex. Brown
International, Chase Securities Inc. and Salomon Brothers
International Limited with respect to the 10-3/4% Senior Deferred
Coupon Notes
4.20 Form of Preferred Stock (Incorporated by reference from the Company's
1996 Form 10-K)
4.21 Indenture, dated as of June 12, 1996, by and between the Company and
Chemical Bank, as Trustee, with respect to the 7% Convertible Notes
(Incorporated by reference from the Company's Registration Statement
on Form S-3, File No. 333-07879)
62
<PAGE>
4.22 Registration Rights Agreement, dated June 12, 1996, by and among the
Company and Donaldson, Lufkin & Jenrette Securities Corporation and
Salomon Brothers Inc, with respect to the 7% Convertible Notes
(Incorporated by reference from the Company's Registration Statement
on Form S-3, File No. 33-07879)
4.23 Indenture, dated as of April 20, 1995, by and among the Company and
Chemical Bank, as Trustee, with respect to the 7-1/4% Convertible
Notes (Incorporated by reference from the Company's Registration
Statement on Form S-3, File No. 333-92792)
4.24 Registration Agreement, dated April 12, 1995, by and among the Company
and Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman Sachs & Co., with respect to the 7-1/4%
Convertible Notes (Incorporated by reference from the Company's
Registration Statement on Form S-3, File No. 333-92792)
4.25 Rights Agreement entered into by the Company and Continental Stock
Transfer & Trust Company (Incorporated by reference to Exhibit 4.2,
Registration No. 33-63570)
10.1 Compensation Plan Agreements, as amended and restated effective
June 3, 1997
10.2 Form of Director and Officer Indemnity Agreement (together with a
schedule of executed Indemnity Agreements) (Incorporated by reference
from the Company's Registration Statement on Form S-4, File No.
33-92794)
11 Statement re computation of per share earnings
21 Subsidiaries of the Registrant
23 Consent of Ernst & Young LLP
27.1 Financial Data Schedule, for the year ended December 31, 1997
27.2 Restated Financial Data Schedule, for the quarter ended September 30,
1997
27.3 Restated Financial Data Schedule, for the quarter ended June 30, 1997
27.4 Restated Financial Data Schedule, for the quarter ended March 31, 1997
27.5 Restated Financial Data Schedule, for the year ended December 31, 1996
27.6 Restated Financial Data Schedule, for the quarter ended September 30,
1996
27.7 Restated Financial Data Schedule, for the quarter ended June 30, 1996
63
<PAGE>
27.8 Restated Financial Data Schedule, for the quarter ended March 31, 1996
99.1 Prescribed Diffusion Service License, dated July 21, 1987, issued to
British Cable Services Limited (now held by CableTel Surrey and
Hampshire Limited) for the area of West Surrey and East Hampshire,
England (Incorporated by reference to the Company's Form 8-K, filed
with the Commission on March 19, 1996)
99.2 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Clyde Cablevision (renamed CableTel Glasgow) for the area of
Inverclyde, Scotland (Incorporated by reference to the Company's Form
8-K, filed with the Commission on March 19, 1996)
99.3 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Clyde Cablevision (renamed CableTel Glasgow) for the area of
Bearsden and Milngavie, Scotland (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.4 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Clyde Cablevision (renamed CableTel Glasgow) for the area of
Paisley and Renfrew, Scotland (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.5 Prescribed Diffusion Service License, dated July 10, 1984, issued to
Clyde Cablevision (renamed CableTel Glasgow) for the area of North
Glasgow and Clydebank, Strathclyde, Scotland (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.6 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Clyde Cablevision (renamed CableTel Glasgow) for the area of
Greater Glasgow, Scotland (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.7 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Newport Cablevision Limited (renamed CableTel Newport) for the area
of Newport, Wales (Incorporated by reference to the Company's Form
8-K, filed with the Commission on March 19, 1996)
99.8 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Cable and Satellite Television Holdings Ltd (renamed CableTel West
Glamorgan Limited) for the area of West Glamorgan, Wales (Incorporated
by reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
64
<PAGE>
99.9 Prescribed Diffusion Service License, dated December 3, 1990, issued
to British Cable Services Limited for the area of Cardiff and Penarth,
Wales (now held by CableTel Cardiff Limited) (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.10 Prescribed Diffusion Service License, dated December 3, 1990, issued
to Kirklees Cable (renamed CableTel Kirklees) for the area of
Huddersfield and Dewsbury, West Yorkshire, England (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.11 Prescribed Diffusion Service License, dated December 3, 1990, issued
to CableVision Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the area of Broxbourne and East
Hertfordshire, England (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.12 Prescribed Diffusion Service License, dated December 3, 1990, issued
to CableVision Communications Company Ltd (renamed CableTel Central
Hertfordshire Limited) for the area of Central Hertfordshire,
England(Incorporated by reference to the Company's Form 8-K, filed
with the Commission on March 19, 1996)
99.13 Prescribed Diffusion Service License, dated March 26, 1990, issued to
CableVision Bedfordshire Limited (renamed CableTel Bedfordshire Ltd.)
for the area of Luton and South Bedfordshire (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.14 Prescribed Diffusion Service License, dated December 3, 1990, issued
to CableVision North Bedfordshire Ltd (renamed CableTel North
Bedfordshire Ltd.) for the area of North Bedfordshire, England
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.15 Local Delivery Service License, dated October 2, 1995, issued to
CableTel Northern Ireland Limited for Northern Ireland (Incorporated
by reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.16 Local Delivery Service License, dated December 6, 1995, issued to
CableTel South Wales Limited for Glamorgan and Gwent, Wales
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.17 Local Delivery Service License, dated March 13, 1991, issued to
Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales (now held by
Metro South Wales Limited) (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
65
<PAGE>
99.18 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Camarthen, Wales (now held by Metro South
Wales Limited) (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
99.19 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Milford Haven, Wales (now held by Metro
South Wales Limited) (Incorporated by reference to the Company's Form
8-K, filed with the Commission on March 19, 1996)
99.20 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Cwmgors (Amman Valley), West Glamorgan,
Wales (Incorporated by reference to the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.21 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Ammanford, West Glamorgan, Wales
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.22 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Brecon, Gwent, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.23 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Haverfordwest, Preseli, Wales
(Incorporated by reference to the the Company's Form 8-K, filed with
the Commission on March 19, 1996)
99.24 Local Delivery Service License, dated March 15, 1991, issued to
Maxwell Cable TV Limited for Neyland, Preseli, Wales (now held by
Metro South Wales Limited) (Incorporated by reference to the Company's
Form 8-K, filed with the Commission on March 19, 1996)
99.25 License, dated January 11, 1991, issued to Cablevision Communications
the Company of Hertfordshire Ltd (renamed CableTel Hertfordshire
Limited) for the Hertford, Cheshunt and Ware (Lea Valley) cable
franchise, England (Incorporated by reference to the Company's Form
8-K, filed with the Commission on March 19, 1996)
99.26 License, dated December 8, 1990, issued to Cablevision Communications
the Company Limited for Central Hertfordshire (renamed CableTel
Central Hertfordshire Limited), England (Incorporated by reference to
the Company's Form 8-K, filed with the Commission on March 19, 1996)
66
<PAGE>
99.27 License, dated August 23, 1989, issued to Cablevision Bedfordshire
Limited for Bedford and surrounding areas, England (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.28 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.29 License, dated January 29, 1991, issued to Clyde Cablevision (renamed
CableTel Glasgow) for the Inverclyde Cable Franchise, Scotland
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.30 License, dated January 29, 1991, issued to Clyde Cablevision (renamed
CableTel Glasgow) for the Bearsden and Milngavie Cable Franchise,
Scotland (Incorporated by reference to the Company's Form 8-K, filed
with the Commission on March 19, 1996)
99.31 License, dated January 29, 1991, issued to Clyde Cablevision (renamed
CableTel Glasgow) for the Paisley and Renfrew Cable Franchise,
Scotland (Incorporated by reference to the Company's Form 8-K, filed
with the Commission on March 19, 1996)
99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd (renamed
CableTel Glaswgow) for North West Glasgow and Clydebank, Scotland
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision (renamed
CableTel Glasgow) for the Greater Glasgow cable franchise, Scotland
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.34 License, dated October 13, 1993, issued to Insight Communications
Cardiff Limited (renamed CableTel Cardiff Limited) for Cardiff, Wales
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.35 License, dated January 22, 1991, issued to Newport Cablevision
Limited (renamed CableTel Newport), for Newport Cable franchise Wales
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.36 License, dated May 18, 1990, issued to Cable and Satellite Television
Holdings Limited (renamed CableTel West Glamorgan Limited) for West
Glamorgan, Wales (Incorporated by reference to the Company's Form 8-K,
filed with the Commission on March 19, 1996)
67
<PAGE>
99.37 License, dated December 20, 1990, issued to Kirklees Cable (renamed
CableTel Kirklees) for the Huddersfield and Dewsbury cable franchise,
England (Incorporated by reference to the Company's Form 8-K, filed
with the Commission on March 19, 1996)
99.38 License, dated October 13, 1993, issued to Insight Communications
Guildford Limited (renamed CableTel Surrey and Hampshire Limited) for
the West Surrey/East Hampshire (Guildford) Cable Franchise, England
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.39 License, dated January 20, 1995, issued to CableTel Bedfordshire Ltd.
for the area of South Bedfordshire, England (Incorporated by reference
to the Company's Form 8-K, filed with the Commission on March 19,
1996)
99.40 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.41 License, dated January 20, 1992, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West Glamorgan Limited)
for the area of Swansea, Neath and Port Talbot, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.42 License, dated January 20, 1995, issued to Cabletel Hertfordshire
Ltd. for the area of Hertford, Cheshunt and Ware (Lea Valley), England
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.43 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire, England
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.44 License, dated July 21, 1995, issued to CableTel Kirklees
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire Ltd.
(Incorporated by reference to the Company's Form 8-K, filed with the
Commission on March 19, 1996)
99.46 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Neyland, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
68
<PAGE>
99.47 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Cwmgors, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.48 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Ammanford, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.49 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Carmarthen, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.50 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Haverfordwest, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.51 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Pembroke Dock, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.52 License, dated October 27, 1995, issued to Metro South Wales Limited
for the area of Milford Haven, Wales (Incorporated by reference to the
Company's Form 8-K, filed with the Commission on March 19, 1996)
99.53 License, dated October 27, 1995, issued to CableTel South Wales
Limited for the area of Glamorgan and Gwent, Wales (Incorporated by
reference to the Company's Form 8-K, filed with the Commission on
March 19, 1996)
99.54 License, dated January 26, 1996, issued to Cabletel South Wales
Limited, for part of the Glamorgan area (Incorporated by reference to
the Company's Form 8-K, filed with the Commission on March 19, 1996)
99.55 License, dated November 3, 1997, issued to NTL (UK) Group, Inc. for
the Provision of Radio Fixed Access Operator Services.
99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors, L.P.
(Incorporated by reference to the Company's Form 8-K dated February 5,
1998)
69
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 26, 1998
NTL INCORPORATED
By: /s/ J. Barclay Knapp
--------------------------------------
J. Barclay Knapp
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive and Principal
Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ J. Barclay Knapp President, Chief Executive )
- ------------------------- Officer and Chief Financial )
J. Barclay Knapp Officer (Principal Executive and )
Principal Financial Officer) )
)
)
)
/s/ George S. Blumenthal Chairman of the Board and )
- ------------------------- Treasurer ) March 26, 1998
George S. Blumenthal )
)
)
/s/ Gregg Gorelick Vice President-Controller )
- ------------------------- (Principal Accounting Officer) )
Gregg Gorelick )
)
)
/s/ Sidney R. Knafel Director )
- ------------------------- )
Sidney R. Knafel )
70
<PAGE>
)
)
/s/ Ted H. McCourtney Director )
- ------------------------- )
Ted H. McCourtney )
)
)
)
/s/ Del Mintz Director )
- ------------------------- )
Del Mintz )
)
)
)
/s/ Alan J. Patricof Director ) March 26, 1998
- ------------------------- )
Alan J. Patricof )
)
)
)
/s/ Warren Potash Director )
- ------------------------- )
Warren Potash )
)
)
)
/s/ Michael S. Willner Director )
- ------------------------- )
Michael S. Willner )
71
<PAGE>
Form 10-K - Item 14(a)(1) and (2)
NTL Incorporated and Subsidiaries
Index of Consolidated Financial Statements
and Financial Statement Schedules
The following consolidated financial statements of NTL Incorporated and
Subsidiaries are included in Item 8:
Report of Independent Auditors........................................... F-2
Consolidated Balance Sheets - December 31, 1997 and 1996................. F-3
Consolidated Statements of Operations - Years ended
December 31, 1997, 1996 and 1995...................................... F-5
Consolidated Statement of Shareholders' Equity (Deficiency) -
Years ended December 31, 1997, 1996 and 1995.......................... F-6
Consolidated Statements of Cash Flows - Years ended
December 31, 1997, 1996 and 1995...................................... F-7
Notes to Consolidated Financial Statements............................... F-9
The following consolidated financial statement schedules of NTL Incorporated and
Subsidiaries are included in Item 14(d):
Schedule I - Condensed Financial Information of Registrant .............. F-35
Schedule II - Valuation and Qualifying Accounts.......................... F-41
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore have been omitted.
F-1
<PAGE>
Report of Independent Auditors
The Board of Directors and Shareholders
NTL Incorporated
We have audited the consolidated balance sheets of NTL Incorporated and
Subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity (deficiency) and cash flows for
each of the three years in the period ended December 31, 1997. Our audits also
included the financial statement schedules listed in the Index at Item 14(a).
These financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of NTL
Incorporated and Subsidiaries at December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
New York, New York
March 20, 1998
F-2
<PAGE>
NTL Incorporated and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
-------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 98,902,000 $ 445,884,000
Marketable securities 4,998,000 -
Accounts receivable - trade, less allowance for
doubtful accounts of $8,056,000 (1997) and
$3,870,000 (1996) 66,022,000 28,340,000
Other 67,232,000 66,817,000
-------------- --------------
Total current assets 237,154,000 541,041,000
Fixed assets, net 1,756,985,000 1,459,528,000
Intangible assets, net 364,479,000 392,933,000
Other assets, net of accumulated amortization
of $25,889,000 (1997) and $21,789,000 (1996) 63,021,000 61,109,000
============== ==============
Total assets $2,421,639,000 $2,454,611,000
============== ==============
</TABLE>
F-3
<PAGE>
NTL Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
-------------- --------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 45,475,000 $ 57,960,000
Accrued expenses and other 181,605,000 101,228,000
Accrued construction costs 26,930,000 62,723,000
Deferred revenue 35,060,000 16,491,000
Deferred purchase price - 60,537,000
-------------- --------------
Total current liabilities 289,070,000 298,939,000
Long-term debt 2,015,057,000 1,732,168,000
Other 428,000 459,000
Commitments and contingent liabilities
Deferred income taxes 70,218,000 94,931,000
Senior redeemable exchangeable preferred stock,
$.01 par value, plus accreted dividends;
liquidation preference $107,000,000; less
unamortized discount of $3,444,000 (1997);
issued and outstanding 110,000 shares (1997)
and none (1996) 108,534,000 -
Shareholders' equity (deficiency):
Series preferred stock - $.01 par value;
authorized 2,500,000 shares; liquidation
preference $78,000,000; issued and
outstanding 780 shares (1997 and 1996) - -
Common stock - $.01 par value; authorized
100,000,000 shares; issued and outstanding
32,210,000 (1997) and 32,066,000 (1996) shares 322,000 321,000
Additional paid-in capital 538,054,000 548,647,000
Cumulative translation adjustment 117,008,000 163,141,000
(Deficit) (717,052,000) (383,995,000)
-------------- --------------
(61,668,000) 328,114,000
-------------- --------------
Total liabilities and shareholders' equity (deficiency) $2,421,639,000 $2,454,611,000
============== ==============
</TABLE>
See accompanying notes.
F-4
<PAGE>
NTL Incorporated and Subsidiaries
Consolidated Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES
Local telecommunications and television $ 189,407,000 $ 89,209,000 $ 24,804,000
National and international telecommunications 162,738,000 45,430,000 -
Broadcast transmission and other 130,799,000 83,618,000 -
Other telecommunications 8,831,000 10,086,000 8,937,000
-------------- -------------- --------------
491,775,000 228,343,000 33,741,000
COSTS AND EXPENSES
Operating expenses 301,644,000 144,315,000 24,415,000
Selling, general and administrative expenses 169,133,000 114,992,000 57,932,000
Franchise fees 23,587,000 13,117,000 -
Corporate expenses 18,324,000 14,899,000 14,697,000
Nonrecurring charges 20,642,000 - -
Depreciation and amortization 150,509,000 98,653,000 29,823,000
-------------- -------------- --------------
683,839,000 385,976,000 126,867,000
-------------- -------------- --------------
Operating (loss) (192,064,000) (157,633,000) (93,126,000)
OTHER INCOME (EXPENSE)
Interest and other income 28,415,000 33,634,000 21,185,000
Interest expense (202,570,000) (137,032,000) (28,379,000)
Other gains 21,497,000 - -
Foreign currency transaction gains 574,000 2,408,000 84,000
-------------- -------------- --------------
(Loss) before income taxes, minority interests
and extraordinary item (344,148,000) (258,623,000) (100,236,000)
Income tax benefit (provision) 15,591,000 (7,653,000) 2,477,000
-------------- -------------- --------------
(Loss) before minority interests and
extraordinary item (328,557,000) (266,276,000) (97,759,000)
Minority interests - 11,822,000 6,974,000
-------------- -------------- --------------
(Loss) before extraordinary item (328,557,000) (254,454,000) (90,785,000)
Loss from early extinguishment of debt (4,500,000) - -
-------------- -------------- --------------
Net (loss) $ (333,057,000) $ (254,454,000) $ (90,785,000)
============== ============== ==============
Basic and diluted net (loss) per common share:
(Loss) before extraordinary item $(10.60) $(8.20) $(3.01)
Extraordinary item (.14) - -
-------------- -------------- --------------
Net (loss) per common share $(10.74) $(8.20) $(3.01)
============== ============== ==============
</TABLE>
See accompanying notes.
F-5
<PAGE>
NTL Incorporated and Subsidiaries
Consolidated Statement of Shareholders' Equity (Deficiency)
<TABLE>
<CAPTION>
SERIES COMMON STOCK -
PREFERRED STOCK $.01 PAR VALUE ADDITIONAL CUMULATIVE
------------------ ---------------------- PAID-IN TRANSLATION
SHARES PAR SHARES PAR CAPITAL ADJUSTMENT (DEFICIT)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 22,635,000 $ 226,000 $ 462,197,000 $ 12,867,000 $ (38,756,000)
Exercise of stock options 20,000 1,000 101,000
Stock split 7,547,000 75,000 (75,000)
Net loss for the year ended
December 31, 1995 (90,785,000)
Currency translation adjustment (6,594,000)
-------------------------------------------------------------------------------------------
Balance, December 31, 1995 30,202,000 302,000 462,223,000 6,273,000 (129,541,000)
Exercise of stock options 396,000 4,000 1,362,000
Exercise of warrants 53,000 1,000 298,000
Issuance of warrants in connection
with consent solicitations 1,641,000
Shares issued for acquisitions 780 $ - 1,415,000 14,000 83,123,000
Net loss for the year ended
December 31, 1996 (254,454,000)
Currency translation adjustment 156,868,000
-------------------------------------------------------------------------------------------
Balance, December 31, 1996 780 - 32,066,000 321,000 548,647,000 163,141,000 (383,995,000)
Exercise of stock options 119,000 1,000 1,532,000
Exercise of warrants 25,000 138,000
Accreted dividends on senior
redeemable exchangeable
preferred stock (11,978,000)
Accretion of discount on senior
redeemable exchangeable
preferred stock (285,000)
Net loss for the year ended
December 31, 1997 (333,057,000)
Currency translation adjustment (46,133,000)
===========================================================================================
Balance, December 31, 1997 780 $ - 32,210,000 $ 322,000 $538,054,000 $117,008,000 $(717,052,000)
===========================================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
NTL Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
---------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (333,057,000) $ (254,454,000) $ (90,785,000)
Adjustment to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 150,509,000 98,653,000 29,823,000
Loss from early extinguishment of debt 4,500,000 - -
Amortization of non competition agreements 1,852,000 2,906,000 3,256,000
Provision for losses on accounts receivable 6,891,000 2,597,000 709,000
Minority interests - (11,822,000) (6,974,000)
Deferred income taxes (16,852,000) 5,063,000 -
Amortization of original issue discount 122,639,000 104,264,000 29,379,000
Other (8,148,000) 8,578,000 6,229,000
Changes in operating assets and liabilities, net
of effect from business acquisitions:
Accounts receivable (30,430,000) 10,050,000 (6,496,000)
Other current assets (6,563,000) (20,316,000) (6,749,000)
Other assets 2,303,000 (24,000) (123,000)
Accounts payable (4,615,000) (2,869,000) 20,583,000
Accrued expenses and other 74,706,000 35,691,000 9,926,000
Deferred revenue 18,994,000 278,000 1,075,000
----------------------------------------------------------
Net cash (used in) operating activities (17,271,000) (21,405,000) (10,147,000)
INVESTING ACTIVITIES
Purchase of fixed assets (503,656,000) (505,664,000) (445,550,000)
Payment of deferred purchase price (57,330,000) - -
Increase in other assets (4,322,000) (6,013,000) (3,361,000)
Acquisitions of subsidiaries and minority
interests, net of cash acquired - (332,693,000) (12,412,000)
Purchase of marketable securities (145,939,000) - -
Proceeds from sales of marketable securities 142,596,000 - -
----------------------------------------------------------
Net cash (used in) investing activities (568,651,000) (844,370,000) (461,323,000)
</TABLE>
F-7
<PAGE>
NTL Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
----------------------------------------------------------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Proceeds from borrowings and sale of preferred
stock, net of financing costs $ 490,302,000 $1,146,190,000 $ 326,166,000
Principal payments (242,424,000) (95,283,000) (9,963,000)
Cash released from escrow - 1,600,000 2,810,000
Capital contribution from minority partner - - 12,626,000
Proceeds from borrowings from minority partner - 31,232,000 19,065,000
Proceeds from exercise of stock options and warrants 1,671,000 1,665,000 102,000
----------------------------------------------------------
Net cash provided by financing activities 249,549,000 1,085,404,000 350,806,000
Effect of exchange rate changes on cash (10,609,000) 50,972,000 1,345,000
----------------------------------------------------------
Increase (decrease) in cash and cash equivalents (346,982,000) 270,601,000 (119,319,000)
Cash and cash equivalents at beginning of year 445,884,000 175,283,000 294,602,000
----------------------------------------------------------
Cash and cash equivalents at end of year $ 98,902,000 $ 445,884,000 $ 175,283,000
==========================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest exclusive
of amounts capitalized $ 72,047,000 $ 27,595,000 $ 1,735,000
Income taxes paid 1,107,000 367,000 1,695,000
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on senior redeemable
exchangeable preferred stock $ 12,263,000 $ - $ -
Warrants issued in connection with consent solicitations - 1,641,000 -
Common stock issued for acquisition - 34,137,000 -
Preferred stock issued for acquisition of minority interest,
including notes payable to minority partner - 49,000,000 -
Liabilities incurred in connection with acquisitions - 81,906,000 -
</TABLE>
See accompanying notes.
F-8
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
1. ORGANIZATION
NTL Incorporated (the "Company"), through its subsidiaries and joint ventures,
owns and operates television and radio broadcasting, cable television, telephone
and telecommunications systems in the United Kingdom and provides long-distance
telephone service in the United States. Based on revenues and identifiable
assets, the Company's predominant lines of business are television and radio
broadcasting, cable television, telephone and telecommunications services in the
United Kingdom.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company, its
wholly-owned subsidiaries and entities where the Company's interest is greater
than 50%. Significant intercompany accounts and transactions have been
eliminated in consolidation.
FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's foreign subsidiaries have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation." All
balance sheet accounts have been translated using the current exchange rates at
the respective balance sheet dates. Statement of operations amounts have been
translated using the average exchange rates for the respective years. The gains
or losses resulting from the change in exchange rates have been reported
separately as a component of shareholders' equity (deficiency).
CASH EQUIVALENTS
Cash equivalents are short-term highly liquid investments purchased with a
maturity of three months or less. Cash equivalents were $55,894,000 and
$339,249,000 at December 31, 1997 and 1996, respectively, which consisted
primarily of repurchase agreements and corporate commercial paper. At December
31, 1997 and 1996, none and $238,862,000, respectively, of such cash equivalents
were denominated in British pounds sterling.
F-9
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
MARKETABLE SECURITIES
Marketable securities are classified as available-for-sale, which are carried at
fair value. Unrealized holding gains and losses on securities, net of tax, are
carried as a separate component of shareholders' equity (deficiency). The
amortized cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in interest
income. Realized gains and losses and declines in value judged to be other than
temporary will be included in interest income. The cost of securities sold or
matured is based on the specific identification method. Interest on securities
is included in interest income.
Marketable securities at December 31, 1997 consist of federal agency notes.
During the year ended December 31, 1997, there were no realized gains or losses
on sales of securities. All of the marketable securities as of December 31, 1997
had a contractual maturity of less than one year.
FIXED ASSETS
Fixed assets are stated at cost, which includes amounts capitalized for labor
and overhead expended in connection with the design and installation of
operating equipment. Depreciation is computed by the straight-line method over
the estimated useful lives of the assets. Estimated useful lives are as follows:
operating equipment - 5 to 40 years and other equipment - 3 to 22.5 years.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the fair
value and the carrying value of the asset.
INTANGIBLE ASSETS
Intangible assets include goodwill and license acquisition costs. Goodwill is
the excess of the purchase price over the fair value of net assets acquired in
business combinations accounted for as purchases. Goodwill is amortized on a
straight-line basis over the periods benefited, principally 30 years. License
acquisition costs represent the portion of purchase price allocated to the cable
television and telecommunications licenses acquired in business combinations.
License acquisition costs are amortized on a straight-line basis over the
remaining life of the license as follows: cable television license - 7 to 12
years and telecommunications license - 23 years. The Company continually reviews
the recoverability of the carrying value of these assets using the same
methodology that it uses for the evaluation of its other long-lived assets.
F-10
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER ASSETS
Other assets consist primarily of noncompetition agreements obtained in exchange
for the issuance of warrants to purchase an aggregate of 899,000 shares of
common stock and deferred financing costs. The noncompetition agreements were
valued at the difference between the fair market value of the common stock on
the date of grant and the exercise price of the warrants. The noncompetition
agreements are being expensed on a straight-line basis over the noncompetition
period of primarily five years. Deferred financing costs were incurred in
connection with the issuance of debt and are amortized over the term of the
related debt.
CAPITALIZED INTEREST
Interest is capitalized as a component of the cost of fixed assets constructed.
In 1997, 1996 and 1995, interest of $6,770,000, $10,294,000 and $12,183,000,
respectively, was capitalized.
REVENUE RECOGNITION
Revenues are recognized at the time the service is provided to the customer.
CABLE TELEVISION SYSTEM COSTS, EXPENSES AND REVENUES
The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its cable television, telephone and
telecommunications systems in accordance with SFAS No. 51, "Financial Reporting
by Cable Television Companies."
ADVERTISING EXPENSE
The Company expenses the cost of advertising as incurred. Advertising costs were
$31,003,000, $22,727,000 and $10,370,000 in 1997, 1996 and 1995, respectively.
NET (LOSS) PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share". SFAS 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. The Company adopted SFAS No. 128 for each of the three years
in the period ended December 31, 1997.
F-11
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK-BASED COMPENSATION
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." The Company applies APB Opinion No.
25, "Accounting for Stock Issued to Employees" and related interpretations in
accounting for its stock option plans.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
3. RECENT ACCOUNTING PRONOUNCEMENTS
COMPREHENSIVE INCOME
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income".
SFAS No. 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. The Company will adopt SFAS No. 130 in the first interim
period for its fiscal year ending December 31, 1998.
SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. SFAS No. 131
is effective for financial statements for periods beginning after December 15,
1997. The Company will adopt SFAS No. 131 for its fiscal year ending December
31, 1998.
4. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES
NEED FOR ADDITIONAL FINANCING
The Company will require additional financing in the future. There can be no
assurance that the required financing will be obtainable on acceptable terms.
F-12
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
4. CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES (CONTINUED)
REQUIREMENTS TO MEET BUILD MILESTONES
The telecommunications license for each United Kingdom franchise contains
specific construction milestones. Based on current network construction
scheduling, the Company believes it will be able to satisfy its milestones in
the future, but there can be no assurance that such milestones will be met. If
the Company is unable to meet the construction milestones required by any of its
licenses and is unable to obtain modifications to the milestones, the relevant
licenses could be revoked.
CONCENTRATIONS
The Company's television and radio broadcasting business is substantially
dependent upon contracts with a small group of companies for the right to
broadcast their programming, and upon a site sharing agreement for a large
number of its transmission sites. The loss of any one of these contracts or the
site sharing agreement could have a material adverse effect on the business of
the Company.
LIMITED ACCESS TO PROGRAMMING
The Company's ability to make a competitive offering of cable television
services is dependent on the Company's ability to obtain access to programming
at a reasonable cost. There can be no assurance that the Company's current
programming will continue to be available on acceptable commercial terms or at
all.
CURRENCY RISK
To the extent that the Company obtains financing in United States dollars and
incurs construction and operating costs in British pounds sterling, it will
encounter currency exchange rate risks. In addition, the Company's revenues are
generated primarily in British pounds sterling while its interest and principal
obligations with respect to most of the Company's existing indebtedness are
payable in United States dollars. The Company has entered into an option
agreement to hedge some of the risk of exchange rate fluctuations related to
interest payments on United States dollar denominated debt.
F-13
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. FIXED ASSETS
Fixed assets consists of:
DECEMBER 31
1997 1996
------------------------------------------
Operating equipment $1,612,440,000 $1,080,135,000
Other equipment 225,514,000 197,368,000
Construction-in-progress 134,795,000 305,372,000
------------------------------------------
1,972,749,000 1,582,875,000
Accumulated depreciation (215,764,000) (123,347,000)
------------------------------------------
$1,756,985,000 $1,459,528,000
==========================================
6. INTANGIBLE ASSETS
Intangible assets consists of:
DECEMBER 31
1997 1996
------------------------------------------
License acquisition costs, net
of accumulated amortization
of $46,620,000 (1997) and
$34,894,000 (1996) $123,116,000 $134,909,000
Goodwill, net of accumulated
amortization of $13,449,000
(1997) and $5,986,000 (1996) 241,363,000 258,024,000
------------------------------------------
$364,479,000 $392,933,000
==========================================
In October 1996, the Company acquired the remaining 40% interest it did not
already own in CableTel Newport in exchange for 780 shares of the Company's
Series A Preferred Stock. CableTel Newport owns and operates cable television,
telephone and telecommunications franchises in South Wales. The Series A
Preferred Stock was valued at $49,000,000, based on an appraisal as of the date
of issuance. The fair value of the net tangible assets acquired of $67,710,000
exceeded the aggregate purchase price of $49,062,000 (including costs incurred
of $62,000) by $18,648,000, which is classified as a reduction to license
acquisition costs.
In September 1996, the Company acquired the remaining 30% minority interest of
English Cable Enterprises, Inc. ("ECE") that the Company did not own, in
exchange for 1,415,000 shares of its common stock. ECE, through its
subsidiaries, owns four cable television, telephone and telecommunications
licenses in the northern suburbs of London. The value of the shares, based on
the market price on the date of issuance, of $34,137,000 plus costs incurred of
$204,000 exceeded the fair value of the net tangible assets acquired by
$28,649,000, which is classified as license acquisition costs.
F-14
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
6. INTANGIBLE ASSETS (CONTINUED)
In May 1996, an indirect wholly-owned subsidiary of the Company, NTL Investment
Holdings Limited ("NTLIH"), acquired NTL Group Limited for payments of
approximately 204,000,000 pounds sterling at closing, 17,100,000 pounds sterling
in October 1996 and 35,000,000 pounds sterling in May 1997. NTL Group Limited
provides television and radio transmission services and a range of other
services in the broadcasting and telecommunications industries. This acquisition
has been accounted for as a purchase, and, accordingly, the net assets and
results of operations of NTL Group Limited have been included in the
consolidated financial statements from the date of acquisition. The aggregate
purchase price of 256,100,000 pounds sterling ($439,000,000) plus costs incurred
of $3,700,000 exceeded the fair value of the net tangible assets acquired by
$263,000,000, which is classified as goodwill.
The pro forma unaudited consolidated results of operations for the year ended
December 31, 1996 assuming consummation of the above mentioned transactions as
of January 1, 1996 is as follows:
Total revenue $289,638,000
Net loss (265,180,000)
Basic and diluted net loss per share (8.31)
In October 1995, CableTel South Wales Limited, a wholly-owned subsidiary of
CableTel Newport, acquired the cable television business of Metro Cable TV
Limited in South Wales ("Metro Wales"), and CableTel Central Hertfordshire
Limited, a wholly-owned subsidiary of ECE, acquired the cable television
business of Metro Cable TV Limited in Hertfordshire ("Metro Herts"), for an
aggregate consideration of $12,125,000. These acquisitions have been accounted
for as purchases, and, accordingly, the net assets and results of operations of
Metro Wales and Metro Herts have been included in the consolidated financial
statements from the date of acquisition. The aggregate purchase price exceeded
the fair value of the net tangible assets acquired by $10,167,000, which is
classified as license acquisition costs. In 1996, the Metro Wales license
acquisition costs were reduced by $565,000.
F-15
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. LONG-TERM DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
---------------------------------------------------
<S> <C> <C>
10-7/8% Senior Deferred Coupon Notes
("10-7/8% Notes") (a) $ 194,959,000 $ 175,368,000
12-3/4% Series A Senior Deferred Coupon Notes
("12-3/4% Notes") (b) 209,387,000 185,043,000
11-1/2% Series B Senior Deferred Coupon Notes
("11-1/2% Notes") (c) 743,961,000 665,257,000
10% Series B Senior Notes ("10% Notes") (d) 400,000,000 -
7-1/4% Convertible Subordinated Notes
("7-1/4 Convertible Notes") (e) 191,750,000 191,750,000
7% Convertible Subordinated Notes
("7% Convertible Notes") (f) 275,000,000 275,000,000
Term Loan and Revolving Facility (g) - 239,750,000
---------------------------------------------------
$2,015,057,000 $1,732,168,000
========================== ========================
</TABLE>
(a) In October 1993, the Company issued $212,000,000 aggregate principal amount
of 10-7/8% Senior Deferred Coupon Notes due 2003. The 10-7/8% Notes were
issued at a price to the public of 58.873% or $124,811,000. The Company
incurred $5,019,000 in fees and expenses which is included in deferred
financing costs. The original issue discount on the 10-7/8% Notes accretes
at a rate of 10-7/8%, compounded semiannually, to an aggregate principal
amount of $212,000,000 by October 15, 1998. Interest will thereafter accrue
at 10-7/8% per annum, payable semiannually beginning on April 15, 1999.
During 1997, 1996 and 1995, the Company recognized $19,591,000, $17,620,000
and $15,851,000, respectively, of the original issue discount as interest
expense.
The 10-7/8% Notes are effectively subordinated to all existing and future
indebtedness and other liabilities and commitments of the Company's
subsidiaries. The 10-7/8% Notes may be redeemed at the Company's option, in
whole or in part, at any time on or after October 15, 1998 at 103.107% the
first year, 101.554% the second year and 100% thereafter, plus accrued and
unpaid interest to the date of redemption. The indenture governing the
10-7/8% Notes contains restrictions relating to, among other things: (i)
incurrence of additional indebtedness and issuance of preferred stock; (ii)
dividend and other payment restrictions; and (iii) mergers, consolidations
and sales of assets.
F-16
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. LONG-TERM DEBT (CONTINUED)
(b) In April 1995, the Company issued $277,803,500 aggregate principal amount
of 12-3/4% Senior Deferred Coupon Notes due 2005. The 12-3/4% Notes were
issued at a price to the public of 53.995% or $150,000,000. The Company
incurred $6,192,000 in fees and expenses in connection with the issuance of
12-3/4% Notes which is included in deferred financing costs. The original
issue discount accretes at a rate of 12-3/4%, compounded semiannually, to
an aggregate principal amount of $277,803,500 by April 15, 2000. Interest
will thereafter accrue at 12-3/4% per annum, payable semiannually beginning
on October 15, 2000. During 1997, 1996 and 1995, the Company recognized
$24,344,000, $21,515,000 and $13,528,000, respectively, of original issue
discount as interest expense.
The 12-3/4% Notes are effectively subordinated to all existing and future
indebtedness and other liabilities and commitments of the Company's
subsidiaries, rank pari passu in right of payment with all senior unsecured
indebtedness and rank senior in right of payment to all subordinated
indebtedness of the Company. The 12-3/4% Notes may be redeemed at the
Company's option, in whole or in part, at any time on or after April 15,
2000 at 103.64% the first year, 101.82% the second year and 100%
thereafter, plus accrued and unpaid interest to the date of redemption. The
indenture governing the 12-3/4% Notes contains restrictions relating to,
among other things: (i) incurrence of additional indebtedness and issuance
of preferred stock, (ii) dividend and other payment restrictions and (iii)
mergers, consolidations and sales of assets.
(c) In January 1996, the Company issued $1,050,000,000 aggregate principal
amount of 11-1/2% Series B Senior Deferred Coupon Notes due 2006. The
11-1/2% Notes were issued at a price to investors of 57.155% of the
aggregate principal amount at maturity or $600,127,500. The Company
incurred $19,273,000 in fees and expenses in connection with the issuance
of the 11-1/2% Notes which is included in deferred financing costs. The
original issue discount accretes at a rate of 11-1/2%, compounded
semiannually, to an aggregate principal amount of $1,050,000,000 by
February 1, 2001. Interest will thereafter accrue at 11-1/2% per annum,
payable semiannually beginning on August 1, 2001. During 1997 and 1996, the
Company recognized $78,704,000 and $65,129,000 of original issue discount
as interest expense.
The 11-1/2% Notes are effectively subordinated to all existing and future
indebtedness and other liabilities and commitments of the Company's
subsidiaries, rank pari passu in right of payment with all senior unsecured
indebtedness and rank senior in right of payment to all subordinated
indebtedness of the Company. The 11-1/2% Notes may be redeemed at the
Company's option, in whole or in part, at any time on or after February 1,
2001 at 105.75% the first year, 102.875% the second year and 100%
thereafter, plus accrued and unpaid interest to the date of redemption. The
indenture governing the 11-1/2% Notes contains restrictions relating to,
among other things: (i) incurrence of additional indebtedness and issuance
of preferred stock; (ii) dividend and other payment restrictions and (iii)
mergers, consolidations and sales of assets.
F-17
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. LONG-TERM DEBT (CONTINUED)
(d) In February 1997, the Company issued $400,000,000 aggregate principal
amount of 10% Senior Notes due 2007. The Company received net proceeds of
$389,000,000 after discounts and commissions from the issuance of the 10%
Notes. Discounts, commissions and other fees incurred of $11,885,000 are
included in deferred financing costs. The 10% Notes accrue interest at 10%
per annum, payable semiannually as of August 15, 1997.
The 10% Notes are effectively subordinated to all existing and future
indebtedness and other liabilities and commitments of the Company's
subsidiaries. The 10% Notes may be redeemed at the Company's option, in
whole or in part, at any time on or after February 15, 2002 at a redemption
price of 105% that declines annually to 100% in 2005, in each case together
with accrued and unpaid interest to the date of redemption. The indenture
governing the 10% Notes contains restrictions relating to, among other
things: (i) incurrence of additional indebtedness and the issuance of
preferred stock, (ii) dividend and other payment restrictions and (iii)
mergers, consolidations and sales of assets.
(e) In April and May 1995, the Company issued $191,750,000 principal amount of
7-1/4% Convertible Subordinated Notes due 2005. Interest payments began on
October 15, 1995 and interest is payable every six months thereafter. The
7-1/4% Convertible Notes will mature on April 15, 2005. The 7-1/4%
Convertible Notes are unsecured obligations convertible into shares of
common stock prior to maturity at a conversion price of $27.56 per share,
subject to adjustment. There are approximately 6,958,000 shares of common
stock reserved for issuance upon the conversion of the 7-1/4% Convertible
Notes. The 7-1/4% Convertible Notes are redeemable, in whole or in part, at
the option of the Company at any time on or after April 15, 1998, at a
redemption price of 105.08% that declines annually to 100.73% in 2004, in
each case together with accrued interest to the redemption date. The
Company incurred $6,822,000 in fees and expenses in connection with the
issuance of the 7-1/4% Convertible Notes, which is included in deferred
financing costs.
In March 1998, the Company announced that it was calling for redemption all
of the 7-1/4% Convertible Notes. The redemption date is April 20, 1998 and
the redemption price is 105.08% of the principal amount, plus accrued and
unpaid interest through the date of redemption.
(f) In June 1996, the Company issued $275,000,000 aggregate principal amount of
7% Convertible Subordinated Notes due 2008. Interest payments began on
December 15, 1996 and interest is payable every six months thereafter. The
7% Convertible Notes mature on June 15, 2008. The 7% Convertible Notes are
unsecured obligations convertible into shares of common stock prior to
maturity at a conversion price of $37.875 per share, subject to adjustment.
There are approximately 7,261,000 shares of common stock reserved for
issuance upon conversion of the 7% Convertible Notes. The 7% Convertible
Notes are redeemable, in whole or in part, at the option of the Company at
any time on or after June 15, 1999, at a redemption price of 104.9% that
declines annually to 100% in 2006, in
F-18
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. LONG-TERM DEBT (CONTINUED)
each case together with accrued and unpaid interest to the redemption date.
The Company incurred $8,616,000 in fees and expenses in connection with the
issuance of the 7% Convertible Notes, which is included in deferred
financing costs.
(g) To finance a substantial portion of the purchase price for NTL Group
Limited, NTLIH obtained from a syndicate of lenders senior secured loan
facilities (the "NTLIH Facility") of a maximum principal amount of
165,000,000 pounds sterling comprised of: (i) a long-term loan facility of
140,000,000 pounds sterling and (ii) a revolving credit facility of
25,000,000 pounds sterling. One of the Lenders also made available to NTLIH
a secured loan facility of 60,000,000 pounds sterling (the "Bridge
Facility") to finance the remainder of the payment due at closing and
acquisition costs and expenses due at closing. Loans under the NTLIH
Facility incurred interest at an annual rate equal to LIBOR plus a margin
that varied from 0.75% per annum to 1.75% per annum, based on certain
financial ratios of NTLIH and certain of its subsidiaries. Interest was
payable either monthly, quarterly or semiannually, at the option of NTLIH.
The effective interest rate on the NTLIH Facility at December 31, 1996 was
7.972%. The Bridge Facility was repaid in full in August 1996. In October
1997, the principal and accrued interest outstanding under the NTLIH
Facility of 140,138,000 pounds sterling ($231,466,000) was repaid using
cash on hand.
In 1997, NTL (UK) Group, Inc., a wholly-owned subsidiary of the Company, which
is the holding company for the United Kingdom operations and the parent company
of NTLIH, and NTLIH entered into an agreement with The Chase Manhattan Bank
pursuant to which Chase has agreed to fully underwrite a 555,000,000 pounds
sterling, eight-year term loan facility with an initial four-year revolving
period. By April 14, 1999, Chase's commitment will be reduced to no less than
480,000,000 pounds sterling or such greater amount as is necessary to ensure
that the Company's United Kingdom operations remain fully funded by reference to
an agreed business plan. The facility will be used to finance capital
expenditures and working capital for the Company's United Kingdom operations,
including its local broadband, national telecommunications and national digital
television networks. A portion of the facility (75,000,000 pounds sterling) is
conditional upon the execution of contracts to provide digital television
transmission services to certain third parties. Chase has provided a portion of
the 555,000,000 pounds sterling facility in the form of a 350,000,000 pounds
sterling facility to the Company on the same terms as to restrictions,
covenants, guarantees and security as the 555,000,000 pounds sterling facility.
As of March 20, 1998, 10,000,000 pounds sterling ($16,517,000) is outstanding
under the 350,000,000 pounds sterling facility. The principal amount outstanding
under the 350,000,000 pounds sterling facility is required to be repaid on
December 31, 2005. Interest is payable either monthly, quarterly or
semi-annually, at the option of NTLIH, at LIBOR plus, at a maximum, 2.25% per
annum. The commitment fee is .375% per annum on the unutilized portion of the
350,000,000 pounds sterling facility and is payable quarterly in arrears. The
facility is secured by first fixed and floating charges over all present and
future assets and undertakings of the United Kingdom group. The facility
F-19
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. LONG-TERM DEBT (CONTINUED)
contains customary financial covenants, and certain restrictions relating to,
among other things: (i) incurrence of additional indebtedness or guarantees,
(ii) investments, acquisitions and mergers and (iii) dividend and other payment
restrictions. In the absence of a default, the facility generally permits
payments to the Company to pay interest and principal of existing indebtedness
of the Company. At December 31, 1997, restricted net assets were approximately
$1,861,000,000.
In March 1998, the Company issued 125,000,000 pounds sterling aggregate
principal amount of 9-1/2% Senior Notes due 2008 (the "Sterling Senior Notes"),
300,000,000 pounds sterling aggregate principal amount of 10-3/4% Senior
Deferred Coupon Notes due 2008 (the "Sterling Deferred Coupon Notes") and
$1,300,000,000 aggregate principal amount of 9-3/4% Senior Deferred Coupon Notes
due 2008 (the "Dollar Deferred Coupon Notes") (together the "New Notes"). The
Sterling Senior Notes, Sterling Deferred Coupon Notes and the Dollar Deferred
Coupon Notes were issued at a price to the public of 99.67% or 124,588,000
pounds sterling, 58.62% or 175,860,000 pounds sterling and 61.724% or
$802,412,000, respectively. The Company received net proceeds of 121,161,000
pounds sterling, 170,584,000 pounds sterling and $778,340,000, after discounts
and commissions, from the issuance of the Sterling Senior Notes, the Sterling
Deferred Coupon Notes and the Dollar Deferred Coupon Notes, respectively.
The original issue discount of the Sterling Deferred Coupon Notes accretes at a
rate of 10-3/4%, compounded semiannually, to an aggregate principal amount of
300,000,000 pounds sterling by April 1, 2003. The original issue discount of the
Dollar Deferred Coupon Notes accretes at a rate of 9-3/4%, compounded
semiannually, to an aggregate principal amount of $1,300,000,000 by April 1,
2003. Interest on each of the Sterling Deferred Coupon Notes and the Dollar
Deferred Coupon Notes will thereafter accrue at 10-3/4% per annum and 9-3/4% per
annum, respectively, payable semiannually, beginning on October 1, 2003. The
Sterling Senior Notes accrue interest at 9-1/2% per annum, payable semiannually,
beginning on October 1, 1998.
The New Notes are effectively subordinated to all existing and future
indebtedness and other liabilities and commitments of the Company's
subsidiaries, rank pari passu in right of payment with each other and with all
senior unsecured indebtedness of the Company and rank senior in right of payment
to all subordinated indebtedness of the Company.
The New Notes may be redeemed at the Company's option, in whole or in part, at
any time on or after April 1, 2003, at a redemption price of 104-3/4% to
105-3/8% that declines annually to 100% in 2006, in each case together with
accrued and unpaid interest to the date of redemption.
The indentures governing the New Notes contain restrictions relating to, among
other things: (i) incurrence of additional indebtedness and the issuance of
preferred stock, (ii) dividend and other payment restrictions and (iii) mergers,
consolidations and sales of assets.
F-20
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
8. REDEEMABLE PREFERRED STOCK
In February 1997, the Company issued $100,000,000 of its 13% Senior Redeemable
Exchangeable Preferred Stock (the "Redeemable Preferred Stock"). The Company
received net proceeds of $96,625,000 after discounts and commissions from the
issuance of the Redeemable Preferred Stock. Discounts, commissions and other
fees incurred of $3,729,000 were recorded as unamortized discount at issuance.
Of the 2,500,000 authorized shares of Series Preferred Stock, 100,000 shares of
Redeemable Preferred Stock were issued. Dividends accrue at 13% per annum ($130
per share) and are payable quarterly in arrears as of May 15, 1997. Dividends,
whether or not earned or declared, will accrue without interest until declared
and paid, which declaration may be for all or part of the accrued dividends.
Dividends accruing on or prior to February 15, 2004 may, at the option of the
Company, be paid in cash, by the issuance of additional Redeemable Preferred
Stock or in any combination of the foregoing. As of December 31, 1997, the
Company has accrued $11,978,000 for dividends and has issued approximately
10,000 shares for $10,187,000 of such accrued dividends. The Redeemable
Preferred Stock may be redeemed, at the Company's option, in whole or in part,
at any time on or after February 15, 2002 at a redemption price of 106.5% of the
liquidation preference of $1,000 per share that declines annually to 100% in
2005, in each case together with accrued and unpaid dividends to the redemption
date. The Redeemable Preferred Stock is subject to mandatory redemption on
February 15, 2009. On any scheduled dividend payment date, the Company may, at
its option, exchange all of the shares of Redeemable Preferred Stock then
outstanding for the Company's 13% Subordinated Exchange Debentures due 2009 (the
"Subordinated Debentures").
The Subordinated Debentures, if issued, will bear interest at a rate of 13% per
annum, payable semiannually in arrears on February 15 and August 15 of each year
commencing with the first such date to occur after the date of exchange.
Interest accruing on or prior to February 15, 2004 may, at the option of the
Company, be paid in cash, by the issuance of additional Subordinated Debentures
or in any combination of the foregoing. The Subordinated Debentures will be
redeemable, at the Company's option, in whole or in part, on or after February
15, 2002 at a redemption price of 106.5% that declines annually to 100% in 2005,
in each case together with accrued and unpaid interest to the redemption date.
9. NONRECURRING CHARGES INCLUDING RESTRUCTURING CHARGES
Nonrecurring charges of $20,642,000 in 1997 include deferred costs written-off
of $5,013,000 and restructuring costs of $15,629,000. The deferred costs
written-off relate to the Company's unsuccessful bid for United Kingdom digital
terrestrial television multiplex licenses. Restructuring costs relate to the
Company's announcement in September 1997 of a reorganization of certain of its
operations. The Company is consolidating the Customer Operations departments
that serve its three franchise areas in England into one department, and is
consolidating certain operations and management groups within the Broadcast
Services division,
F-21
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. NONRECURRING CHARGES INCLUDING RESTRUCTURING CHARGES (CONTINUED)
as well as certain other consolidations or cessations of activities. This charge
consisted of employee severance and related costs of $6,726,000 for
approximately 280 employees to be terminated, lease exit costs of $6,539,000 and
penalties of $2,364,000 associated with the cancellation of contractual
obligations. As of December 31, 1997, $5,441,000 of the provision has been used.
10. OTHER GAINS
Other gains of $21,497,000 in 1997 include a legal settlement of $10,000,000 and
a gain on the sale of fixed assets of $11,497,000. In October 1997, following
the U.S. District Court's decision to dismiss the Company's complaint against
LeGroupe Videotron Ltee and its subsidiary, the Company entered into a
Settlement Agreement dismissing the Company's complaint in exchange for a
payment of $10,000,000. In December 1997, a U.S. subsidiary of the Company sold
its fixed and other assets utilized in its microwave transmission service
business and recognized a gain of $11,497,000.
11. INCOME TAXES
The provision (benefit) for income taxes consists of the following:
YEAR ENDED DECEMBER 31
1997 1996 1995
---------------------------------------------------
Current:
Federal $ - $ - $ (181,000)
State and local 1,261,000 344,000 167,000
Foreign - 2,246,000 (2,463,000)
---------------------------------------------------
Total current 1,261,000 2,590,000 (2,477,000)
---------------------------------------------------
Deferred:
Federal - - -
State and local - - -
Foreign (16,852,000) 5,063,000 -
---------------------------------------------------
Total deferred (16,852,000) 5,063,000 -
---------------------------------------------------
$(15,591,000) $7,653,000 $(2,477,000)
===================================================
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for
F-22
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
11. INCOME TAXES (CONTINUED)
income tax purposes. Significant components of the deferred tax liabilities and
assets are as follows:
DECEMBER 31
1997 1996
---------------------------------
Deferred tax liabilities:
Fixed assets $ 68,380,000 $ 78,433,000
Depreciation and amortization - 30,623,000
Other 4,894,000 6,018,000
---------------------------------
Total deferred tax liabilities 73,274,000 115,074,000
Deferred tax assets:
Net operating losses 107,208,000 99,227,000
Net deferred interest expense 94,689,000 51,770,000
Depreciation and amortization 16,935,000 -
Other 18,164,000 10,396,000
---------------------------------
Total deferred tax assets 236,996,000 161,393,000
Valuation allowance for deferred
tax assets (233,940,000) (141,250,000)
---------------------------------
Net deferred tax assets 3,056,000 20,143,000
---------------------------------
Net deferred tax liabilities $ 70,218,000 $ 94,931,000
=================================
At December 31, 1997, the Company had net operating loss carryforwards of
approximately $56,000,000 for U.S. federal income tax purposes that expire as
follows: $500,000 in 2008, $1,100,000 in 2009, $21,000,000 in 2010, $27,700,000
in 2011 and $5,700,000 in 2012. The Company also has United Kingdom net
operating loss carryforwards of approximately $290,000,000 which have no
expiration date. Pursuant to United Kingdom law, these losses are only available
to offset income of the separate entity that generated the loss.
The reconciliation of income taxes computed at U.S. federal statutory rates to
income tax expense is as follows:
YEAR ENDED DECEMBER 31
1997 1996 1995
---------------------------------------------
Provision (benefit) at
federal statutory rate (35%) $(120,452,000) $(90,518,000) $(35,083,000)
Add (deduct):
State and local income tax,
net of federal benefit 820,000 224,000 109,000
Foreign losses with no benefit 59,804,000 44,610,000 6,699,000
Amortization of goodwill and
license acquisition costs 3,925,000 4,031,000 3,696,000
U.S. losses with no benefit 40,312,000 49,184,000 22,507,000
Other - 122,000 (405,000)
---------------------------------------------
$ (15,591,000) $7,653,000 $(2,477,000)
=============================================
F-23
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported in the
consolidated balance sheets approximate fair value.
Long-term debt: The fair values of the 10-7/8% Notes, the 12-3/4% Notes,
the 11-1/2% Notes, the 10% Notes, the 7-1/4% Convertible Notes and the 7%
Convertible Notes are based on the quoted market price. The fair value of
the Term Loan and Revolving Facility is estimated using discounted cash
flow analysis, based on the Company's incremental borrowing rate for
similar types of borrowing arrangements.
Redeemable Preferred Stock: The fair value is based on the quoted market
price.
The carrying amounts and fair values of the Company's financial instruments are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------- ----------------------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 98,902,000 $ 98,902,000 $ 445,884,000 $ 445,884,000
Long-term debt:
10-7/8% Notes 194,959,000 199,810,000 175,368,000 179,140,000
12-3/4% Notes 209,387,000 230,577,000 185,043,000 202,797,000
11-1/2% Notes 743,961,000 819,000,000 665,257,000 714,000,000
10% Notes 400,000,000 422,000,000 - -
7-1/4% Convertible Notes 191,750,000 212,843,000 191,750,000 206,611,000
7% Convertible Notes 275,000,000 264,688,000 275,000,000 251,625,000
Term Loan and Revolving Facility - - 239,750,000 239,750,000
Redeemable Preferred Stock 108,534,000 121,846,000 - -
</TABLE>
13. RELATED PARTY TRANSACTIONS
On July 25, 1990, Cellular Communications, Inc. ("CCI") and AirTouch
Communications, Inc. ("AirTouch") entered into a Merger and Joint Venture
Agreement, as amended as of December 14, 1990. In connection with this
agreement, on July 31, 1991, CCI distributed to its shareholders the stock of
the Company.
F-24
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
13. RELATED PARTY TRANSACTIONS (CONTINUED)
Through August 1996, CCI provided management, financial and legal services to
the Company. Amounts charged to the Company included direct costs where
identifiable, and indirect costs allocated utilizing direct labor hours as
reported by the common officers and employees of CCI and the Company. For the
years ended December 31, 1996 and 1995, CCI charged $1,194,000, and $1,644,000,
respectively, which is included in corporate expenses. In August 1996, upon the
merger of CCI with AirTouch, the Company commenced providing management,
financial, legal and technical services to Cellular Communications
International, Inc. ("CCII") and CoreComm Incorporated ("CoreComm"). In 1996,
the Company charged CCII and CoreComm $351,000 and $200,000, respectively, which
included direct costs where identifiable and allocated corporate overhead based
upon the amount of time incurred on CCII and CoreComm business by the common
officers and employees of the Company, CCII and CoreComm. These charges reduced
corporate expenses in 1996.
In January 1997, the Company, CoreComm and CCII agreed to a change in the
Company's fee for the provision of services. In 1997, the Company charged
CoreComm and CCII $1,492,000 and $871,000, respectively, for direct costs where
identifiable and a fixed percentage of its corporate overhead. These charges
reduced corporate expenses. In the opinion of management of the Company, the
allocation methods are reasonable.
As of December 31, 1997 and 1996, the Company had receivables of $69,000 and
$586,000 from CCII and $71,000 and $102,000 from CoreComm, respectively.
In 1993, the Company entered into a consulting agreement with Insight
Communications Company, L.P. ("Insight U.S."), under which Insight U.S. provided
advice and assistance to the Company with respect to its cable television,
telephone and telecommunications operations in the United Kingdom. Two members
of the Company's Board of Directors are partners in Insight U.S. Pursuant to the
consulting agreement, which had a term of three years, the Company paid Insight
U.S. a fee of $50,000 per month for the first year, $40,000 per month for the
second year and $30,000 per month for the third year. The fees for the years
ended December 31, 1996 and 1995 of $270,000 and $450,000, respectively, are
included in corporate expenses.
F-25
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
14. NET LOSS PER COMMON SHARE
The following table sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
--------------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Loss before extraordinary item $(328,557,000) $(254,454,000) $(90,785,000)
Preferred stock dividend (11,978,000) - -
--------------------------------------------------------------
(340,535,000) (254,454,000) (90,785,000)
Extraordinary item (4,500,000) - -
--------------------------------------------------------------
Loss available to common shareholders $(345,035,000) $(254,454,000) $(90,785,000)
--------------------------------------------------------------
Denominator for basic net loss
per common share 32,117,000 31,041,000 30,190,000
Effect of dilutive securities - - -
--------------------------------------------------------------
Denominator for diluted net loss
per common share 32,117,000 31,041,000 30,190,000
--------------------------------------------------------------
Basic and diluted net loss per common share:
Loss before extraordinary item $(10.60) $(8.20) $(3.01)
Extraordinary item (.14) - -
--------------------------------------------------------------
Net (loss) $(10.74) $(8.20) $(3.01)
==============================================================
</TABLE>
Stock options, warrants and convertible securities are excluded from the
calculation of net loss per common share as their effect would be antidilutive.
15. SHAREHOLDERS' EQUITY (DEFICIENCY)
STOCK SPLIT
On July 25, 1995, the Company declared a 4-for-3 stock split by way of stock
dividend, which was paid on August 11, 1995. All common stock data in the
Consolidated Financial Statements give effect to the stock split.
SERIES PREFERRED STOCK
In October 1996, the Board of Directors created and authorized for issuance
2,000 shares of 5% Non-Voting Convertible Preferred Stock, Series A ("Series A
Preferred Stock"), of which 780 shares were issued in connection with the
CableTel Newport acquisition. Each share of Series A Preferred Stock has a
stated value of $100,000, subject to certain exceptions. The holders of
F-26
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Series A Preferred Stock are entitled to receive cumulative dividends beginning
in October 2001 at the rate of 5% of the stated value, payable semi-annually in
arrears, subject to certain exceptions. Dividends may be paid, in the sole
discretion of the Board of Directors, in cash, in common stock or in additional
shares of Series A Preferred Stock. The Company has the right, exercisable at
any time, to redeem all or some of the Series A Preferred Stock at a price equal
to the aggregate stated value of the shares to be redeemed, together with all
accrued and unpaid dividends, in cash or in shares of common stock (based on the
average market price of the common stock, as defined). The holder of Series A
Preferred Stock has the right to convert shares of Series A Preferred Stock into
common stock equal to the aggregate stated value of Series A Preferred Stock
divided by the greater of (a) $40.00 or (b) the average market price of the
common stock, as defined. The Series A Preferred Stock has a liquidation
preference equal to the stated value per share plus accrued and unpaid
dividends.
WARRANTS
In 1993, the Company issued warrants to purchase an aggregate of approximately
899,000 shares of common stock at an initial exercise price of $8.35 per share
in connection with certain noncompetition agreements. The exercise price
decreased to $6.96 per share in the second year after the grant and to $5.57 per
share thereafter. The warrants were valued at $13,193,000, the difference
between the fair market value of the common stock on the date of grant and $5.57
per share. The warrants expire in 2000.
In 1996, pursuant to the terms of the consent solicitations to the holders of
the 10-7/8% Notes and to the holders of the 12-3/4% Notes to gain consent to
modify certain indenture provisions, the Company paid an aggregate of $3,592,000
in consent payments and issued warrants to purchase 164,000 shares of common
stock at an exercise price of $23.78 per share in lieu of additional consent
payments of $1,641,000. The warrants expire in 2006.
SHAREHOLDER RIGHTS PLAN
The Rights Agreement provides that one Right will be issued with each share of
common stock issued on or after October 13, 1993. The Rights are exercisable
upon the occurrence of certain potential takeover events and will expire in
October 2003 unless previously redeemed by the Company. When exercisable, each
Right entitles the owner to purchase from the Company one one-hundredth of a
share of Series A Junior Participating Preferred Stock ("Rights Preferred
Stock") at a purchase price of $100.
F-27
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
The Rights Preferred Stock will be entitled to a minimum preferential quarterly
dividend payment of $.01 per share and will be entitled to an aggregate dividend
of 100 times the dividend, if any, declared per share of common stock. In the
event of liquidation, the holders of Rights Preferred Stock will be entitled to
a minimum preferential liquidation payment of $1 per share and will be entitled
to an aggregate payment of 100 times the payment made per share of common stock.
Each share of Rights Preferred Stock will have 100 votes and will vote together
with the common stock. In the event of any merger, consolidation or other
transaction in which shares of common stock are changed or exchanged, each share
of Rights Preferred Stock will be entitled to receive 100 times the amount
received per share of common stock. These rights are protected by customary
antidilution provisions.
There are 2,500,000 authorized shares of Series Preferred Stock of which
1,000,000 shares are designated Rights Preferred Stock.
STOCK OPTIONS
There are 2,164,000 shares of common stock reserved for issuance under the OCOM
Corporation (a wholly-owned subsidiary of the Company) 1991 Stock Option Plan.
The plan provides that incentive stock options ("ISOs") be granted at the fair
market value of OCOM's common stock on the date of grant, and nonqualified stock
options ("NQSOs") be granted at not less than 85% of the fair market value of
OCOM's common stock on the date of grant. Options are exercisable as to 20% of
the shares subject thereto on the date of grant and become exercisable as to an
additional 20% of the shares subject thereto on each January 1 thereafter, while
the optionee remains an employee of the Company. Options will expire ten years
after the date of the grant.
There are 6,653,000 shares of common stock reserved for issuance under the NTL
Incorporated 1993 Stock Option Plan. The exercise price of an ISO may not be
less than 100% of the fair market value of the Company's common stock on the
date of grant, and the exercise price of a NQSO may not be less than 85% of the
fair market value of the Company's common stock on the date of grant. Options
are exercisable as to 20% of the shares subject thereto on the date of grant and
become exercisable as to an additional 20% of the shares subject thereto on each
January 1 thereafter, while the optionee remains an employee of the Company.
Options will expire ten years after the date of the grant.
There are 100,000 shares of common stock reserved for issuance under the OCOM
Corporation Non-Employee Director Stock Option Plan. The plan provides that all
options be granted at the fair market value of OCOM's common stock on the date
of grant, and options will expire ten years after the date of the grant. Options
are exercisable as to 20% of the shares subject thereto on the date of grant and
become exercisable as to an additional 20% of the shares subject thereto on each
subsequent anniversary of the grant date, while the optionee remains a director
of the Company. Options will expire ten years after the date of the grant.
F-28
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
There are 320,000 shares of common stock reserved for issuance under the NTL
Incorporated 1993 Non-Employee Director Stock Option Plan. Under the terms of
this plan, options will be granted to members of the Board of Directors who are
not employees of the Company or any of its affiliates. The plan provides that
all options be granted at the fair market value of the Company's common stock on
the date of grant, and options will expire ten years after the date of the
grant. Options are exercisable as to 20% of the shares subject thereto on the
date of grant and become exercisable as to an additional 20% of the shares
subject thereto on each subsequent anniversary of the grant date while the
optionee remains a director of the Company. Options will expire ten years after
the date of the grant.
Pro forma information regarding net loss and net loss per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for 1997, 1996 and 1995: risk-free interest rates of 5.89%, 6.56%
and 6.61%, respectively, dividend yield of 0%, volatility factor of the expected
market price of the Company's common stock of .276, .255 and .255, respectively,
and a weighted-average expected life of the option of 10 years.
The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. Following is the
Company's pro forma information:
YEAR ENDED DECEMBER 31
1997 1996 1995
-----------------------------------------------
Pro forma net (loss) $(343,850,000) $(261,245,000) $(93,688,000)
Basic and diluted pro
forma net (loss) per share $(11.08) $(8.42) $(3.10)
F-29
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
15. SHAREHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
A summary of the Company's stock option activity and related information for the
years ended December 31, follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------------------------------------------------------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding-beginning of year 6,738,000 $ 14.10 5,934,000 $11.04 4,795,000 $8.09
Granted 1,571,000 23.97 1,390,000 25.94 1,164,000 23.07
Exercised (119,000) 12.85 (396,000) 3.44 (21,000) 4.78
Forfeited (33,000) 23.78 (190,000) 27.39 (4,000) 17.50
--------- --------- ---------
Outstanding-end of year 8,157,000 $15.98 6,738,000 $14.10 5,934,000 $11.04
========= ========= =========
Exercisable at end of year 5,663,000 $12.39 4,258,000 $10.71 3,410,000 $ 8.22
========= ========= =========
</TABLE>
Weighted-average fair value of options, calculated using the Black-Scholes
option pricing model, granted during 1997, 1996 and 1995 is $12.74, $13.98 and
$12.47, respectively.
The following table summarizes the status of the stock options outstanding and
exercisable at December 31, 1997:
<TABLE>
<CAPTION>
STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE
- ------------------- ----------------------------------------------- ---------------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF OF CONTRACTUAL EXERCISE OF EXERCISE
EXERCISE PRICES OPTIONS LIFE PRICE OPTIONS PRICE
- ------------------- ----------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
$0.19 to $0.56 77,000 3.6 Years $0.245 77,000 $0.245
$0.73 to $1.12 150,000 3.6 Years $0.745 150,000 $0.745
$1.53 to $2.69 356,000 3.6 Years $2.157 356,000 $2.157
$3.09 to $4.50 75,000 4.4 Years $3.230 75,000 $3.230
$8.81 to $14.63 3,312,000 5.4 Years $8.873 3,305,000 $8.861
$15.19 to $22.88 1,498,000 7.4 Years $21.685 882,000 $21.659
$23.06 to $32.38 2,689,000 8.9 Years $25.038 818,000 $25.213
- ------------------- ----------------------------------------------- ---------------------------------
Total 8,157,000 5,663,000
=================== =============================================== =================================
</TABLE>
The Company has 25,309,000 shares of its common stock reserved for issuance upon
the exercise of warrants and stock options and the conversion of debt and
preferred stock.
F-30
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
16. EMPLOYEE BENEFIT PLANS
Certain subsidiaries of NTL Group Limited operate a defined benefit pension
plan in the United Kingdom. The assets of the Plan are held separately from
those of NTL Group Limited and are invested in specialized portfolios under the
management of an investment group. The pension cost is calculated using the
attained age method. The Company's policy is to fund amounts to the defined
benefit plan necessary to comply with the funding requirements as prescribed by
the laws and regulations in the United Kingdom. The change in the projected
benefit obligation in 1997 is due to the change in actuarial assumptions used.
The components of net pension costs are as follows:
YEAR ENDED DECEMBER 31
1997 1996
--------------------------------------------
Service cost $ 10,693,000 $7,997,000
Interest cost 12,765,000 11,679,000
Actual return on plan assets (30,852,000) (16,103,000)
Net amortization and deferral 17,327,000 4,241,000
--------------------------------------------
$ 9,933,000 $7,814,000
============================================
The funded status (assets exceed accumulated benefits) of the plan is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
---------------------------------------
<S> <C> <C>
Accumulated benefit obligation:
Vested $178,828,000 $148,809,000
Nonvested - -
---------------------------------------
$178,828,000 $148,809,000
=======================================
Fair value of plan assets,
principally U.K. equity securities $195,226,000 $166,195,000
Projected benefit obligation 204,340,000 170,795,000
---------------------------------------
Excess of projected benefit obligation over assets (9,114,000) (4,600,000)
Unrecognized net transition obligation 10,203,000 11,541,000
Unrecognized net gain (1,065,000) (5,098,000)
---------------------------------------
Prepaid pension cost $ 24,000 $1,843,000
=======================================
Actuarial assumptions:
Weighted average discount rate 7.25% 8.25%
Weighted average rate of compensation increase 8.00% 8.00%
Expected long-term rate of return on plan assets 9.00% 9.50%
</TABLE>
F-31
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
17. LEASES
Leases for buildings, office space and equipment extend through 2031. Total
rental expense for the years ended December 31, 1997, 1996 and 1995 under
operating leases was $20,674,000, $14,886,000 and $2,607,000, respectively.
Future minimum lease payments under noncancellable operating leases as of
December 31, 1997 are as follows:
Year ended December 31:
1998 $21,169,000
1999 20,933,000
2000 20,572,000
2001 20,235,000
2002 16,352,000
Thereafter 82,420,000
------------
$181,681,000
============
18. COMMITMENTS AND CONTINGENT LIABILITIES
As of December 31, 1997, the Company was committed to pay approximately
$78,000,000 for equipment and services.
The Company has licenses issued by the United Kingdom Department of Trade and
Industry ("DTI") and the United Kingdom Independent Television Commission
("ITC") for its cable television, telephone and telecommunications business. The
initial terms of the Company's licenses was 23 years for the DTI licenses and 15
years for the ITC licenses. The Company's licenses expire in 2008 to 2016 for
the DTI licenses and 1999 to 2005 for the ITC licenses. The DTI requires a fixed
annual renewal fee of 2,500 pounds sterling ($4,200) per license. The ITC
requires an annual license fee ranging from 1,300 pounds sterling ($2,200) to
7,900 pounds sterling ($13,100) per license based on the number of homes in the
licensed area, which is subject to adjustment annually. The Company's license
fees in 1997 were $316,000.
In addition, the Company was awarded certain newly issued licenses by the ITC in
1995. Pursuant to the terms of the local delivery license ("LDL") for Northern
Ireland granted to a wholly-owned subsidiary of the Company, the Company is
required to make annual cash payments to the ITC for fifteen years commencing in
January 1997 in the amount of approximately 14,400,000 pounds sterling
($23,800,000) (subject to adjustments for inflation). Such payments are in
addition to the percentages of qualifying revenue already set by the ITC of 0%
for the first ten years and 2% for the last five years of the fifteen year
license. The Company paid $23,587,000 in 1997.
F-32
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
18. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Pursuant to the terms of the LDL for Glamorgan and Gwent, Wales granted to a
wholly-owned subsidiary of the Company, the Company is required to make annual
cash payments to the ITC for fifteen years, commencing in the first full
calendar year after the start of operations, in the amount of 104,188 pounds
sterling ($172,000). Such payments are in addition to the percentages of
qualifying revenue already set by the ITC of 0% for the first five years, 2% for
the second five years and 4% for the last five years of the fifteen-year
license.
A significant portion of NTL Group Limited's revenues is attributable to the
provision of television and radio transmission and distribution services and the
provision of telecommunications services. In the United Kingdom, the provision
of such services is governed by the Telecommunications Act and The Wireless
Telegraphy Act 1949. NTL Group Limited holds five licenses under the
Telecommunications Act. The initial terms of these licenses were 10 or 25 years.
These licenses expire in 2002 to 2021. NTL Group Limited holds a number of
Wireless Telegraphy Act licenses which continue in force primarily from year to
year unless revoked or unless any of the license fees are not paid. The Company
paid $3,447,000 in 1997 in connection with these licenses.
The Company is involved in, or has been involved in, certain disputes and
litigation arising in the ordinary course of its business, including claims
involving contractual disputes and claims for damages to property and personal
injury resulting from the construction of the Company's networks and the
maintenance and servicing of the Company's transmission masts. None of these
matters are expected to have a material adverse effect on the Company's
financial position, results of operations or cash flows.
19. INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS
The Company operates its long distance telephone and microwave transmission
business in the United States and its television and radio broadcasting, cable
television, telephone and telecommunications businesses in the United Kingdom.
The Company acquired its national and international telecom segment and its
broadcast transmission and other segment in 1996. Identifiable corporate assets
consist primarily of cash and cash equivalents. The industry segments and
geographic area information as of and for the years ended December 31, 1997,
1996 and 1995 are as follows:
F-33
<PAGE>
NTL Incorporated and Subsidiaries
Notes to Consolidated Financial Statements (continued)
19. INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS (CONTINUED)
<TABLE>
<CAPTION>
Long
Distance
Telephone Local National Broadcast
and Telecom and Transmission
Microwave and International and
Transmission Television Telecom Other Corporate Consolidated
--------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Total revenues $ 8,831 $ 189,407 $162,738 $ 130,799 $ - $ 491,775
Operating income (loss) (1,207) (208,815) (5,327) 42,652 (19,367) (192,064)
Depreciation and amortization 2,368 103,704 17,454 20,328 6,655 150,509
Identifiable assets 27,623 1,579,044 350,704 358,302 105,966 2,421,639
Fixed asset additions 1,541 333,037 101,088 38,984 156 474,806
YEAR ENDED DECEMBER 31, 1996
Total revenues $ 10,086 $ 89,209 $ 45,430 $ 83,618 $ - $ 228,343
Operating income (loss) 773 (164,108) (7,774) 26,376 (12,900) (157,633)
Depreciation and amortization 2,744 69,200 8,601 13,152 4,956 98,653
Identifiable assets 15,660 1,655,759 220,764 412,989 149,439 2,454,611
Fixed asset additions 552 478,761 38,812 26,056 1,894 546,075
YEAR ENDED DECEMBER 31, 1995
Total revenues $ 8,937 $ 24,804 $ - $ - $ - $ 33,741
Operating (loss) (4,531) (76,161) - - (12,434) (93,126)
Depreciation and amortization 2,729 25,650 - - 1,444 29,823
Identifiable assets 15,774 892,935 - - 101,960 1,010,669
Fixed asset additions 1,557 473,795 - - - 475,352
</TABLE>
20. SUBSEQUENT EVENT
In February 1998, the Company entered into an agreement and plan of amalgamation
(the "Agreement") with Comcast UK Cable Partners Limited ("Partners"). Under the
Agreement, Partners' shareholders will receive 0.3745 shares of the Company's
Common Stock for each share of Partners Common Stock. Based on the closing price
of the Company's Common Stock on the date of the Agreement, the transaction is
valued at approximately $600,000,000. The Agreement contains provisions such
that if the purchase price per Partners share falls below $10.00, Partners has
the right to terminate the transaction, subject to the Company's right to adjust
the exchange ratio such that Partners' shareholders would receive $10.00 for
each Partners share. Under certain circumstances, the consideration payable to
Partners' shareholders may be adjusted based on the proceeds of the potential
exercise of certain rights of first refusal with respect to Partners' interests
in the London and Birmingham franchises. Completion of the transaction is
subject to a number of closing conditions including regulatory approvals,
shareholder approvals and consents from the holders of the Company's and
Partners' debt.
F-34
<PAGE>
NTL Incorporated
Schedule I - Condensed Financial Information of Registrant
Condensed Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
-------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 46,421,000 $ 101,555,000
Marketable securities 4,998,000 -
Other 8,804,000 1,008,000
-------------------------------------
Total current assets 60,223,000 102,563,000
Office improvements and equipment, net of accumulated
depreciation of $555,000 (1997) and $191,000 (1996) 1,551,000 1,759,000
Investments in and loans to subsidiaries 1,970,114,000 1,672,695,000
Deferred financing costs, net of accumulated amortization of
$13,141,000 (1997) and $6,850,000 (1996) 50,771,000 45,132,000
Other assets, net of accumulated amortization
of $11,803,000 (1997) and $9,952,000 (1996) 1,540,000 4,597,000
-------------------------------------
Total assets $2,084,199,000 $1,826,746,000
=====================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities $ 22,276,000 $ 6,214,000
Long-term debt 2,015,057,000 1,492,418,000
Senior redeemable exchangeable preferred stock 108,534,000 -
Shareholders' equity (deficiency):
Series preferred stock - -
Common stock 322,000 321,000
Additional paid-in capital 538,054,000 548,647,000
Cumulative translation adjustment 117,008,000 163,141,000
(Deficit) (717,052,000) (383,995,000)
-------------------------------------
(61,668,000) 328,114,000
-------------------------------------
Total liabilities and shareholders' equity (deficiency) $2,084,199,000 $1,826,746,000
=====================================
</TABLE>
See accompanying notes.
F-35
<PAGE>
NTL Incorporated
Schedule I - Condensed Financial Information of Registrant (continued)
Condensed Statements of Operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C>
COSTS AND EXPENSES
Corporate expenses $ 12,811,000 $ 14,144,000 $ 14,697,000
Depreciation and amortization 6,655,000 4,954,000 1,445,000
--------------------------------------------------------
Operating (loss) (19,466,000) (19,098,000) (16,142,000)
OTHER INCOME (EXPENSE)
Interest and other income 4,490,000 5,017,000 7,470,000
Interest expense (191,124,000) (128,755,000) (39,033,000)
Other gain 10,000,000 - -
Foreign currency transaction gains (losses) (2,221,000) 1,376,000 (23,000)
--------------------------------------------------------
(Loss) before income taxes and equity in net
(loss) of subsidiaries (198,321,000) (141,460,000) (47,728,000)
Income tax (provision) (1,083,000) (193,000) -
--------------------------------------------------------
(Loss) before equity in net (loss) of subsidiaries (199,404,000) (141,653,000) (47,728,000)
Equity in net (loss) of subsidiaries (133,653,000) (112,801,000) (43,057,000)
--------------------------------------------------------
Net (loss) $(333,057,000) $(254,454,000) $(90,785,000)
========================================================
</TABLE>
See accompanying notes.
F-36
<PAGE>
NTL Incorporated
Schedule I - Condensed Financial Information of Registrant (continued)
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C>
Net cash (used in) operating activities $ (55,467,000) $ (28,152,000) $ (10,448,000)
INVESTING ACTIVITIES
Purchase of office improvements and equipment (156,000) (1,891,000) -
Purchase of marketable securities (145,939,000) - -
Proceeds from sales of marketable securities 142,596,000 - -
Increase in investments in and loans to subsidiaries (436,046,000) (955,652,000) (337,120,000)
-----------------------------------------------------------
Net cash (used in) investing activities (439,545,000) (957,543,000) (337,120,000)
FINANCING ACTIVITIES
Proceeds from borrowings and sale of preferred stock,
net of financing costs 484,340,000 842,820,000 328,731,000
Proceeds from exercise of stock options and warrants 1,671,000 1,665,000 102,000
-----------------------------------------------------------
Net cash provided by financing activities 486,011,000 844,485,000 328,833,000
Effect of exchange rate changes on cash (46,133,000) 156,868,000 (6,594,000)
-----------------------------------------------------------
Increase (decrease) in cash and cash equivalents (55,134,000) 15,658,000 (25,329,000)
Cash and cash equivalents at beginning of year 101,555,000 85,897,000 111,226,000
-----------------------------------------------------------
Cash and cash equivalents at end of year $ 46,421,000 $ 101,555,000 $ 85,897,000
===========================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 53,485,000 $ 23,687,000 $ -
Income taxes paid - 193,000 -
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on senior
redeemable exchangeable preferred stock $ 12,263,000 $ - $ -
Warrants issued in connection with consent
solicitations - 1,641,000 -
Common stock issued for acquisition - 34,137,000 -
Preferred stock issued for acquisition of minority
interest, including notes payable to minority partner - 49,000,000 -
Liabilities incurred in connection with acquisitions - 81,906,000 -
</TABLE>
See accompanying notes.
F-37
<PAGE>
NTL Incorporated
Schedule I - Condensed Financial Information of Registrant
Notes to Condensed Financial Statements
1. BASIS OF PRESENTATION
In the NTL Incorporated condensed financial statements, the Company's investment
in subsidiaries is stated at cost plus equity in the undistributed earnings of
the subsidiaries since the date of acquisition. The Company's share of net loss
of its unconsolidated subsidiaries is included in consolidated net loss using
the equity method of accounting. The condensed financial statements should be
read in conjunction with the Company's consolidated financial statements.
2. LONG-TERM DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
DECEMBER 31
1997 1996
--------------------------------------
<S> <C> <C>
10-7/8% Senior Deferred Coupon Notes
("10-7/8% Notes") (a) $ 194,959,000 $ 175,368,000
12-3/4% Series A Senior Deferred Coupon Notes
("12-3/4% Notes") (b) 209,387,000 185,043,000
11-1/2% Series B Senior Deferred Coupon Notes
("11-1/2% Notes") (c) 743,961,000 665,257,000
10% Series B Senior Notes ("10% Notes") (d) 400,000,000 -
7-1/4% Convertible Subordinated Notes
("7-1/4 Convertible Notes") (e) 191,750,000 191,750,000
7% Convertible Subordinated Notes
("7% Convertible Notes") (f) 275,000,000 275,000,000
--------------------------------------
$2,015,057,000 $1,492,418,000
======================================
</TABLE>
(a) In October 1993, the Company issued $212,000,000 aggregate principal amount
of 10-7/8% Senior Deferred Coupon Notes due 2003. The 10-7/8% Notes were
issued at a price to the public of 58.873% or $124,811,000.
(b) In April 1995, the Company issued $277,803,500 aggregate principal amount
of 12-3/4% Senior Deferred Coupon Notes due 2005. The 12-3/4% Notes were
issued at a price to the public of 53.995% or $150,000,000.
(c) In January 1996, the Company issued $1,050,000,000 aggregate principal
amount of 11-1/2% Series B Senior Deferred Coupon Notes due 2006. The
11-1/2% Notes were issued at a price to investors of 57.155% of the
aggregate principal amount at maturity or $600,127,500.
F-38
<PAGE>
NTL Incorporated
Schedule I - Condensed Financial Information of Registrant
Notes to Condensed Financial Statements (continued)
2. LONG-TERM DEBT (CONTINUED)
(d) In February 1997, the Company issued $400,000,000 aggregate principal
amount of 10% Senior Notes due 2007.
(e) In April and May 1995, the Company issued $191,750,000 principal amount of
7-1/4% Convertible Subordinated Notes due 2005. Interest payments began on
October 15, 1995 and interest is payable every six months thereafter. The
7-1/4% Convertible Notes will mature on April 15, 2005.
In March 1998, the Company announced that it was calling for redemption all
of the 7-1/4% Convertible Notes. The redemption date is April 20, 1998 and
the redemption price is 105.08% of the principal amount, plus accrued and
unpaid interest through the date of redemption.
(f) In June 1996, the Company issued $275,000,000 aggregate principal amount of
7% Convertible Subordinated Notes due 2008. Interest payments began on
December 15, 1996 and interest is payable every six months thereafter. The
7% Convertible Notes mature on June 15, 2008.
In March 1998, the Company issued 125,000,000 pounds sterling aggregate
principal amount of 9-1/2% Senior Notes due 2008 (the "Sterling Senior Notes"),
300,000,000 pounds sterling aggregate principal amount of 10-3/4% Senior
Deferred Coupon Notes due 2008 (the "Sterling Deferred Coupon Notes") and
$1,300,000,000 aggregate principal amount of 9-3/4% Senior Deferred Coupon Notes
due 2008 (the "Dollar Deferred Coupon Notes"). The Sterling Senior Notes,
Sterling Deferred Coupon Notes and the Dollar Deferred Coupon Notes were issued
at a price to the public of 99.67% or 124,588,000 pounds sterling, 58.62% or
175,860,000 pounds sterling and 61.724% or $802,412,000, respectively.
3. REDEEMABLE PREFERRED STOCK
In February 1997, the Company issued $100,000,000 of its 13% Senior Redeemable
Exchangeable Preferred Stock (the "Redeemable Preferred Stock"). The Company
received net proceeds of $96,625,000 after discounts and commissions from the
issuance of the Redeemable Preferred Stock. Discounts, commissions and other
fees incurred of $3,729,000 were recorded as unamortized discount at issuance.
Of the 2,500,000 authorized shares of Series Preferred Stock, 100,000 shares of
Redeemable Preferred Stock were issued. Dividends accrue at 13% per annum ($130
per share) and are payable quarterly in arrears as of May 15, 1997. Dividends,
whether or not earned or declared, will accrue without interest until declared
and paid, which declaration may be for all or part of
F-39
<PAGE>
NTL Incorporated
Schedule I - Condensed Financial Information of Registrant
Notes to Condensed Financial Statements (continued)
3. REDEEMABLE PREFERRED STOCK (CONTINUED)
the accrued dividends. Dividends accruing on or prior to February 15, 2004 may,
at the option of the Company, be paid in cash, by the issuance of additional
Redeemable Preferred Stock or in any combination of the foregoing. As of
December 31, 1997, the Company has accrued $11,978,000 for dividends and has
issued approximately 10,000 shares for $10,187,000 of such accrued dividends.
The Redeemable Preferred Stock is subject to mandatory redemption on February
15, 2009. On any scheduled dividend payment date, the Company may, at its
option, exchange all of the shares of Redeemable Preferred Stock then
outstanding for the Company's 13% Subordinated Exchange Debentures due 2009.
4. LEASES
Leases for office space extend through 2004. Total rental expense for the years
ended December 31, 1997, 1996 and 1995 under operating leases was $503,000,
$220,000 and $22,000, respectively.
Future minimum lease payments under noncancellable operating leases as of
December 31, 1997 are as follows:
Year ended December 31:
1998 $ 565,000
1999 475,000
2000 462,000
2001 462,000
2002 462,000
Thereafter 924,000
----------
$3,350,000
==========
5. OTHER GAIN
In October 1997, following the U.S. District Court's decision to dismiss the
Company's complaint against LeGroupe Videotron Ltee and its subsidiary, the
Company entered into a Settlement Agreement dismissing the Company's complaint
in exchange for a payment of $10,000,000.
6. OTHER
No cash dividends were paid to the registrant by subsidiaries in any of the last
three years.
F-40
<PAGE>
NTL Incorporated and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------------
ADDITIONS
--------------------------
(2)
(1) CHARGED
BALANCE AT CHARGED TO TO OTHER BALANCE
BEGINNING COSTS AND ACCOUNTS- DEDUCTIONS AT END
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE OF PERIOD
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for doubtful accounts
$3,870,000 $6,891,000 $ - $(2,705,000)(a) $8,056,000
==================================================================================
Year ended December 31, 1996:
Allowance for doubtful accounts
$ 767,000 $2,597,000 $ - $ 506,000 (b) $3,870,000
==================================================================================
Year ended December 31, 1995:
Allowance for doubtful accounts
$ 22,000 $ 709,000 $ - $ 36,000 (c) $ 767,000
==================================================================================
</TABLE>
(a) Uncollectible accounts written-off, net of recoveries of $2,604,000 and
$101,000 foreign currency translation adjustments.
(b) Uncollectible accounts written-off, net of recoveries of $645,000, offset
by $804,000 allowance for doubtful accounts as of acquisition date of
purchased subsidiary and $347,000 foreign currency translation adjustments.
(c) Recoveries of accounts previously written-off, net of uncollectible
accounts written-off of $49,000 less $13,000 foreign currency translation
adjustments.
F-41
EXHIBIT 4.10
EXECUTION COPY
================================================================================
NTL INCORPORATED
125,000,000 POUNDS STERLING
9-1/2% SENIOR NOTES DUE 2008
----------------------------------
INDENTURE
Dated as of March 13, 1998
----------------------------------
------------------------
The Chase Manhattan Bank
Trustee
------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I....................................................................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................13
Section 1.03. Incorporation by Reference of Trust Indenture Act..........14
Section 1.04. Rules of Construction......................................14
ARTICLE II. THE NOTES.......................................................15
Section 2.01. Form and Dating............................................15
Section 2.02. Execution and Authentication...............................17
Section 2.03. Registrar and Paying Agent.................................17
Section 2.04. Paying Agent to Hold Money in Trust........................18
Section 2.05. Holder Lists...............................................18
Section 2.06. Transfer and Exchange......................................18
Section 2.07. Replacement Notes..........................................22
Section 2.08. Outstanding Notes..........................................22
Section 2.09. Treasury Notes.............................................23
Section 2.10. Temporary Notes; Global Notes..............................23
Section 2.11. Cancellation...............................................24
Section 2.12. Defaulted Interest.........................................24
ARTICLE III. REDEMPTION.....................................................24
Section 3.01. Notices to Trustee.........................................24
Section 3.02. Selection of Notes to Be Redeemed..........................24
Section 3.03. Notice of Redemption.......................................25
Section 3.04. Effect of Notice of Redemption.............................25
Section 3.05. Deposit of Redemption Price................................25
Section 3.06. Notes Redeemed in Part.....................................26
Section 3.07. Optional Redemption and Optional Tax Redemption............26
Section 3.08. Mandatory Redemption.......................................26
Section 3.09. Asset Sale Offer and Purchase Offer........................26
ARTICLE IV. COVENANTS.......................................................29
Section 4.01. Payment of Notes...........................................29
Section 4.02. Reports....................................................29
Section 4.03. Compliance Certificate.....................................29
Section 4.04. Stay, Extension and Usury Laws.............................30
Section 4.05. Corporate Existence........................................30
Section 4.06. Taxes......................................................30
Section 4.07. Limitations on Liens.......................................30
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock.31
Section 4.09. Restricted Payments........................................33
Section 4.10. Asset Sales................................................35
Section 4.11. Transactions with Affiliates...............................38
Section 4.12. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries...................................39
Section 4.13. Change of Control..........................................40
Section 4.14. Payment of Additional Amounts..............................40
ARTICLE V. SUCCESSORS.......................................................41
Section 5.01. Merger, Consolidation or Sale of Assets....................41
<PAGE>
Section 5.02. Successor Corporation Substituted..........................42
ARTICLE VI. DEFAULTS AND REMEDIES...........................................42
Section 6.01. Events of Default..........................................42
Section 6.02. Acceleration...............................................44
Section 6.03. Other Remedies.............................................44
Section 6.04. Waiver of Past Defaults....................................45
Section 6.05. Control by majority........................................45
Section 6.06. Limitation on Suits........................................45
Section 6.07. Rights of Holders to Receive Payment.......................45
Section 6.08. Collection Suit by Trustee.................................45
Section 6.09. Trustee May File Proofs of Claim...........................46
Section 6.10. Priorities.................................................46
Section 6.11. Undertaking for Costs......................................46
ARTICLE VII. TRUSTEE........................................................47
Section 7.01. Duties of Trustee..........................................47
Section 7.02. Rights of Trustee..........................................47
Section 7.03. Individual Rights of Trustee...............................48
Section 7.04. Trustee's Disclaimer.......................................48
Section 7.05. Notice of Defaults.........................................48
Section 7.06. Reports by Trustee to Holders..............................48
Section 7.07. Compensation and Indemnity.................................48
Section 7.08. Replacement of Trustee.....................................49
Section 7.09. Successor Trustee by Merger, Etc...........................50
Section 7.10. Eligibility; Disqualification..............................50
Section 7.11. Preferential Collection of Claims Against Company..........50
ARTICLE VIII. DISCHARGE OF INDENTURE........................................51
Section 8.01. Termination of Company's Obligations.......................51
Section 8.02. Option to Effect Defeasance................................51
Section 8.03. Application of Trust Money.................................53
Section 8.04. Repayment to Company.......................................53
Section 8.05. Reinstatement..............................................53
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS.............................53
Section 9.01. Without Consent of Holders.................................53
Section 9.02. With Consent of Holders....................................54
Section 9.03. Compliance with Trust Indenture Act........................55
Section 9.04. Revocation and Effect of Consents..........................55
Section 9.05. Notation on or Exchange of Notes...........................55
Section 9.06. Trustee Protected..........................................55
ARTICLE X. MISCELLANEOUS....................................................56
Section 10.01. Trust Indenture Act Controls.............................56
Section 10.02. Notices..................................................56
Section 10.03. Communication by Holders with Other Holders..............56
Section 10.04. Certificate and Opinion as to Conditions Precedent.......56
Section 10.05. Statements Required in Certificate or Opinion............57
Section 10.06. Rules by Trustee and Agents..............................57
Section 10.07. Conversion of Currency...................................57
Section 10.08. Legal Holidays...........................................58
Section 10.09. No Recourse Against Others...............................59
Section 10.10. Counterparts and Facsimile Signatures....................59
ii
<PAGE>
Section 10.11. Variable Provisions......................................59
Section 10.12. Governing Law............................................59
Section 10.13. No Adverse Interpretation of Other Agreements............60
Section 10.14. Successors...............................................60
Section 10.15. Severability.............................................60
Section 10.16. Table of Contents, Headings, Etc.........................60
iii
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
310 (a)(1)..............................................................7.10
(a)(2) .................................................................7.10
(a)(3)..................................................................N.A.
(a)(4)..................................................................N.A.
(a)(5)..................................................................7.10
(b).....................................................................7.08,
7.10
(c).....................................................................N.A.
311(a)..................................................................7.11
(b).....................................................................7.11
(c).....................................................................N.A.
312 (a).................................................................2.05
(b).....................................................................10.03
(c).....................................................................10.03
313(a)..................................................................7.06
(b)(1)..................................................................N.A.
(b)(2)..................................................................7.06
(c).....................................................................7.06
(d).....................................................................7.06
314(a)..................................................................4.02,
4.03
(b).....................................................................N.A.
(c)(1)..................................................................10.04
(c)(2)..................................................................10.04
(c)(3)..................................................................N.A.
(d).....................................................................N.A.
(e).....................................................................N.A.
(f).....................................................................N.A.
315(a)..................................................................7.01(b)
(b).....................................................................7.05
(c) ....................................................................7.01(a)
(d).....................................................................7.01(c)
(e).....................................................................6.11
316 (a)(last sentence)..................................................2.09
(a)(1)(A)...............................................................6.05
(a)(1)(B)...............................................................6.04
(a)(2)..................................................................N.A.
(b).....................................................................6.07
(c).....................................................................9.04
317 (a)(1)..............................................................6.08
(a)(2)..................................................................6.09
(b).....................................................................2.04
318 (a).................................................................N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
iv
<PAGE>
INDENTURE, dated as of March 13, 1998, between NTL Incorporated, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, a New York
corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders (as defined in Section 1.01) of the
Company's 9-1/2% Senior Notes Due 2008 (the "Initial Notes") and, if and when
issued in exchange for Initial Notes, the Company's 9-1/2% Series B Senior Notes
Due 2008 (the "Exchange Notes" and, together with the Initial Notes, the
"Notes"):
ARTICLE I.
SECTION 1.01. DEFINITIONS.
"10% Notes" means the Company's 10% Series B Senior Notes Due 2007.
"11-1/2% Notes" means the Company's 11-1/2% Series B Senior Deferred Coupon
Notes Due 2006.
"12-3/4% Notes" means the Company's 12-3/4% Series A Senior Deferred Coupon
Notes Due 2005.
"Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person (the "Acquired Person") existing at the time such Acquired
Person merged with or into or became a Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
Acquired Person merging with or into or becoming a Subsidiary of such specified
Person.
"Acquired Person" has the meaning specified in the definition of Acquired
Debt.
"Adjusted Total Assets" means the total amount of assets of the Company and
its Restricted Subsidiaries (including the amount of any Investment in any
Non-Restricted Subsidiary), except to the extent resulting from write-ups of
assets (other than write-ups in connection with accounting for acquisitions in
conformity with GAAP), after deducting therefrom (i) all current liabilities of
the Company and its Restricted Subsidiaries, and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as calculated in conformity with GAAP. For purposes of this
Adjusted Total Assets definition, (a) assets shall be calculated less applicable
accumulated depreciation, accumulated amortization and other valuation reserves,
and (b) all calculations shall exclude all intercompany items.
"Adjusted Total Controlled Assets" means the total amount of assets of the
Company and its Cable Controlled Subsidiaries, except to the extent resulting
from write-ups of assets (other than write-ups in connection with accounting for
acquisitions in conformity with GAAP), after deducting therefrom (i) all current
liabilities of the Company and such Cable Controlled Subsidiaries; and (ii) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles of the Company and such Restricted
Subsidiaries, all as calculated in conformity with GAAP; provided that Adjusted
Total Controlled Assets shall be reduced (to the extent not otherwise reduced in
accordance with GAAP) by an amount equal to the aggregate amount of all
Investments of the Company or any such Cable Controlled Subsidiaries in any
Person other than a Cable Controlled Subsidiary, except Cash Equivalents. For
purposes of this Adjusted Total Controlled Assets definition, (a) assets shall
be calculated less applicable accumulated depreciation, accumulated amortization
and other valuation reserves, and (b) all calculations shall exclude all
intercompany items.
<PAGE>
"Affiliate" of any specified Person means any other Person directly
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar or Paying Agent.
"Annualized Pro Forma EBITDA" means, with respect to any Person, such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Applicable Notes" means the Company's 10 7/8% Senior Deferred Coupon Notes
Due 2003.
"Asset Sale" means (i) any sale, lease, transfer, conveyance or other
disposition of any assets (including by way of a sale-and-leaseback) other than
the sale or transfer of inventory or goods held for sale in the ordinary course
of business (provided that the sale, lease, transfer, conveyance or other
disposition of all or substantially all of the assets of the Company shall be
governed by Section 4.13 or 5.01 hereof) or (ii) any issuance, sale, lease,
transfer, conveyance or other disposition of any Equity Interests of any of the
Company's Restricted Subsidiaries to any Person; in either case other than (A)
to (w) the Company, (x) any Wholly Owned Subsidiary, or (y) any Subsidiary which
is a Subsidiary of the Company on the Issuance Date provided that at the time of
and after giving effect to such issuance, sale, lease, transfer, conveyance or
other disposition to such Subsidiary, the Company's ownership percentage in such
Subsidiary is equal to or greater than such percentage on the Issuance Date or
(B) the issuance, sale, transfer, conveyance or other disposition of Equity
Interests of a Subsidiary in exchange for capital contributions made on a pro
rata basis by the holders of the Equity Interests of such Subsidiary.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Business Day" means any day that is not a Legal Holiday.
"Cable Assets" means tangible or intangible assets, licenses (including,
without limitation, Licenses) and computer software used in connection with a
Cable Business.
"Cable Business" means (i) any Person directly or indirectly operating, or
owning a license to operate, a cable and/or television and/or telephone and/or
telecommunications system or service principally within the United Kingdom
and/or the Republic of Ireland and (ii) any Cable Related Business.
"Cable Controlled Property" means a Cable Controlled Subsidiary or a Cable
Asset held by a Cable Controlled Subsidiary.
"Cable Controlled Subsidiary" means any Restricted Subsidiary that is
primarily engaged, directly or indirectly, in one or more Cable Businesses.
"Cable Related Business" means a Person which directly or indirectly owns
or provides a service or product used in a Cable Business, including, without
limitation, any television programming,
2
<PAGE>
production and/or licensing business or any programming guide or telephone
directory business or content or software related thereto.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Capital Stock Sale Proceeds" means the aggregate net sale proceeds
(including from the sale of any property received for the Capital Stock or the
fair market value of such property, as determined by an independent appraisal
firm) received by the Company or any Subsidiary of the Company from the issue or
sale (other than to a Subsidiary) by the Company of any class of its Capital
Stock after October 14, 1993 (including Capital Stock of the Company issued
after October 14, 1993 upon conversion of or in exchange for other securities of
the Company).
"Cash Equivalents" means (i) Permitted Currency, (ii) securities issued or
directly and fully guaranteed or insured by the United States government, a
European Union member government or any agency or instrumentality thereof having
maturities of not more than six months and one day from the date of acquisition,
(iii) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any commercial bank(s) domiciled in the United States, the United Kingdom,
the Republic of Ireland or any other European Union member having capital and
surplus in excess of $500 million, (iv) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated P-1
or the equivalent thereof by Moody's or A-1 or the equivalent thereof by S & P
and in each case maturing within six months and one day after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i)-(v) of this
definition.
"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of the Company to any "Person" or "group"
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any
successor provision to either of the foregoing, including any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(1) under the Exchange Act) (other than any Permitted Holder),
(ii) the approval by the requisite stockholders of the Company of a plan of
liquidation or dissolution of the Company, (iii) any "Person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act or any successor
provision to either of the foregoing, including any group acting for the purpose
of acquiring, holding or disposing of securities within the meaning of Rule 13d-
5(b)(1) under the Exchange Act), other than any Permitted Holder, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than 50% of the total voting power of all classes of the voting stock of the
Company and/or warrants or options to acquire such voting stock, calculated on a
fully diluted basis, unless, as a result of such transaction, the ultimate
direct or indirect ownership of the Company is substantially the same
immediately after such transaction as it was immediately prior to such
transaction, or (iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Company's Board of Directors
(together with any new directors whose election or appointment by such board or
whose nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors then in office.
3
<PAGE>
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Ratings Decline.
"Company" means the party named as such above until a successor replaces it
in accordance with Article V and thereafter means the successor.
"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, Restricted Subsidiary
Preferred Stock Dividends and the interest component of rentals in respect of
any capital lease obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such Person and its Subsidiaries (other than
Non-Restricted Subsidiaries) during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
capital lease obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
capital lease obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
(other than Non-Restricted Subsidiaries) for such period, on a consolidated
basis, determined in accordance with GAAP; provided that (i) the Net Income of
any Person that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid to the referent Person or a Wholly Owned
Subsidiary, (ii) the Net Income of any Person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having ordinary voting
power for the election of directors or other governing body of such Subsidiary
is owned by the referent Person directly or indirectly through one or more
Subsidiaries) shall be included only to the extent of the amount of dividends or
distributions paid to the referent Person or a Wholly Owned Subsidiary, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Convertible Subordinated Notes" means the Company's 7-1/4% Convertible
Subordinated Notes issued pursuant to an indenture dated as of April 20, 1995,
between the Company and The Chase Manhattan Bank (formerly known as Chemical
Bank), as trustee, and the Company's 7% Convertible Subordinated Notes issued
pursuant to an indenture dated as of June 12, 1996, between the Company and The
Chase Manhattan Bank (formerly known as Chemical Bank), as trustee.
"Credit Facility" means the Facilities Agreement, dated October 17, 1997,
between NTL (UK) Group Inc., as principal guarantor, Chase Manhattan plc, as
arranger, Chase Manhattan International Limited, as agent and security trustee
and the Chase Manhattan Bank as issuer, as such Facilities Agreement may be
supplemented, amended, restated, modified, renewed, refunded, replaced or
refinanced, in whole or in part, from time to time in an aggregate outstanding
principal amount not to exceed the greater of (i) 555 million pounds sterling
and (ii) the amount of the aggregate commitments thereunder as the same may be
increased after the date of the Indenture as contemplated by the Facilities
Agreement as amended or supplemented to the date of the Indenture, but in no
event greater than 875 million pounds sterling, less in each case, the aggregate
amount of all Net Proceeds of Asset Sales that have been applied to permanently
reduce Indebtedness under the Credit Facility pursuant Section 4.10 hereof.
Indebtedness that may
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<PAGE>
otherwise be incurred under this Indenture may, but need not, be incurred under
the Credit Facility without regard to the limit set forth in the preceding
sentence. Indebtedness outstanding under the Credit Facility on the date hereof
shall be deemed to have been incurred on such date in reliance on the exception
provided by Section 4.08(b)(i).
"Cumulative EBITDA" means the cumulative EBITDA of the Company from and
after the Issuance Date 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; provided, however, that EBITDA of Non-Restricted Subsidiaries
shall not be included.
"Cumulative Interest Expense" means the aggregate amount of Consolidated
Interest Expense paid, accrued or scheduled to be paid or accrued by the Company
from the Issuance Date 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 that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Depositary" shall mean The Depository Trust Company, its nominees and
their respective successors.
"Disqualified Stock" means 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 the date
on which the Notes mature.
"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 item reducing
Consolidated Net Income for such period (excluding any such non-cash item to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
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.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any Indebtedness that is
convertible into, or exchangeable for Capital Stock).
"European Union member" means any country that is or becomes a member of
the European Union or any successor organization thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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<PAGE>
"Exchange Rate Contract" means, with respect to any Person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, the principal purpose of
which is to provide protection against fluctuations in currency exchange rates.
An Exchange Rate Contract may also include an Interest Rate Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the Issuance Date, until such amounts are repaid,
including, without limitation, the Existing Notes.
"Existing Notes" means the Old Notes and the Convertible Subordinated
Notes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date and are applied on a consistent basis.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" means a Person in whose name a Note is registered in the register
referred to in Section 2.03.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
and also includes, to the extent not otherwise included, the Guarantee of items
which would be included within this definition. The amount of any Indebtedness
outstanding as of any date shall be the accreted value thereof, in the case of
any Indebtedness issued with original issue discount
"Indenture" means this Indenture, as amended from time to time.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International, Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co. International Limited, BT Alex. Brown
Incorporated, BT Alex. Brown International, Division of Bankers Trust
International PLC, Chase Securities Inc., Salomon Brothers Inc and Salomon
Brothers International Limited.
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"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
similar agreement, the principal purpose of which is to protect the party
indicated therein against fluctuations in interest rates.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's. In the event that the
Company shall be permitted to select any other Rating Agency, the equivalent of
such ratings by such Rating Agency shall be used.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar advances and loans, joint property ownership and other arrangements, in
each case, made to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the date on which the Notes are first authenticated
and issued.
"License" means any license issued or awarded pursuant to the Broadcasting
Act 1990, the Cable and Broadcasting Act 1984, the Telecommunications Act 1984
or the Wireless Telegraphy Act 1948 (in each case, as such Acts may, from time
to time, be amended, modified or re-enacted) (or equivalent statutes of any
jurisdiction) to operate or own a Cable Business.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent or successor statutes) of any
jurisdiction).
"Long Distance/Microwave Assets" means any assets, tangible or intangible,
choate or inchoate, primarily used in the business conducted by OCOM Corporation
in the United States as of the Issuance Date.
"Material License" means a License held by the Company or any of its
Subsidiaries which License at the time of determination covers a number of Net
Households which equals or exceeds 5% of the aggregate number of Net Households
covered by all of the Licenses held by the Company and its Subsidiaries at such
time.
"Material Subsidiary" means (i) NTL UK Group, Inc. (formerly known as OCOM
Sub II, Inc.), NTL Investment Holdings Limited, NTL Group Limited, CableTel
Surrey Limited, CableTel Cardiff Limited, CableTel Glasgow, CableTel Newport and
CableTel Kirklees and (ii) any other Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof).
"Monetize" means a strategy with respect to Equity Interests that generates
an amount of cash equal to the fair value of such Equity Interests.
"Moody's" means Moody's Investors Service, Inc. and its successors.
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"Net Households" means the product of (i) the number of households covered
by a License in the United Kingdom and (ii) the percentage of the entity holding
such License which is owned directly or indirectly by the Company.
"Net Income" means, with respect to any Person for a specific period, the
net income (loss) of such Person during such period, determined in accordance
with GAAP, excluding, however, any gain (but not loss) during such period,
together with any related provision for taxes on such gain (but not loss),
realized during such period in connection with any Asset Sale (including,
without limitation, dispositions pursuant to sale-and-leaseback transactions),
and excluding any extraordinary gain (but not loss) during such period, together
with any related provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets.
"Non-Controlled Subsidiary" means an entity which is not a Cable Controlled
Subsidiary.
"Non-Recourse Debt" means Indebtedness or that portion of Indebtedness as
to which none of the Company, nor any Restricted Subsidiary: (i) provides credit
support (including any undertaking, agreement or instrument which would
constitute Indebtedness); (ii) is directly or indirectly liable; or (iii)
constitutes the lender.
"Non-Restricted Subsidiary" means (A) a Subsidiary that (a) at the time of
its designation by the Board of Directors as a Non-Restricted Subsidiary has not
acquired any assets (other than as specifically permitted by clause (e) of
"Permitted Investments" or Section 4.09 hereof), at any previous time, directly
or indirectly from the Company or any of its Restricted Subsidiaries, (b) has no
Indebtedness other than Non-Recourse Debt and (c) that at the time of such
designation, after giving pro forma effect to such designation, the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company is equal to or less
than the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding such designation, provided, however, that if the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company immediately preceding
such designation is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio immediately
preceding such designation; (B) any Subsidiary which (a) has been acquired or
capitalized out of or by Equity Interests (other than Disqualified Stock) of the
Company or Capital Stock Sale Proceeds therefrom, (b) has no Indebtedness other
than Non-Recourse Debt and (c) is designated as a Non-Restricted Subsidiary by
the Board of Directors or is merged, amalgamated or consolidated with or into,
or its assets or capital stock is to be transferred to, a Non-Restricted
Subsidiary; or (C) any Subsidiary of a Non-Restricted Subsidiary.
"Notes" has the meaning set forth in the preamble hereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
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"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the President, the Treasurer or a Vice
President of the Company. See Sections 10.04 and 10.05 hereof.
"Old Notes" means the Applicable Notes, the 12-3/4% Notes, the 11-1/2%
Notes and the 10% Notes.
"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 10.04 and 10.05 hereof.
"Other Qualified Notes" means any outstanding senior indebtedness of the
Company issued pursuant to an indenture having a provision substantially similar
to Section 4.10 hereof (including, without limitation, the 12-3/4% Notes, the
11-1/2% Notes and the 10% Notes).
"Permitted Acquired Debt" means, with respect to any Acquired Person
(including, for this purpose, any Non-Restricted Subsidiary at the time such
Non-Restricted Subsidiary becomes a Restricted Subsidiary), Acquired Debt of
such Acquired Person and its Subsidiaries in an amount (determined on a
consolidated basis) not exceeding the sum of (x) amount of the gross book value
of property, plant and equipment of the Acquired Person and its Subsidiaries as
set forth on the most recent consolidated balance sheet of the Acquired Person
(which may be unaudited) prior to the date it becomes an Acquired Person and (y)
the aggregate amount of any Cash Equivalents held by such Acquired Person at the
time it becomes an Acquired Person.
"Permitted Currency" means the lawful currency of the United States or a
European Union member.
"Permitted Designee" means (i) a spouse or a child of a Permitted Holder,
(ii) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder, (iii) in the event of the death or incompetence of a Permitted
Holder, his estate, heirs, executor, administrator, committee or other personal
representative or (iv) any Person so long as a Permitted Holder owns at least
50% of the voting power of all classes of the voting stock of such Person.
"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Permitted Investments" means (a) any Investments in the Company or in a
Cable Controlled Property or in a Qualified Subsidiary (including, without
limitation, (i) Guarantees of Indebtedness of the Company, a Cable Controlled
Subsidiary or a Qualified Subsidiary, (ii) Liens securing such Indebtedness or
Guarantees or (iii) the payment of any balance deferred and unpaid of the
purchase price of any Qualified Subsidiary); (b) any Investments in Cash
Equivalents; (c) Investments by the Company in Indebtedness of a counter-party
to an Exchange Rate Contract for hedging a Permitted Currency exchange risk that
are made, for purposes other than speculation, in connection with such contract
to hedge not more than the aggregate principal amount of the Indebtedness being
hedged (or, in the case of Indebtedness issued with original issue discount,
based on the amounts payable after the amortization of such discount); (d)
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Cable Controlled Subsidiary
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Subsidiary of the Company; and (e) any
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<PAGE>
issuance, transfer or other conveyance of Equity Interests (other than
Disqualified Stock) in the Company (or any Capital Stock Sale Proceeds
therefrom) to a Subsidiary of the Company.
"Permitted Liens" means (a) Liens in favor of the Company; (b) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided, that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not secure any property or assets of the Company or any of
its Subsidiaries other than the property or assets subject to the Liens prior to
such merger or consolidation; (c) 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 60
days past due or are being contested in good faith and by appropriate
proceedings; (d) Liens existing on the Issuance Date; (e) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor and (f) easements, rights of way, restrictions and other
similar easements, licenses, restrictions on the use of properties or minor
imperfections of title that, in the aggregate, are not material in amount, and
do not in any case materially detract from the properties subject thereto or
interfere with the ordinary conduct of the business of the Company or its
Restricted Subsidiaries.
"Permitted Non-Controlled Assets" means Equity Interests in any Person
primarily engaged, directly or indirectly, in one or more Cable Businesses if
such Equity Interests (x) were acquired by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale or any Investment otherwise
permitted under the terms of the Indenture and (y) to the extent that, after
giving pro forma effect to the acquisition thereof by the Company or any of its
Restricted Subsidiaries, Adjusted Total Controlled Assets is greater than 80% of
Adjusted Total Assets based on the most recent consolidated balance sheet of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Stock" means the 13% Senior Redeemable Exchangeable Preferred
Stock of the Company with an original aggregate liquidation preference of
$100,000,000.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP 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 (without giving
effect to clause (iii) of the definition of Consolidated Net Income); 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.
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"Purchase Agreement" means the Purchase Agreement, dated as of March 6,
1998, between the Company and the Initial Purchasers.
"Qualified Subsidiary" means a Wholly Owned Subsidiary, or an entity that
will become a Wholly Owned Subsidiary after giving effect to the transaction
being considered, that at the time of and after giving effect to the
consummation of the transaction under consideration, (i) is a Cable Business or
holds only Cable Assets, (ii) has no Indebtedness (other than Indebtedness being
incurred to consummate such transaction) and (iii) has no encumbrances or
restrictions (other than such encumbrances or restrictions imposed or permitted
by this Indenture, the indentures governing the Old Notes or any other
instrument governing unsecured indebtedness of the Company which is pari passu
with the Notes) on its ability to pay dividends or make any other distributions
to the Company or any of its Subsidiaries.
"Rating Agencies" means (i) S&P, (ii) Moody's and (iii) if S&P or Moody's
or both shall not make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Company, which shall be substituted for S&P or Moody's or both, as the case
may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories) and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining whether
the rating of the Notes has decreased by one or more gradations, gradations
within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the
equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB to BB-, as well as
from BB-to B+, will constitute a decrease of one gradation).
"Rating Date" means that date which is 90 days prior to the earlier of (x)
a Change of Control and (y) public notice of the occurrence of a Change of
Control or of the intention by the Company or any Permitted Holder to effect a
Change of Control.
"Ratings Decline" means the occurrence of any of the following events on,
or within six months after, the date of public notice of the occurrence of a
Change of Control or of the intention of the Company or any Person to effect a
Change of Control (which period shall be extended so long as the rating of any
of the Company's debt securities is under publicly announced consideration for
possible downgrade by any of the Rating Agencies): (a) in the event that any of
the Company's debt securities are rated by both of the Rating Agencies on the
Rating Date as Investment Grade, the rating of such securities by either of the
Rating Agencies shall be below Investment Grade, (b) in the event that any of
the Company's debt securities are rated by either, but not both, of the Rating
Agencies on the Rating Date as Investment Grade, the rating of such securities
by both of the Rating Agencies shall be below Investment Grade, or (c) in the
event any of the Company's debt securities are rated below Investment Grade by
both of the Rating Agencies on the Rating Date, the rating of such securities by
either Rating Agency 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 Disqualified
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 Disqualified Stock.
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"Registered Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Notes, dated March 13, 1998, between the Company and the Initial
Purchasers party thereto.
"Replacement Assets" means (w) Cable Assets, (x) Equity Interests of any
Person engaged, directly or indirectly, primarily in a Cable Business, which
Person is or will become on the date of acquisition thereof a Restricted
Subsidiary as a result of the Company's acquiring such Equity Interests, (y)
Permitted Non-Controlled Assets or (z) any combination of the foregoing.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary of the Company which is not a
Non-Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, 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 preferred stock.
"S&P" means Standard & Poor's Ratings Group and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subordinated Debentures" means the debentures exchangeable by the Company
for the Preferred Stock in accordance with the Certificate of Designations
therefor.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (Sections)
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the
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<PAGE>
nearest one-twelfth) that will elapse between such date and the making of such
payment, by (b) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by the Company.
SECTION 1.02. OTHER DEFINITIONS.
Defined
Term in Section
"Additional Amounts" 4.14
"Affiliate Transaction" 4.11
"Agent Member" 2.01
"Asset Sale Offer" 4.10
"Bankruptcy Law" 6.01
"Cedel" 2.01
"Change of Control Payment" 4.13
"Commencement Date" 3.09
"Custodian" 6.01
"Defeasance" 8.02
"Euroclear" 2.01
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Global Note" 2.01
"incur" 4.08
"Judgment Currency" 10.07
"Legal Holiday" 10.08
"Offer Amount" 3.09
"Officer" 10.11
"Paying Agent" 2.03
"Payment Default" 6.01
"Purchase Date" 3.09
"Purchase Offer" 4.13
"QIBs" 2.01
"Rate of Exchange" 10.07
"Refinancing Indebtedness" 4.08
"Regulation S" 2.01
"Regulation S Global Note" 2.01
"Registrar" 2.03
"Restricted Notes" 2.01
"Restricted Payments" 4.09
"Rule 144A" 2.01
"Rule 144A Global Note" 2.01
"Tender Period" 3.09
"U.K. Government Obligations" 8.02
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SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP consistently applied;
(c) references to "GAAP" shall mean GAAP in effect as of the time when and
for the period as to which such accounting principles are to be applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and in the plural include the
singular;
(f) provisions apply to successive events and transactions;
(g) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules adopted
by the SEC from time to time; and
(h) a reference to "$" or U.S. Dollars is to United States dollars and a
reference to "Pounds Sterling" or pounds sterling is to British pounds sterling.
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ARTICLE II.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General.
The Initial Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto, which is hereby incorporated by
reference and expressly made a part of this Indenture. The Exchange Notes and
the Trustee's certificate of authentication shall be substantially in the form
of Exhibit B hereto, which is hereby incorporated by reference and expressly
made a part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). The Company shall furnish
any such legend not contained in Exhibit A or Exhibit B to the Trustee in
writing. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of 1,000 pounds sterling and integral multiples
thereof. The terms and provisions of the Notes set forth in Exhibit A and
Exhibit B are part of this Indenture and to the extent applicable, the Company
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes.
The Initial Notes are being offered and sold by the Company pursuant to the
Purchase Agreement.
Initial Notes offered and sold in reliance on Regulation S under the
Securities Act ("Regulation S"), as provided in the Purchase Agreement, shall be
issued initially in the form of one or more permanent Global Notes in
definitive, fully registered form without interest coupons with the Global Notes
Legend and Restricted Notes Legend set forth in Exhibit A hereto (the
"Regulation S Global Note"), which shall be deposited on behalf of the
purchasers of the Initial Notes represented thereby with the Trustee, at its New
York office, as custodian, for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank,
societe anonyme ("Cedel"), duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Initial Notes offered and sold to Qualified Institutional Buyers ("QIBs")
in reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in
the Purchase Agreement, shall be issued initially in the form of one or more
permanent Global Notes in definitive, fully registered form without interest
coupons with the Global Notes Legend and Restricted Notes Legend set forth in
Exhibit A hereto ("Rule 144A Global Note"), which shall be deposited on behalf
of the purchasers of the Initial Notes represented thereby with the Trustee, at
its New York office, as custodian for the Depositary, and registered in the name
of the Depositary or a nominee of the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of the Rule
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144A Global Note may from time to time be increased or decreased by adjustments
made on the records of the Trustee and the Depositary or its nominee as
hereinafter provided.
Upon consummation of the Registered Exchange Offer, the Exchange Notes may
be issued in the form of one or more permanent Global Notes in definitive, fully
registered form without interest coupons with the Global Notes Legend but not
the Restricted Notes Legend set forth in Exhibit A hereto, registered in the
name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of such Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(c) Book-Entry Provisions.
This Section 2.01(c) shall apply only to the Regulation S Global Note, the
Rule 144A Global Note and the Exchange Notes issued in the form of one or more
permanent Global Notes (collectively, the "Global Notes") deposited with or on
behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(c), authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depositary for such Global Note
or Global Notes or the nominee of such Depositary and (b) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instructions or
held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of an owner of a beneficial
interest in any Global Note.
Without limitation of the preceding paragraph, all payments to Agent
Members in respect of any Global Note held by the Depositary (except for the
account of Euroclear of Cedel) shall, unless notice requesting payment in the
currency in which the Notes are denominated is given by such Agent Members in
accordance with applicable procedures of the Depositary, be made in U.S. Dollars
in accordance with applicable procedures of the Depositary, if and to the extent
such payment is required by such procedures and provided that arrangements for
the conversion of payments by the Company in respect of such Global Note into
U.S. Dollars are in form and substance acceptable to the Paying Agent or other
party to such conversion (which may but need not be an affiliate of the Paying
Agent), including receipt of documentation satisfactory to the Paying Agent or
such other party and payment of any currency conversion fee assessed by the
Paying Agent or such other party at the expense of such Agent Members. Nothing
in such procedures or arrangements shall affect the Company's obligation to pay,
and any Holder's right to receive, payment in the currency in which the Notes
are denominated, or the right of a Holder of a beneficial interest in a Global
Note to receive a Note in certificated form as contemplated by Section 2.01(d).
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(d) Certificated Notes.
In addition to the provisions of Section 2.10, owners of beneficial
interests in Global Notes may, upon request to the Trustee, receive a
certificated Initial Note, which certificated Initial Note shall bear the
Restricted Notes Legend set forth in Exhibit A hereto ("Restricted Notes").
After a transfer of any Initial Notes during the period of the
effectiveness of a Shelf Registration Statement with respect to the Initial
Notes and pursuant thereto, all requirements for Restricted Notes Legends on
such Initial Note will cease to apply, and a certificated Initial Note without a
Restricted Notes Legend will be available to the Holder of such Initial Notes.
Upon the consummation of a Registered Exchange Offer with respect to the Initial
Notes pursuant to which Holders of Initial Notes are offered Exchange Notes in
exchange for their Initial Notes, certificated Initial Notes with the Restricted
Notes Legend set forth in Exhibit A hereto will be available to Holders of such
Initial Notes that do not exchange their Initial Notes, and Exchange Notes in
certificated form without the Restricted Notes Legend set forth in Exhibit A
hereto will be available to Holders that exchange such Initial Notes in such
Registered Exchange Offer.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of an
authorized officer of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate (1) Initial Notes for original issue up to an aggregate
principal amount stated in paragraph 6 of the Initial Notes and (2) Exchange
Notes for issue only in a Registered Exchange Offer, pursuant to the
Registration Rights Agreement, in exchange for Initial Notes for a like
principal amount. The aggregate principal amount of Notes outstanding at any
time shall not exceed the amount set forth herein, except as provided in Section
2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders, the Company or an Affiliate.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain in the Borough of Manhattan, City of New York,
State of New York and, as long as the Notes are listed on the Luxembourg Stock
Exchange, in Luxembourg, (i) offices or agencies where the Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
offices or agencies where the Notes may be presented for payment ("Paying
Agent"). The Company initially designates the Trustee at its corporate trust
offices in the Borough of Manhattan, City of New York, State of New York to act
as principal Registrar and Paying Agent and Banque Internationale a Luxembourg
S.A. to act as a Registrar and Paying Agent. Until otherwise designated by
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the Company, the Company shall also provide a Registrar and Paying Agent in
London, England at the offices of the Trustee maintained for that purpose. The
Paying Agent located at the offices of the Trustee in London, England shall be
the principal Paying Agent. The principal Registrar shall keep a register of the
Notes and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents in such other locations
as it shall determine. 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 prior notice to any Holder. The Company
shall notify the Trustee 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 Affiliates may act as Paying Agent or Registrar.
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
or interest on the Notes, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee
and to account for any money disbursed by it. 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 an Affiliate
of the Company) shall have no further liability for the money. If the Company or
an Affiliate of the Company 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.
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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or 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 Holders.
SECTION 2.06. TRANSFER AND EXCHANGE.
Where Notes are presented to the Registrar or a co-registrar with a request
to register a transfer or to exchange them for an equal principal amount of
Notes of other denominations, the Registrar shall register the transfer or make
the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Company shall issue and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made for any registration of transfer or exchange (except as otherwise
expressly permitted herein), 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 tax or similar governmental
charge payable upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note for a period beginning at the opening of business 15 days
before the day of any selection of Notes to be redeemed under Section 3.02
hereof and ending at the close of business on the day of selection, or (ii) to
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register the transfer, or exchange, of any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
(a) Notwithstanding any provision to the contrary herein, so long as a
Global Note remains outstanding and is held by or on behalf of the Depositary,
transfers of a Global Note, in whole or in part, or of any beneficial interest
therein, shall only be made in accordance with Section 2.01(b) and this Section
2.06(a); provided, however, that beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the Restricted Notes Legend and under the heading "Notice to
Investors" in the Company's Offering Memorandum dated March 6, 1998.
(i) Except for transfers or exchanges made in accordance with clauses
(ii) through (iv) of this Section 2.06(a), transfers of a Global Note shall
be limited to transfers of such Global Note in whole, but not in part, to
nominees of the Depositary or to a successor of the Depositary or such
successor's nominee.
(ii) Rule 144A Global Note to Regulation S Global Note. If an owner of
a beneficial interest in the Rule 144A Global Note deposited with the
Depositary or the Trustee as custodian for the Depositary wishes at any
time to transfer its interest in such Rule 144A Global Note to a Person who
is required to take delivery thereof in the form of an interest in the
Regulation S Global Note, such owner may, subject to the rules and
procedures of the Depositary, exchange or cause the exchange of such
interest for an equivalent beneficial interest in the Regulation S Global
Notes. Upon receipt by the principal Registrar of (1) instructions given in
accordance with the Depositary's procedures from an Agent Member directing
the principal Registrar to credit or cause to be credited a beneficial
interest in the Regulation S Global Note in an amount equal to the
beneficial interest in the Rule 144A Global Note to be exchanged, (2) a
written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary
and the Euroclear or Cedel account to be credited with such increase and
(3) a certificate in the form of Exhibit C attached hereto given by the
Holder of such beneficial interest, then the principal Registrar shall
instruct the Depositary to reduce or cause to be reduced the principal
amount of the Rule 144A Global Note and to increase or cause to be
increased the principal amount of the Regulation S Global Note by the
aggregate principal amount of the beneficial interest in the Rule 144A
Global Note equal to the beneficial interest in the Regulation S Global
Note to be exchanged or transferred, to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial
Interest in the Regulation S Global Note equal to the reduction in the
principal amount of the Rule 144A Global Note and to debit or cause to be
debited from the account of the Person making such exchange or transfer the
beneficial interest in the Rule 144A Global Note that is being exchanged or
transferred.
(iii) Regulation S Global Note to Rule 144A Global Note. If an owner
of a beneficial interest in the Regulation S Global Note deposited with the
Depositary or with the Trustee as custodian for the Depositary wishes at
any time to transfer its interest in such Regulation S Global Note to a
Person who is required to take delivery thereof in the form of an interest
in the Rule 144A Global Note, such Holder may, subject to the rules and
procedures of Euroclear or Cedel, as the case may be, and the Depositary,
exchange or cause the exchange of such interest for an equivalent
beneficial interest in the Rule
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144A Global Note. Upon receipt by the principal Registrar of (1)
instructions from Euroclear or Cedel, if applicable, and the Depositary,
directing the principal Registrar to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal to the beneficial
interest in the Regulation S Global Note to be exchanged or transferred,
such instructions to contain information regarding the participant account
with the Depositary to be credited with such increase, (2) a written order
given in accordance with the Depositary's procedures containing information
regarding the participant account of the Depositary and (3) a certificate
in the form of Exhibit D attached hereto given by the owner of such
beneficial interest, then Euroclear or Cedel or the principal Registrar, as
the case may be, will instruct the Depositary to reduce or cause to be
reduced the Regulation S Global Note and to increase or cause to be
increased the principal amount of the Rule 144A Global Note by the
aggregate principal amount of the beneficial interest in the Regulation S
Global Note to be exchanged or transferred, and the principal Registrar
shall instruct the Depositary, concurrently with such reduction, to credit
or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Rule 144A Global Note equal to
the reduction in the principal amount of the Regulation S Global Note and
to debit or cause to be debited from the account of the Person making such
exchange or transfer the beneficial interest in the Regulation S Global
Note that is being exchanged or transferred.
(iv) Global Note to Restricted Note. If an owner of a beneficial
interest in a Global Note deposited with the Depositary or with the Trustee
as custodian for the Depositary wishes at any time to transfer its interest
in such Global Note to a Person who is required to take delivery thereof in
the form of a Restricted Note, such owner may, subject to the rules and
procedures of Euroclear or Cedel, if applicable, and the Depositary, cause
the exchange of such interest for one or more Restricted Notes of any
authorized denomination or denominations and of the same aggregate
principal amount. Upon receipt by the principal Registrar of (1)
instructions from Euroclear or Cedel, if applicable, and the Depositary
directing the principal Registrar to authenticate and deliver one or more
Restricted Notes of the same aggregate principal amount as the beneficial
interest in the Global Note to be exchanged, such instructions to contain
the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Restricted Notes to be so
issued and appropriate delivery instructions, (2) a certificate in the form
of Exhibit E attached hereto given by the owner of such beneficial interest
to the effect set forth therein, (3) a certificate in the form of Exhibit F
attached hereto given by the Person acquiring the Restricted Notes for
which such interest is being exchanged, to the effect set forth therein,
and (4) such other certifications, legal opinions or other information as
the Company may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then Euroclear or Cedel,
if applicable, or the principal Registrar, as the case may be, will
instruct the Depositary to reduce or cause to be reduced such Global Note
by the aggregate principal amount of the beneficial interest therein to be
exchanged and to debit or cause to be debited from the account of the
Person making such transfer the beneficial interest in the Global Note that
is being transferred, and concurrently with such reduction and debit the
Company shall execute, and the Trustee shall authenticate and deliver, one
or more Restricted Notes of the same aggregate principal amount in
accordance with the instructions referred to above.
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(v) Restricted Note to Restricted Note. If a Holder of a Restricted
Note wishes at any time to transfer such Restricted Note to a Person who is
required to take delivery thereof in the form of a Restricted Note, such
Holder may, subject to the restrictions on transfer set forth herein and in
such Restricted Note, cause the exchange of such Restricted Note for one or
more Restricted Notes of any authorized denomination or denominations and
of the same aggregate principal amount. Upon receipt by the principal
Registrar of (1) such Restricted Note, duly endorsed as provided herein,
(2) instructions from such Holder directing the principal Registrar to
authenticate and deliver one or more Restricted Notes of the same aggregate
principal amount as the Restricted Note to be exchanged, such instructions
to contain the name or authorized denomination or denominations of the
Restricted Notes to be so issued and appropriate delivery instructions, (3)
a certificate from the Holder of the Restricted Note to be exchanged in the
form of Exhibit E attached hereto, (4) a certificate in the form of Exhibit
F attached hereto given by the Person acquiring the Restricted Notes for
which such interest is being exchanged, to the effect set forth therein,
and (5) such other certifications, legal opinions or other information as
the Company may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the Registrar shall
cancel or cause to be canceled such Restricted Note and concurrently
therewith, the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Restricted Notes of the same aggregate principal
amount, in accordance with the instructions referred to above.
(vi) Other Exchanges. In the event that a beneficial interest in a
Global Note is exchanged for Notes in definitive registered form pursuant
to Section 2.10, prior to the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of clauses (ii) through (v) above (including the certification
requirements intended to ensure that such transfers comply with Rule 144A,
Rule 144, Regulation S or any other available exemption from registration,
as the case may be) and such other procedures as may from time to time be
adopted by the Company.
(vii) Restricted Period. Prior to the termination of the "restricted
period" (as defined in Regulation S) with respect to the issuance of the
Notes, transfers of interests in the Regulation S Global Note to "U.S.
Persons" (as defined in Regulation S) shall be limited to transfers to QIBs
made pursuant to the provisions of Sections 2.06(a)(iii). The Company shall
advise the Trustee as to the termination of the restricted period and the
Trustee may rely conclusively thereon.
(viii) Regulation S Global Note to Certificated Note. Upon proper
presentment to the Trustee of a certificate substantially in the form of
Exhibit G hereto and subject to the rules and procedures of the Depositary
or its direct or indirect participants, including Euroclear and Cedel, an
interest in a Regulation S Global Note may be exchanged for a certificated
Restricted Note. At any time following consummation of the Exchange Offer
pursuant to the Registration Rights Agreement (provided that such
consummation is after the expiration of the 40-day restricted period
provided for in Rule 903 of Regulation S), such exchange may be made
without presentment of the certificate in substantially the form of Exhibit
G by any Holder who
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certifies to the Trustee that such Holder would have been able to
participate in such Exchange Offer and resell Exchange Notes without
delivery of a prospectus under applicable rules and interpretations of the
Commission, and such certificated Note shall be free from any restriction
on transfer (other than such as are solely attributable to any holder's
status).
(b) Except in connection with a Registered Exchange Offer or a Shelf
Registration Statement contemplated by and in accordance with the terms of the
Registration Rights Agreement, if Initial Notes are issued upon the transfer,
exchange or replacement of Initial Notes bearing the Restricted Securities
Legend set forth in Exhibit A hereto, or if a request is made to remove such
Restricted Notes Legend on Initial Notes, the Initial Notes so issued shall bear
the Restricted Notes Legend, or the Restricted Notes Legend shall not be
removed, as the case may be, unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel licensed to
practice law in the State of New York, as may be reasonably required by the
Company, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of Rule 144A, Rule 144, Regulation S or any other available exemption from
registration under the Securities Act or, with respect to Restricted Notes, that
such Notes are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon provision of such satisfactory evidence, the Trustee, at
the direction of the Company, shall authenticate and deliver Initial Notes that
do not bear the legend.
(c) Neither the Company nor the Trustee shall have any responsibility for
any actions taken or not taken by the Depositary and the Company shall have no
responsibility for any actions taken or not taken by the Trustee as agent or
custodian of the Depositary.
SECTION 2.07. REPLACEMENT NOTES.
If the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken or if such Note is mutilated and is surrendered to the Trustee,
the Company shall issue and the Trustee shall authenticate a replacement Note if
the Trustee's and the Company's requirements are met. If required by the Trustee
or the Company, an indemnity bond must be sufficient in the judgment of both to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article III hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
and those described in this Section as not outstanding.
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If a Note is replaced, paid or purchased pursuant to Section 2.07 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced, paid or purchased Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
Except as set forth in Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate of the Company shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES; GLOBAL NOTES.
(a) Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes. Holders of temporary Notes shall be entitled to
all of the benefits of this Indenture.
(b) A Global Note deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Notes only in
accordance with Section 2.01(d) or if such transfer complies with Section 2.06
and (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Note or if at any time such Depositary
ceases to be a "clearing agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within 90 days of such
notice, or (ii) an Event of Default has occurred and is continuing.
(c) Any Global Note that is transferable to the beneficial owners thereof
in the form of certificated Notes pursuant to Section 2.01(d) or this Section
2.10 shall be surrendered by the Depositary to the Trustee to be so transferred,
in whole or from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Note, an equal aggregate principal amount of Initial Notes of authorized
denominations in the form of certificated Notes. Any portion of a Global Note
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of 1,000 pounds sterling and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any Initial Note in the form of certificated Notes delivered in exchange for an
interest in the Global Notes shall, except as otherwise provided by Section
2.06(b) bear the Restricted Notes Legend set forth in Exhibit A hereto.
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(d) The registered Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
(e) In the event of the occurrence of either of the events specified in
Section 2.10(b), the Company will promptly make available to the Trustee a
reasonable supply of certificated Notes in definitive, fully registered form
without interest coupons.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall promptly cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes as the Company directs. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company fails to make a payment of interest on the Notes, it shall
pay such defaulted interest plus any interest payable on the defaulted interest,
in any lawful manner. It may pay such defaulted interest, plus any such interest
payable on it, to the Persons who are Holders on a subsequent special record
date. The Company shall fix any such record date and payment date, provided that
no such record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before any such record date, the
Company shall mail to Holders a notice that states the special record date, the
related payment date and amount of such interest to be paid.
ARTICLE III.
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of the Notes and Section 3.07 hereof or pursuant to the Optional Tax
Redemption provision of the Notes (Section 8 of the Initial Notes and Section 7
of the Exchange Notes), it shall notify the Trustee of the redemption date and
the principal amount of Notes to be redeemed, and in connection with an Optional
Tax Redemption as provided in the Notes, such notice shall be accompanied by an
Officers' Certificate to the effect that the conditions to such redemption
contained herein have been complied with. The Company shall give each notice
provided for in this Section 3.01 at least 50 days before the redemption date
(unless a shorter notice period shall be satisfactory to the Trustee).
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes shall be made by the Trustee on a pro rata basis or by lot or by method
that complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate, provided that no
Notes of 1,000 pounds sterling or less shall be redeemed in part. The Trustee
shall make the selection not more than 60 days and not less than 30 days before
the redemption date from Notes outstanding not previously called for redemption.
Notes and portions of Notes selected shall be in amounts of 1,000 pounds
sterling or integral
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multiples of 1,000 pounds sterling. Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption. The Trustee shall notify the Company promptly of the Notes or
portions of Notes to be called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address. The notice shall
identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the
principal amount thereof redeemed, and that, after the redemption date, upon
surrender of such Note, a new Note in principal amount equal to the unredeemed
portion thereof shall be issued in the name of the Holder thereof upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price plus accrued interest;
(f) that interest on Notes called for redemption ceases to accrue on and
after the redemption date; and
(g) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense; provided 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.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become due and payable on the redemption date at the
price set forth in the Note. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money not required for that
purpose.
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SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION AND OPTIONAL TAX REDEMPTION.
The Company may redeem all or any portion of the Notes, upon the terms and
at the redemption prices set forth in each of the Notes. The Company may also
redeem all of the Notes in accordance with the Optional Tax Redemption provision
of the Notes (Section 8 of the Initial Notes and Section 7 of the Exchange
Notes). Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
SECTION 3.09. ASSET SALE OFFER AND PURCHASE OFFER.
(a) In the event that, pursuant to Sections 4.10 or 4.13 hereof, the
Company shall commence an offer to all Holders of the Notes to purchase Notes
(the "Asset Sale Offer" or "Purchase Offer"), the Company shall follow the
procedures in this Section 3.09.
(b) The Asset Sale Offer or the Purchase Offer, as the case may be, shall
remain open for a period specified by the Company which shall be no less than 30
calendar days and no more than 40 calendar days following its commencement (the
"Commencement Date") (as determined in accordance with Section 4.10 or 4.13
hereof, as the case may be), except to the extent that a longer period is
required by applicable law (the "Tender Period"). Upon the expiration of the
Tender Period (the "Purchase Date"), the Company shall purchase the principal
amount of Notes required to be purchased pursuant to Section 4.10 or 4.13 hereof
(the "Offer Amount") or, if less than the Offer Amount has been tendered, all
Notes tendered in response to the Asset Sale Offer or the Purchase Offer, as the
case may be.
(c) If the Purchase Date is on or after an interest payment record date and
on or before the related interest payment date, any accrued interest shall be
paid to the Person in whose name a Note is registered at the close of business
on such record date, and no additional interest will be payable to Holders who
tender Notes pursuant to the Asset Sale Offer or the Purchase Offer, as the case
may be.
(d) The Company shall provide the Trustee with notice of the Asset Sale
Offer or the Purchase Offer, as the case may be, at least 10 days before the
Commencement Date.
(e) On or before the Commencement Date, the Company or the Trustee (at the
expense of the Company) shall send, by first class mail, a notice to each of the
Holders, which shall govern the terms of the Asset Sale Offer or the Purchase
Offer and shall state:
(i) that the Asset Sale Offer or the Purchase Offer is being made
pursuant to this Section 3.09 and, as applicable, Section 4.10 or 4.13
hereof and the length of time the Asset Sale Offer or the Purchase Offer
will remain open;
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(ii) Offer Amount, the purchase price (as determined in accordance
with Section 4.10 or 4.13 hereof) and the Purchase Date, and in the case of
a Purchase Offer made pursuant to Section 4.13 hereof, that all Notes
tendered will be accepted for payment;
(iii) that any Note or portion thereof not tendered or accepted for
payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the purchase
price, any Note or portion thereof accepted for payment pursuant to the
Asset Sale Offer or the Purchase Offer will cease to accrue interest after
the Purchase Date;
(v) that Holders electing to have a Note or portion thereof purchased
pursuant to any Asset Sale Offer or Purchase Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the close of business on the second Business Day preceding the
Purchase Date, or such longer period as may be required by law, a letter or
a telegram, telex or facsimile transmission (receipt of which is confirmed
and promptly followed by a letter) setting forth the name of the Holder,
the principal amount of the Note or portion thereof the Holder delivered
for purchase and a statement that such Holder is withdrawing his election
to have the Note or portion thereof purchased;
(vii) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount (as defined in Section 4.10 hereof), the
Trustee will select the Notes to be purchased pro rata or by a method that
complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of 1,000 pounds sterling, or integral multiples thereof,
shall be purchased; and
(viii) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
In addition, the notice shall, to the extent permitted by applicable law,
be accompanied by a copy of the information regarding the Company and its
Subsidiaries which is required to be contained in the most recent Quarterly
Report on Form 10-Q or Annual Report on Form 10-K (including any financial
statements or other information required to be included or incorporated by
reference therein) and any Reports on Form 8-K filed since the date of such
Quarterly Report or Annual Report (or would have been required to file if the
Company remained a company incorporated in the United States), as the case may
be, which the Company has filed (or would have been required to file if it
remained a company incorporated in the United States) with the SEC on or prior
to the date of the notice. The notice shall
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contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer or the Purchase Offer, as the case
may be.
(f) At least one Business Day prior to the Purchase Date, the Company shall
irrevocably deposit with the Trustee or a Paying Agent in immediately available
funds an amount equal to the Offer Amount to be held for payment in accordance
with the terms of this Section. On the Purchase Date, the Company shall, to the
extent lawful, (i) accept for payment the Notes or portions thereof tendered
pursuant to the Asset Sale Offer or the Purchase Offer, (ii) deliver or cause
the depositary or Paying Agent to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating such Notes or
portions thereof have been accepted for payment by the Company in accordance
with the terms of this Section 3.09. The depositary, the Paying Agent or the
Company, as the case may be, shall promptly (but in any case not later than ten
(10) calendar days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so
accepted shall be promptly mailed or delivered by or on behalf of the Company to
the Holder thereof. The Company will publicly announce in a newspaper of general
circulation the results of the Asset Sale Offer or the Purchase Offer on the
Purchase Date.
(g) For the purposes of calculating the allocation of available Excess
Proceeds to the Notes and each issue of Other Qualified Notes on a pro rata
basis according to accreted value or principal amount, as the case may be, the
relevant principal amount of the Notes and the relevant principal amount or the
accreted value, as the case may be, of any Other Qualified Notes denominated in
a currency other than United States dollars will be notionally converted into
United States dollars from the currency such Notes or Other Qualified Notes are
denominated in (the "Base Currency");
(i) in the case of determining the maximum principal amount of Notes
and Other Qualified Notes that may be purchased out of the Excess
Proceeds, if any, remaining after the consummation of an Asset
Sale Offer to holders of Applicable Notes, at the noon buying
rate in the City of New York as certified for customs purposes by
the Federal Reserve Bank of New York for cable transfers in the
Base Currency (the "Noon Buying Rate") on the Business Day which
is 10 Business Days prior to the Commencement Date; and
(ii) in the case of determining the allocation of the remaining Excess
Proceeds if the aggregate principal amount or accreted value, as
the case may be, of Notes and Other Qualified Notes surrendered
by holders in the Asset Sale Offer exceeds the remaining amount
of Excess Proceeds, at the Noon Buying Rate on the second
Business Day preceding the Purchase Date.
(h) The Asset Sale Offer or the Purchase Offer shall be made by the Company
in compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials necessary to enable such Holders to tender their
Notes.
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ARTICLE IV.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of, premium, if any, and interest on,
the Notes on the dates and in the manner provided in the Notes. Principal,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent (other than the Company or an Affiliate of the Company) holds on
that date money designated for and sufficient to pay all principal and interest
then due. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal and premium, if any, at the rate borne by the Notes,
compounded semiannually; and (ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate, compounded
semiannually.
SECTION 4.02. REPORTS.
Whether or not required by the rules and regulations of the SEC, so long as
any Notes are outstanding, the Company shall file with the SEC and furnish to
the Trustee and to the Holders of Notes, all quarterly and annual financial
information required to be contained in a filing with the SEC on Forms 10-Q and
10-K (or the equivalent thereof under the Exchange Act for foreign private
issuers in the event the Company becomes a corporation organized under the laws
of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands), including a "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants, in
each case, in the form required by the rules and regulations of the SEC as in
effect on the Issuance Date. This Section 4.02 will apply notwithstanding that
the Company becomes a corporation organized under the laws of the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands.
SECTION 4.03. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under, and complied with the covenants and conditions
contained in, this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant, and complied
with the covenants and conditions contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal or
of interest, if any, on the Notes are prohibited.
One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
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The Company will so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon becoming aware of any Default or Event of Default an
Officers' Certificate specifying such Default or Event of Default.
Immediately upon the occurrence of any event giving rise to the accrual of
Special Interest (as such term is defined in Exhibit A hereto) or the cessation
of such accrual, the Company shall give the Trustee notice thereof and of the
event giving rise to such accrual or cessation (such notice to be contained in
an Officers' Certificate) and prior to receipt of such Officers' Certificate the
Trustee shall be entitled to assume that no such accrual has commenced or
ceased, as the case may be.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, 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 4.05. CORPORATE EXISTENCE.
Subject to Article V hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries taken as a
whole and that the loss thereof is not adverse in any material respect to the
Holders. The Company shall notify the Trustee in writing of any subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
SECTION 4.06. TAXES.
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
SECTION 4.07. LIMITATIONS ON LIENS.
Neither the Company nor any of its Restricted Subsidiaries may, directly or
indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except:
(a) Permitted Liens;
(b) Liens securing Indebtedness and related obligations to the extent such
Indebtedness and related obligations are permitted under Sections 4.08(b)(i),
(iii), (iv), (v), (viii), (ix) and (xi) hereof;
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(c) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under Section 4.08 hereof; and
(d) Liens securing Refinancing Indebtedness permitted to be incurred under
Section 4.08 hereof; provided that the Refinancing Indebtedness so issued and
secured by such Lien shall not be secured by any property or assets of the
Company or any of its Restricted Subsidiaries other than the property or assets
subject to the Liens securing such Indebtedness being refinanced.
SECTION 4.08. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and the Company shall not
issue any Disqualified Stock and shall not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock that is Disqualified Stock;
provided, however, that the Company may incur Indebtedness or issue shares of
Disqualified Stock and any of its Restricted Subsidiaries may issue shares of
preferred stock that is Disqualified Stock if after giving effect to such
issuance or incurrence on a pro forma basis, the sum of (x) Indebtedness of the
Company and its Restricted Subsidiaries, on a consolidated basis, (y) the
liquidation value of outstanding preferred stock of Restricted Subsidiaries and
(z) the aggregate amount payable by the Company and its Restricted Subsidiaries,
on a consolidated basis, upon redemption of Disqualified Stock to the extent
such amount is not included in the preceding clause (y) shall be less than the
product of Annualized Pro Forma EBITDA for the latest fiscal quarter for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock or
preferred stock is issued multiplied by 7.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
quarter.
(b) The foregoing limitations in Section 4.08(a) shall not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility;
(ii) the issuance by any Restricted Subsidiary of preferred stock
(other than Disqualified Stock) to the Company, any Restricted Subsidiary
of the Company or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) the incurrence of Indebtedness or the issuance of preferred
stock by the Company or any of its Restricted Subsidiaries the proceeds of
which are (or the credit support provided by any such Indebtedness is), in
each case, used to finance the construction, capital expenditure and
working capital needs of a Cable Business (including, without limitation,
payments made pursuant to any License), the acquisition of Cable Assets or
the Capital Stock of a Qualified Subsidiary;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
not to exceed $50 million;
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(v) the incurrence by the Company or any Restricted Subsidiary of any
Permitted Acquired Debt;
(vi) the incurrence by the Company or any Subsidiary of Indebtedness
issued in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, or refund the Notes the Company's 10-3/4% Senior
Deferred Coupon Notes Due 2008, the Company's 9-3/4% Senior Deferred Coupon
Notes Due 2008, Existing Indebtedness or Indebtedness referred to in
clauses (i), (ii), (iii), (iv) or (v) above or Indebtedness incurred
pursuant to Section 4.08(a) hereof (the "Refinancing Indebtedness");
provided, however, that (1) the principal amount of, and any premium
payable in respect of, such Refinancing Indebtedness shall not exceed the
principal amount of Indebtedness so extended, refinanced, renewed, replaced
or refunded (plus the amount of reasonable expenses incurred in connection
therewith); (2) the Refinancing Indebtedness shall have (A) a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life
to Maturity of, and (B) a stated maturity no earlier than the stated
maturity of, the Indebtedness being extended, refinanced, renewed, replaced
or refunded; and (3) the Refinancing Indebtedness shall be subordinated in
right of payment to the Notes as and to the extent of the Indebtedness
being extended, refinanced, renewed, replaced or refunded;
(vii) the issuance of the Preferred Stock in lieu of payment of cash
interest on the Subordinated Debentures or the incurrence by the Company of
Indebtedness represented by the Subordinated Debentures upon the exchange
of the Preferred Stock in accordance with the Certificate of Designations
therefor;
(viii) Indebtedness under Exchange Rate Contracts, provided that such
Exchange Rate Contracts are related to payment obligations under Existing
Indebtedness or Indebtedness incurred under Section 4.08(a) or (b) hereof
that are being hedged thereby, and not for speculation and that the
aggregate notional amount under each such Exchange Rate Contract does not
exceed the aggregate payment obligations under such Indebtedness;
(ix) Indebtedness under Interest Rate Agreements, provided that the
obligations under such agreements are related to payment obligations on
Existing Indebtedness or Indebtedness otherwise incurred pursuant to
Section 4.08(a) or (b) hereof, and not for speculation;
(x) the incurrence of Indebtedness between the Company and any
Restricted Subsidiary, between or among Restricted Subsidiaries and between
any Restricted Subsidiary and other holders of Equity Interests of such
Restricted Subsidiary (or other Persons providing funding on their behalf)
on a pro rata basis and on substantially identical principal financial
terms; provided, however, that if any such Restricted Subsidiary that is
the payee of any such Indebtedness ceases to be a Restricted Subsidiary or
transfers such Indebtedness (other than to the Company or a Restricted
Subsidiary of the Company), such events shall be deemed, in each case, to
constitute the incurrence of such Indebtedness by the Company or by a
Restricted Subsidiary, as the case may be, at the time of such event; and
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(xi) Indebtedness of the Company and/or any Restricted Subsidiary in
respect of performance bonds of the Company or any Subsidiary or surety
bonds provided by the Company or any Restricted Subsidiary received in the
ordinary course of business in connection with the construction or
operation of a Cable Business.
(c) Any redesignation of a Non-Restricted Subsidiary as a Restricted
Subsidiary shall be deemed for purposes of this Section 4.08 to be an incurrence
of Indebtedness by the Company and its Restricted Subsidiaries of the
Indebtedness of such Non-Restricted Subsidiary as of the time of such
redesignation to the extent such Indebtedness does not already constitute
Indebtedness of the Company or one of its Restricted Subsidiaries.
SECTION 4.09. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
the Company's or any of its Restricted Subsidiaries' Equity Interests
(other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted
Subsidiary or (y) dividends or distributions payable to the Company or any
Wholly Owned Subsidiary of the Company, or (z) pro rata dividends or pro
rata distributions payable by a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company (other than any such Equity Interests owned
by the Company or any Wholly Owned Subsidiary of the Company);
(iii) voluntarily purchase, redeem or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (ii) through (ix) of Section 4.09(b)), is less
than the sum of (x) the difference between Cumulative EBITDA and 1.5
times Cumulative Interest Expense plus (y) Capital Stock Sale Proceeds
plus (z) cash received by the Company or a Restricted Subsidiary from
a Non-Restricted Subsidiary (other than cash which is or is required
to be repaid or returned to such Non-Restricted Subsidiary); provided,
however, that to the extent that any Restricted Investment that was
made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the amount credited pursuant to this
clause (z) shall be the lesser of (A) the cash received with respect
to such sale, liquidation or repayment of such Restricted Investment
(less the cost of such sale, liquidation or repayment, if any) and
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(B) the initial amount of such Restricted Investment, in each case as
determined in good faith by the Company's Board of Directors.
(b) The foregoing provisions in Section 4.09(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) (x) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company or any Restricted Subsidiary or (y)
an Investment in any Person, in each case, in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of other Equity Interests (other than any
Disqualified Stock) of the Company, provided that the Company delivers to
the Trustee:
(1) with respect to any transaction involving in excess of $1
million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such transaction is approved by
a majority of the directors on the Board of Directors; and
(2) with respect to any transaction involving in excess of $25
million, an opinion as to the fairness to the Company or such
Subsidiary from a financial point of view issued by an investment
banking firm of national standing with high yield experience, together
with an Officers' Certificate to the effect that such opinion complies
with this clause (2), provided that the amount of such proceeds from
the sale of such Equity Interests shall be excluded in each case from
Capital Stock Sale Proceeds for purposes of clause (a)(iv)(2)(y),
above;
(iii) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which (A) has no Indebtedness on a consolidated
basis other than Indebtedness incurred to finance the purchase of equipment
used in a Cable Business, (B) has no restrictions (other than restrictions
imposed or permitted by this Indenture or the indentures governing the
Other Qualified Notes or the Applicable Notes or any other instrument
governing unsecured indebtedness of the Company which is pari passu with
the Notes) on its ability to pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries, (C) is or will be a
Cable Business and (D) uses the proceeds of such Investment for
constructing a Cable Business or the working capital needs of a Cable
Business;
(iv) the redemption, purchase, defeasance, acquisition or retirement
of Indebtedness that is subordinated to the Notes (including premium, if
any, and accrued and unpaid interest) made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of (A) Equity Interests of the Company, provided
that the amount of such proceeds from the sale of such Equity Interests
shall be excluded in each case from Capital Stock Sale Proceeds for
purposes of clause (a)(iv)(2)(y) above or (B) Refinancing Indebtedness
permitted to be incurred under Section 4.08 hereof;
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(v) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which is or will be a Cable Business in an amount
not to exceed $80 million in the aggregate plus the sum of (x) cash
received by the Company or a Restricted Subsidiary from a Non-Restricted
Subsidiary (other than cash which s or is required to be repaid or returned
to such Non-Restricted Subsidiary) and (y) Capital Stock Sale Proceeds
(excluding the aggregate net sale proceeds to be received upon conversion
of the Convertible Subordinated Notes), provided that the amount of such
proceeds from the sale of such Equity Interests shall be excluded in each
case from the Capital Stock Sale Proceeds for purposes of clause
(a)(iv)(2)(y) above;
(vi) Investments by the Company or any Restricted Subsidiary in
Permitted Non-Controlled Assets;
(vii) the extension by the Company or any Restricted Subsidiary of
trade credit to a Non-Restricted Subsidiary extended on usual and customary
terms in the ordinary course of business, provided that the aggregate
amount of such trade credit shall not exceed $25 million at any one time;
(viii) the payment of cash dividends on the Preferred Stock accruing
on or after February 15, 2004 or any mandatory redemption or repurchase of
the Preferred Stock, in each case, in accordance with the Certificate of
Designations therefor; and
(ix) the exchange of all of the outstanding shares of Preferred Stock
for Subordinated Debentures in accordance with the Certificate of
Designations for the Preferred Stock.
(c) Any Investment in a Subsidiary (other than the issuance, transfer or
other conveyance of Equity Interests (other than Disqualified Stock) of the
Company (or any Capital Stock Sale Proceeds therefrom)) that is designated by
the Board of Directors as a Non-Restricted Subsidiary shall become a Restricted
Payment made on the date of such designation in the amount of the greater of (x)
the book value of such Subsidiary on the date such Subsidiary becomes a
Non-Restricted Subsidiary and (y) the fair market value of such Subsidiary on
such date as determined (A) in good faith by the Board of Directors of such
Subsidiary if such fair market value is determined to be less than $25 million
and (B) by an investment banking firm of national standing with high yield
underwriting expertise if such fair market value is determined to be in excess
of $25 million.
(d) Not later than the fifth Business Day after making any Restricted
Payment (other than those referred to in sub-clause (vii) of Section 4.09(b)),
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.10. ASSET SALES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to cause, make or suffer to exist any Asset Sale, unless:
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(i) no Default exists or is continuing immediately prior to and after
giving effect to such Asset Sale;
(ii) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced for purposes of this Section 4.10 by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets sold or otherwise disposed of; and
(iii) at least 80% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of (w) Cash
Equivalents, (x) Replacement Assets, (y) publicly traded Equity Interests
of a Person who is, directly or indirectly, engaged primarily in one or
more Cable Businesses; provided, however, that the Company or such
Restricted Subsidiary shall Monetize such Equity Interests by sale to one
or more Persons (other than to the Company or a Subsidiary thereof) at a
price not less than the fair market value thereof within 180 days of the
consummation of such Asset Sale, or (z) any combination of the foregoing
clauses (w) through (y); provided, however, that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such
assets and (y) any notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are within five
Business Days converted by the Company or such Restricted Subsidiary into
cash, shall be deemed to be Cash Equivalents (to the extent of the Cash
Equivalents received in such conversion) for purposes of this clause (iii).
(b) Within 360 days after any Asset Sale, the Company (or the Restricted
Subsidiary, as the case may be) shall cause the Net Proceeds from such Asset
Sale:
(i) to be used to permanently reduce Indebtedness of a Restricted
Subsidiary; or
(ii) to be invested or reinvested in Replacement Assets.
Pending final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture or the
indentures for the Applicable Notes or the Other Qualified Notes.
Any Net Proceeds from any Asset Sale that are not used or reinvested as
provided in the preceding sentence constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15 million, the Company shall make
an offer (an "Asset Sale Offer") to all holders of Notes and Other Qualified
Notes to purchase the maximum principal amount of Notes and Other Qualified
Notes (determined on a pro rata basis according to the accreted value or
principal amount, as the case may be, of the Notes and the Other Qualified Notes
and in accordance with Section 3.09(g)(i); provided, however, that the Asset
Sale Offer must be made first to the holders of the Applicable Notes) that may
be purchased out of the Excess Proceeds, if any, remaining after the
consummation of the aforementioned Asset Sale Offer to the holders of the
Applicable Notes (x) with respect to the Other Qualified Notes, based on the
terms set forth in the indenture related to each issue of the Other Qualified
Notes and (y)
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with respect to the Notes, at an offer price in cash in an amount equal to 100%
of the outstanding principal amount thereof plus accrued and unpaid interest, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in Section 3.09 hereof. To the extent that the aggregate
principal amount or accreted value, as the case may be, of Notes and Other
Qualified Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, if any, remaining after the consummation of the aforementioned Asset
Sale Offer to the holders of the Applicable Notes, the Company may use such
deficiency for general corporate purposes. If the aggregate principal amount or
accreted value, as the case may be, of Notes and Other Qualified Notes
surrendered by holders thereof exceeds the amount of Excess Proceeds, if any,
remaining after the consummation of the aforementioned Asset Sale Offer to the
holders of the Applicable Notes, then such remaining Excess Proceeds shall be
allocated pro rata according to accreted value or principal amount, as the case
may be, to the Notes and each issue of the Other Qualified Notes and in
accordance with Section 3.09(g)(ii), and the Trustee shall select the Notes to
be purchased from the amount allocated to the Notes on the basis set forth in
Section 3.09(e) hereof. Upon completion of such offers to purchase each of the
Applicable Notes and the Notes and the Other Qualified Notes, the amount of
Excess Proceeds will be reset at zero. No such Asset Sale Offer to purchase the
Notes and Other Qualified Notes shall be required to be made by the Company
pursuant to the foregoing provisions if there are no Excess Proceeds remaining
after the consummation of the Asset Sale Offer made to holders of the Applicable
Notes.
(c) Notwithstanding the provisions of Sections 4.10(a) and (b): the Company
and its Subsidiaries may:
(i) sell, lease, transfer, convey or otherwise dispose of assets or
property acquired after October 14, 1993, by the Company or any Subsidiary
in a sale-and-leaseback transaction so long as the proceeds of such sale
are applied within five Business Days to permanently reduce Indebtedness of
a Restricted Subsidiary or if there is no such Indebtedness or such
proceeds exceed the amount of such Indebtedness then such proceeds or
excess proceeds are reinvested in a Replacement Assets within 360 days
after such sale, lease, transfer, conveyance or disposition;
(ii) (x) swap or exchange assets or property with a Cable Controlled
Subsidiary or (y) issue, sell, lease, transfer, convey or otherwise dispose
of equity securities of any of the Company's Subsidiaries to a Cable
Controlled Subsidiary, in each of cases (x) and (y) so long as (A) the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company after
such transaction is equal to or less than the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio
immediately preceding such transaction and (B) either (I) the assets so
contributed consist solely of a license to operate a Cable Business and the
Net Households covered by all of the licenses to operate cable and
telephone systems held by the Company and its Restricted Subsidiaries
immediately after and giving effect to such transaction equals or exceeds
the number of Net Households covered by all of the licenses to operate
cable and telephone systems held by the Company and its Restricted
Subsidiaries immediately prior to such transaction or (II) the assets so
contributed consist solely of Cable Assets and the value of the Capital
Stock received, immediately after and giving effect to such transaction, as
determined by an investment banking firm of recognized standing with
knowledge of the
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Cable Business, equals or exceeds the value of Cable Assets exchanged for
such Capital Stock;
(iii) sell, transfer or otherwise dispose of Long Distance/Microwave
Assets; or
(iv) issue, sell, lease, transfer, convey or otherwise dispose of
Equity Interests (other than Disqualified Stock) of the Company (or any
Capital Stock Sale Proceeds therefrom) to any Person (including
Non-Restricted Subsidiaries).
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or amend any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(a) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that could have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and
(b) the Company delivers to the Trustee:
(i) with respect to any Affiliate Transaction involving aggregate
payments in excess of $1 million or any series of Affiliate Transactions
with an Affiliate involving aggregate payments in excess of $1 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with Section 4.11 (a)
and such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors; and
(ii) with respect to any Affiliate Transaction involving aggregate
payments in excess of $25 million or any series of Affiliate Transactions
with an Affiliate involving aggregate payments in excess of $25 million, an
opinion as to the fairness to the Company or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing with high yield experience together with an Officers' Certificate
to the effect that such opinion complies with this clause (ii); provided,
however, that notwithstanding the foregoing provisions, the following shall
not be deemed to be Affiliate Transactions:
(1) any employment agreement entered into by the Company or any
of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or its predecessor or such
Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions permitted by the provisions of Section 4.09
hereof;
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(4) Liens permitted under Section 4.07 hereof which are granted
by the Company or any of its Subsidiaries to an unrelated Person for
the benefit of the Company or any other Subsidiary of the Company;
(5) any transaction pursuant to an agreement in effect on the
Issuance Date;
(6) the incurrence of Indebtedness by a Restricted Subsidiary
where such Indebtedness is owed to the holders of the Equity Interests
of such Restricted Subsidiary on a pro rata basis and on substantially
identical principal financial terms;
(7) management, operating, service or interconnect agreements
entered into in the ordinary course of business with any Cable
Business in which the Company or any Restricted Subsidiary has an
Investment and which is not a Cable Controlled Subsidiary (and of
which no Affiliate of the Company is an Affiliate other than as a
result of such Investment); and
(8) any tax sharing agreement.
SECTION 4.12. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
indebtedness owed to the Company or any of its Subsidiaries, or
(b) make loans or advances to the Company or any of its Subsidiaries, or
(c) transfer any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of:
(i) Existing Indebtedness as in effect on the Issuance Date;
(ii) this Indenture and the Notes;
(iii) any agreement covering or relating to Indebtedness permitted to
be incurred under Section 4.08(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof (but only, in the case of Section 4.08(b)(viii) or (ix), to the
extent contemplated by the then-existing Credit Facility), provided that
the provisions of such agreement permit any action referred to in clause
(a) above in aggregate amounts sufficient to enable the payment of interest
and principal and mandatory repurchases pursuant to the terms of this
Indenture and the Notes, but provided further that: (x) any such agreement
may nevertheless encumber, prohibit or restrict any action referred to in
clause (a) above if an event of default under such agreement has occurred
and is continuing or would occur as a result of any such action; and (y)
any such agreement may nevertheless contain (I) restrictions limiting the
payment of dividends or the making of any other distributions to all or a
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portion of excess cash-flow (or any similar formulation thereof) and (II)
subordination provisions governing Indebtedness owed to the Company or any
Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired;
provided that the EBITDA of such Person is not taken into account in
determining whether such acquisition was permitted by the terms of this
Indenture; (vi) customary nonassignment provisions in leases entered into
in the ordinary course of business and consistent with past practices;
(vii) provisions of joint venture or stockholder agreements, so long
as such provisions are determined by a resolution of the Board of Directors
to be, at the time of such determination, customary for such agreements;
(viii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business or the provisions
of any agreement with respect to any Asset Sale (or transaction which, but
for its size, would be an Asset Sale), solely with respect to the assets
being sold; or
(ix) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are determined by a resolution of the Board of Directors to be
no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
SECTION 4.13. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control Triggering Event, each
Holder of Notes shall have the right to require the Company to repurchase all or
any part (equal to 1,000 pounds sterling or an integral multiple thereof) of
such Holder's Notes pursuant to the offer described in Section 3.09 hereof (the
"Purchase Offer") at a purchase price equal to 101% of the principal amount
thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase (the "Change of Control Payment").
(b) Within 40 days following any Change of Control Triggering Event, the
Company shall mail to each Holder the notice provided by Section 3.09(e).
SECTION 4.14. PAYMENT OF ADDITIONAL AMOUNTS.
At least 10 days prior to the first date on which payment of principal and
any premium or interest on the Notes is to be made, and at least 10 days prior
to any subsequent such date if there has been any change with respect to the
matters set forth in the Officers' Certificate described in this Section 4.14,
the Company shall furnish the Trustee and the Paying Agent, if other than the
Trustee, with an Officers' Certificate instructing the Trustee and the Paying
Agent whether the Company is obligated to pay Additional Amounts (as defined in
Section 3 of the Initial Notes or Section 2 of the Exchange Notes) with respect
to such payment of principal, or of any premium or interest on the Notes. If the
Company
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will be obligated to pay Additional Amounts with respect to such payment, then
such Officers' Certificate shall specify by country the amount, if any, required
to be withheld on such payments to such Holders and the Company will pay to the
Trustee or the Paying Agent such Additional Amounts. The Company shall indemnify
the Trustee and the Paying Agent for, and hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by any
of them in reliance on any Officers' Certificate furnished to them pursuant to
this Section 4.14.
Whenever in this Indenture there is mentioned, in any context, the payment
of principal (and premium, if any), Offer Amount, interest or any other amount
payable under or with respect to any Note such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange
Notes) to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange Notes) and
express mention of the payment of Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made (if applicable).
ARTICLE V.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless:
(a) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands or of the United States, any state thereof or the
District of Columbia;
(b) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
assumes all the Obligations (including the due and punctual payment of
Additional Amounts if the surviving corporation is a corporation organized or
existing under the laws of the United Kingdom, the Netherlands, the Netherlands
Antilles, Bermuda or the Cayman Islands) of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and this Indenture;
(c) immediately after such transaction no Default or Event of Default
exists;
(d) the Company or any entity or Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made will have a ratio of
Indebtedness to Annualized Pro Forma EBITDA equal to or less than the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company immediately preceding
the transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the
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Company immediately preceding such transaction is 6:1 or less, then the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company may be 0.5 greater
than such ratio immediately preceding such transaction; and
(e) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
Person has been named as the Company herein; provided, however, that the
predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Notes.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest (and Additional
Amounts, if applicable) on any Note when the same becomes due and payable and
the Default continues for a period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the principal of any Note when
the same becomes due and payable at maturity, upon redemption or otherwise;
(c) the Company fails to observe or perform any covenant or agreement
contained in Section 4.08, 4.09, or 4.13 hereof;
(d) the Company fails to observe or perform any other covenant or agreement
contained in this Indenture or the Notes, required by any of them to be
performed and the Default continues for a period of 60 days after notice from
the Trustee to the Company or from the Holders of 25% in aggregate principal
amount of the then outstanding Notes to the Company and the Trustee stating that
such notice is a "Notice of Default";
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary), whether such
Indebtedness or guarantee now exists or is created after the Issuance Date,
which default:
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(i) is caused by a failure to pay when due principal of or interest on
such Indebtedness within the grace period provided for in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default"); or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more;
(f) a final judgment or final judgments (other than any judgment as to
which a reputable insurance company has accepted full liability) for the payment
of money are entered by a court or courts of competent jurisdiction against the
Company or any Restricted Subsidiary of the Company which remains undischarged
for a period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such judgments exceeds $5 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) generally is unable to pay its debts as the same become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Material Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any Material Subsidiary or
for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 60
days; and
(i) the revocation of a Material License.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors or the protection of creditors.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
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SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in clauses
(g) and (h) of Section 6.01 hereof) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Notes by notice to the Company and the Trustee, may declare all
the Notes to be due and payable. Upon such declaration, the principal of,
premium, if any, and interest on, the Notes shall be due and payable
immediately. If an Event of Default specified in clause (g) or (h) of Section
6.01 hereof occurs, such an amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder. The Holders of a majority in principal amount of the then
outstanding Notes by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration. In the case of any Event of Default pursuant to the provisions of
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium that the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to Section 7 of the Initial Notes (Section
6 in the case of the Exchange Notes), an equivalent premium shall, upon demand
of the Holders of at least 25% in principal amount of the then outstanding Notes
delivered to the Company and the Trustee, also become and be immediately due and
payable to the extent permitted by law, anything in this Indenture or in the
Notes contained to the contrary notwithstanding. If an Event of Default occurs
prior to April 1, 2003, by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to April 1, 2003, pursuant to
Section 7 of the Initial Notes (Section 6 in the case of the Exchange Notes),
then the premium payable for purposes of this paragraph for each of the years
beginning on April 1 of the years (March 13 in the case of 1998) set forth below
shall, subject to the foregoing demand, be as set forth in the following table
expressed as a percentage of the amount that would otherwise be due pursuant to
this Section 6.02 hereof but for the provisions of this sentence.
Year Percentage
1998............................ 109.500%
1999............................ 108.550%
2000............................ 107.600%
2001............................ 106.650%
2002............................ 105.700%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder 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. All remedies are cumulative to the
extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the then outstanding Notes
by notice to the Trustee may waive an existing Default or Event of Default and
its consequences except a continuing Default or Event of Default in the payment
of the principal of or interest on any Note. When a Default or Event of Default
is waived, it is cured and ceases; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding Notes
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
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, is unduly prejudicial to the rights of other Holders, or
would involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Holder gives to the Trustee notice of a continuing Event of
Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder made pursuant to this
Section.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Notes and interest on overdue principal and
interest and such further amount as shall be sufficient to cover the costs and,
to the extent lawful,
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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 and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property. Nothing contained herein shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Notes for principal
and interest (and Additional Amounts, if applicable), ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders made pursuant to this Section.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
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ARTICLE VII.
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 circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture and to confirm the
correctness of all mathematical computations.
(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: (i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01; (ii) 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 and (iii) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
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(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be charged with knowledge of any Event of Default
under subsection (c), (d), (e), (f) or (i) (and subsection (a) or (b) if the
Trustee does not act as Paying Agent) of Section 6.01 or of the identity of any
Material Subsidiary referred to in clause (ii) of the definition thereof unless
either (1) a Trust Officer of the Trustee assigned to its Corporate Trustee
Administration Department shall have actual knowledge thereof, or (2) the
Trustee shall have received notice thereof in accordance with Section 10.02
hereof from the Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee is 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 Notes, it shall not be accountable for the Company's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Company in the Indenture or any statement in the Notes other than its
authentication or for compliance by the Company with the Registration Rights
Agreement.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment on any Note, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Trustee shall mail to Holders a brief report dated as of such reporting
date that complies with TIA (Section) 313(a) if and to the extent required by
such (Section) 313(a). The Trustee also shall comply with TIA (Section)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (Section) 313(c).
A copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange on which the Notes are listed. The Company
shall notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of
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an express trust. The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
disbursements and expenses may include the reasonable disbursements,
compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees, disbursements and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee, except money or property held in trust to pay principal and
interest on particular Notes.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
All amounts owing to the Trustee under this Section shall be payable by the
Company in United States dollars.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (Section) 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (Section) 310(b), any
Holder who has been a bona fide Holder of a Note for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08 hereof,
the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring trustee with respect to expenses and liabilities
incurred by it prior to such replacement.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (Section) 310(a)(1) and (5). The Trustee shall always have a combined
capital and surplus as stated in Section 10.11 hereof. The Trustee is subject to
TIA (Section) 310(b). The following indentures shall be deemed to be
specifically described herein for the purposes of clause (i) of the first
proviso contained in TIA (Section) 310(b): (a) indenture, dated as of October
14, 1993, between the Company and The Chase Manhattan Bank (formerly known as
Chemical Bank), as trustee, relating to the Applicable Notes, as amended, (b)
indenture, dated as of April 20, 1995, between the Company and The Chase
Manhattan Bank, as trustee, relating to the 12-3/4% Notes, as amended, (c)
indenture, dated as of January 30, 1996, between the Company and The Chase
Manhattan Bank, as trustee, relating to the 11-1/2% Notes, (d) indenture, dated
as February 12, 1997, between the Company and The Chase Manhattan Bank, as
trustee, relating to the 10% Notes, (e) indenture, dated as of March 13, 1998,
between the Company and The Chase Manhattan Bank, as trustee, relating to the
Company's 10-3/4% Senior Deferred Coupon Notes Due 2008 and (f) indenture, dated
as of March 13, 1998, between the Company and The Chase Manhattan Bank, as
trustee, relating to Company's the 9-3/4% Senior Deferred Coupon Notes Due 2008.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (Section) 311(a), excluding any creditor
relationship listed in TIA (Section) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (Section) 311(a) to the extent indicated
therein.
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ARTICLE VIII.
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 7.07 and 8.03 hereof shall survive) when
all outstanding Notes theretofore authenticated and issued have been delivered
to the Trustee for cancellation and the Company has paid all sums payable
hereunder.
SECTION 8.02. OPTION TO EFFECT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
this Section 8.02 be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Section. Upon the Company's election to have
this Section 8.02 apply to all the outstanding Notes, the Company shall, subject
to the satisfaction of the conditions set forth in the next paragraph, be deemed
to have been discharged from its obligations with respect to all outstanding
Notes on the date such conditions are satisfied (hereinafter, "Defeasance"). For
this purpose, Defeasance means that the Company shall be deemed to have paid and
discharged the entire Obligations represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.03 hereof and the other Sections of this Indenture referred to in clauses (a)
and (b) below, and to have satisfied all its other obligations under such Notes
and this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in the following paragraph, payments in
respect of the principal of, premium, if any, and interest on such Notes when
such payments are due; (ii) the Company's obligations with respect to such Notes
under Article II hereof; (iii) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith;
and (iv) this Article VIII.
In order to exercise Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, pursuant to an irrevocable trust and
security agreement in form satisfactory to the Trustee, money in pounds
sterling sufficient or U.K. Government Obligations the principal of and
interest on which will be sufficient or a combination thereof sufficient in
the opinion of a nationally recognized firm of independent public
accountants, expressed in a written certification thereof (in form
satisfactory to the Trustee) to pay the principal of, premium, if any, and
interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be, of such principal or
installment of principal of, premium, if any, and interest on the
outstanding Notes;
(b) the Company shall have delivered to the Trustee, an Opinion of
Counsel (which counsel may be an employee of the Company) reasonably
acceptable to the Trustee confirming that: (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the Issuance Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for
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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;
(c) no Event of Default shall have occurred and be continuing on the
date of such Defeasance (other than an Event of Default resulting from or
related to the incurrence of Indebtedness, the proceeds of which are to be
applied to such deposit) or, insofar as Sections 6.01(g) and (h) hereof are
concerned, at any time in the period ending on the 91st day after the date
of deposit (or greater period of time in which any such deposit of trust
funds may remain subject to the effect of any Bankruptcy Law insofar as
those apply to the deposit by the Company);
(d) such Defeasance shall not result in a breach or violation of, or
constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;
(e) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit (or
such greater period referred to in (c) above), the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over any other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others;
(g) the deposit shall not result in the Company, the Trustee or the
trust fund established pursuant to (a) above being subject to regulation
under the Investment Company Act of 1940, as amended;
(h) Holders of the Notes will have a valid, perfected and unavoidable
(under applicable Bankruptcy Law), subject to the passage of time referred
to clause (e) above, first priority security interest in the trust funds;
and
(i) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (subject to customary exceptions),
each stating that all conditions precedent provided for or relating to the
Defeasance have been complied with.
"U.K. Government Obligations" means (i) direct obligations of the United
Kingdom that are issued by the Lords Commissioners of Her Majesty's Treasury or
(ii) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United Kingdom the payment of which is unconditionally
guaranteed by the Lords Commissioners of Her Majesty's Treasury, and also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such U.K. Government Obligation or a specific payment of
interest on or principal of any such U.K. Government Obligation held by such
custodian for the account of the holder of a 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.K. Government
Obligation or the specific payment of interest on or principal of the U.K.
Government Obligation evidenced by such depository receipt. In order to have
money available on a payment date to pay principal or interest (including
Additional Amounts, if applicable) on the Notes, the
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U.K. Government Obligations shall be payable as to principal or interest on or
before such payment date in such amounts as will provide the necessary money.
U.K. Government Obligations shall not be callable at the issuer's option.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.K. Government Obligations
deposited with it pursuant to Section 8.02 hereof. It shall apply the deposited
money and the money from U.K. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of principal and interest
on the Notes.
SECTION 8.04. REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after the date upon which such payment shall have become
due; provided, however, that the Company shall have first caused notice of such
payment to the Company to be mailed to each Holder entitled thereto no less than
30 days prior to such payment. After payment to the Company, the Trustee and the
Paying Agent shall have no further liability with respect to such money and
Holders entitled to the money must look to the Company for payment as general
creditors unless any applicable abandoned property law designates another
Person.
SECTION 8.05. REINSTATEMENT.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.03 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application and (ii) the Holders of at least a majority in principal amount
of the then outstanding Notes so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 hereof
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 8.03 hereof or such request is revoked by such
Holders; provided, however, that if the Company makes any payment of interest on
or principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
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(b) to comply with Section 5.01 hereof;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(d) to make any change that does not adversely affect the interests
hereunder of any Holder; or
(e) to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07 hereof, the Company and the Trustee may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in principal
amount of the Notes then outstanding may also waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment, supplement
or waiver under this Section may not:
(a) reduce the amount of Notes whose Holders must consent to an amendment,
supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions of Sections 7 and 8 of the Initial Note and Sections 6 and
7 of the Exchange Note (other than provisions relating to the covenants
described under Sections 4.10 and 4.13);
(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a default in the payment of the principal of, or interest on, any
Note (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(e) except as contemplated by Section 10.07(e), make any Note payable in
money other than that stated in the Note;
(f) make any change in Section 6.04 or 6.07 hereof;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in the foregoing amendment and waiver provisions of
this Article 9.
To secure a consent of the Holders under this Section 9.02, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Holders a notice briefly describing the
amendment or waiver.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Notes shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of a Note if the Trustee receives the notice of revocation
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented to the amendment, supplement or waiver.
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
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
principal amount of Notes required hereunder for such amendment or waiver to be
effective shall have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Holder, unless it is of the type described in any of clauses (a) through
(h) of Section 9.02 hereof. In such case, the amendment or waiver shall bind
each Holder who has consented to it and every subsequent Holder that evidences
the same debt as the consenting Holder's Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment or waiver
on any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall authenticate new Notes that reflect the amendment or
waiver.
Failure to make such notation on a Note or to issue a new Note as aforesaid
shall not affect the validity and effect of such amendment or waiver.
SECTION 9.06. TRUSTEE PROTECTED.
The Trustee shall sign all supplemental indentures, except that the Trustee
may, but need not, sign any supplemental indenture that adversely affects its
rights.
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ARTICLE X.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
This Indenture is subject to the provisions of the TIA that are required to
be incorporated into this Indenture (or, prior to the registration of the Notes
pursuant to the Registration Rights Agreement, would be required to be
incorporated into this Indenture if it were qualified under the TIA), and shall,
to the extent applicable, be governed by such provisions. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required (or would be so required) to be incorporated in this Indenture by the
TIA, the incorporated provision shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in Person or mailed by first class mail
to the other's address stated in Section 10.11 hereof. 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 to a Holder shall be mailed by first class mail
to his address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
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 the
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 10.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA (Section) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
(Section) 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate 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
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(b) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 4.03)
shall include:
(a) a statement that the Person signing such certificate or rendering such
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has made
such examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by, or a meeting of,
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. CONVERSION OF CURRENCY.
The Company covenants and agrees that the following provisions shall apply
to conversion of currency in the case of the Notes and this Indenture:
(a) (i) If for the purposes of obtaining judgment in, or enforcing the
judgment of, any court in any country, it becomes necessary to convert into any
other currency (the "Judgment Currency") an amount due in British pounds
sterling, then the conversion shall be made at the Rate of Exchange prevailing
on the Business Day before the day on which the judgment is given or the order
of enforcement is made, as the case may be (unless a court shall otherwise
determine).
(ii) If there is a change in the Rate of Exchange prevailing between
the Business Day before the day on which the judgment is given or an order
of enforcement is made, as the case may be (or such other date as a court
shall determine), and the date of receipt of the amount due, the Company
shall pay such additional (or, as the case may be, such lesser) amount, if
any, as may be necessary so that the amount paid in the Judgment Currency
when converted at the Rate of Exchange prevailing on the date of receipt
will produce the amount in British pounds sterling originally due.
(b) In the event of the winding-up of the Company at any time while any
amount or damages owing under the Notes and this Indenture, or any judgment or
order rendered in respect thereof, remains outstanding, the Company shall
indemnify and hold the Holders of Notes and the Trustee harmless against any
deficiency arising or resulting from any variation in rates of exchange between
(1) the date as of which the equivalent of the amount in British pounds sterling
due or contingently due under the Notes and this Indenture (other than under
this paragraph (b)) is calculated for the purposes of
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such winding-up and (2) the final date for the filing of proofs of claim in the
winding-up of the Company, which is the date fixed by the liquidator or
otherwise in accordance with the relevant provisions of applicable law as being
the latest practicable date as at which liabilities of the Company may be
ascertained for such winding-up prior to payment by the liquidator or otherwise
in respect thereto.
(c) The obligations contained in paragraphs (a)(ii) and (b) of this Section
10.07 shall:
(i) constitute separate and independent obligations of the Company
from its other obligations under the Notes and this Indenture;
(ii) give rise to separate and independent causes of action against
the Company;
(iii) apply irrespective of any waiver or extension granted by any
Holder or the Trustee from time to time; and
(iv) continue in full force and effect notwithstanding any judgment or
order or the filing of any proof of claim in the winding-up of the Company
for a liquidated sum in respect of amounts due hereunder (other than under
paragraph (b) above) or under any such judgment or order.
Any such deficiency as aforesaid shall be deemed to constitute a loss
suffered by the Holders or the Trustee, as the case may be, and no proof or
evidence of any actual loss shall be required by the Company or its liquidators.
In the case of paragraph (b) above, the amount of such deficiency shall not be
deemed to be reduced by any variation in rates of exchange occurring between the
said final date and the date of any liquidating distribution.
(d) "Rate of Exchange" means the noon buying rate in the City of New York
as certified for customs purposes by the Federal Reserve Bank of New York on the
relevant date for cable transfers in the Judgment Currency other than British
pounds sterling referred to in paragraphs (a) and (b) above and shall include
any premiums and costs of exchange payable.
(e) If the United Kingdom adopts the Euro, the regulations of the European
Commission relating to the Euro shall apply to the Notes and this Indenture. The
circumstances and consequences described in this paragraph entitle neither the
Company nor any Holder to early redemption, rescission, notice, repudiation,
adjustment or renegotiation of the terms and conditions of the Notes or this
Indenture or to raise other defenses or to request any compensation claim, nor
will they affect any of the other obligations of the Company under the Notes and
this Indenture.
SECTION 10.08. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of New York are not required to be open. 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. If any other operative date for purposes of
this Indenture shall occur on a Legal Holiday then for all purposes the next
succeeding day that is not a Legal Holiday shall be such operative date.
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SECTION 10.09. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
SECTION 10.10. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Indenture may be executed by manual or facsimile signature in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 10.11. VARIABLE PROVISIONS.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
The first certificate pursuant to Section 4.03 hereof shall be for the
fiscal year ended on December 31, 1998.
The reporting date for Section 7.06 hereof is March 15, of each year. The
first reporting date is March 15, 1998.
The Trustee shall always have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch, Esq.
General Counsel
The Trustee's address is:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trustee
Administration Department
SECTION 10.12. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND
THE NOTES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
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SECTION 10.13. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or an Affiliate. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.14. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 10.15. SEVERABILITY
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.16. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
NTL INCORPORATED, as Company
By: /s/ Richard J. Lubasch
---------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Andrew M. Deck
--------------------------------------
Name: Andrew M. Deck
Title: Vice President
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EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
[Restricted Notes Legend]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
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TRANSFERORS PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN
THE MEANING OF RULE 903(c)(2) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE THAT MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY
THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (4) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM.
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No. ________
________Pounds Sterling
CUSIP No. [ ]/CINS No. [ ]
9-1/2% SENIOR NOTE DUE 2008
NTL Incorporated, a Delaware corporation (the "Company"), promises to pay
to __________________________ or registered assigns, the principal sum of
____________________ [____________] pounds sterling [,or such other amount as is
indicated on Schedule A hereof* /,] on April 1, 2008, subject to the further
provisions of this Senior Note set forth on the reverse hereof which further
provisions shall for all purposes have the same effect as if set forth at this
place.
Interest Payment Dates: April 1 and October 1, commencing October 1, 1998
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Senior Note to be
signed manually or by facsimile by its duly authorized officers.
Dated:______________________________
NTL INCORPORATED
by:_________________________________
by:_________________________________
______________________________
* Applicable to Global Notes Only
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9-1/2% Senior
Notes Due 2008 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:______________________________________
Authorized Officer
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[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
9-1/2% Senior Note Due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 9-1/2% Senior Notes Due 2008 (the "Senior Notes"). The Senior
Notes will accrue interest at a rate of 9-1/2% per annum. The Company promises
to pay interest on the Senior Notes in cash semiannually on each April 1 and
October 1, commencing on October 1, 1998, to Holders of record on the
immediately preceding March 15 and September 15, respectively. Interest on the
Senior Notes will accrue from the most recent date to which interest has been
paid, or if no interest has been paid, from March 13, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
will pay interest on overdue principal at the interest rate borne by the Senior
Notes, compounded semiannually, and it shall pay interest on overdue
installments of interest (without regard to any applicable grace period) at the
same interest rate compounded semiannually. Any interest paid on this Senior
Note shall be increased to the extent necessary to pay Additional Amounts as set
forth in this Senior Note.
2. Special Interest. The Holder of this Senior Note is entitled to the
benefits of the Registration Rights Agreement relating to the Senior Notes,
dated as of March 13, 1998, between the Company and the Initial Purchasers party
thereto (the "Registration Rights Agreement").
In the event that either (a) the Exchange Offer Registration Statement (as
such term is defined in the Registration Rights Agreement) is not filed with the
SEC on or prior to the 90th day following the date of original issuance of the
Senior Notes, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 270th day following the date of original issuance of the
Senior Notes (as such period may be extended in accordance with the SEC review
delay provisions of the Registration Rights Agreement) or (c) the Registered
Exchange Offer (as such term is defined in the Registration Rights Agreement) is
not consummated or a Shelf Registration Statement (as such term is defined in
the Registration Rights Agreement) is not declared effective on or prior to the
310th day following the date of original issuance of the Senior Notes (as such
period may be extended in accordance with the SEC review delay provisions of the
Registration Rights Agreement) (each such event referred to in clauses (a)
through (c) above, a "Registration Default"), interest will accrue (in addition
to the stated interest on the Senior Notes) from and including the next day
following each of (i) such 90-day period in the case of clause (a) above and
(ii) such 270-day period in the case of clause (b) above and (iii) such 310-day
period in the case of clause (c) above (in each of cases (b) and (c) as such
period is extended, if applicable, in the manner aforesaid) (each such period
referred to in clauses (i)-(iii) above an "Accrual Period"), at a rate per annum
equal to 0.50% of the principal amount of the Senior Notes (determined daily).
The amount of such additional interest (the "Special Interest") will increase by
an additional 0.50% of the principal amount with respect to each subsequent
applicable Accrual Period until all Registration Defaults have been cured, up to
a maximum amount of Special Interest of 1.50% per annum of the principal amount
(determined daily). In each case such additional interest will be payable in
cash semiannually in arrears on each April 1 and October 1, commencing October
1, 1998, to Holders of record on the immediately preceding March 15 and
September 15, respectively. In the event that a Shelf Registration Statement is
declared effective pursuant to the terms of the Registration Rights Agreement,
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if the Company fails to keep such Registration Statement continuously effective
for the period required by the Registration Rights Agreement, then from such
time as the Shelf Registration Statement is no longer effective until the
earlier of (i) the date that the Shelf Registration Statement is again deemed
effective, (ii) the date that is the second anniversary of the original issuance
of the Senior Notes or (iii) the date as of which all of the Senior Notes are
sold pursuant to the Shelf Registration Statement, Special Interest shall accrue
at a rate per annum equal to 0.50% of the principal amount of the Senior Notes
(1.00% thereof if the Shelf Registration Statement is no longer effective for 30
days or more) and shall be payable in cash semiannually in arrears on each April
1 and October 1, commencing October 1, 1998, to the Holders of record on the
immediately preceding March 15 and September 15, respectively.
3. Additional Amounts. This Section 3 shall apply only in the event that
the Company becomes, or a successor to the Company is, a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on this Senior Note shall be made without deduction for or on account
of, any and all present or future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction or withholding of such taxes,
duties, assessments or governmental charges is then required by law. If any
deduction or withholding for or on account of any present or future taxes,
assessments or other governmental charges of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands (or any
political subdivision or taxing authority thereof or therein) shall at any time
be required in respect of any amounts to be paid by the Company under this
Senior Note, the Company shall pay or cause to be paid such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts
received by a Holder of this Senior Note after such deduction or withholding
shall be not less than the amounts specified in this Senior Note to which the
Holder of this Senior Note is entitled; provided, however, that the Company
shall not be required to make any payment of Additional Amounts for or on
account of:
(a) any tax, assessment or other governmental charge to the extent
such tax, assessment or other governmental charge would not have been
imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member
or shareholder of, or possessor of a power over, such Holder, if such
Holder is an estate, nominee, trust, partnership or corporation), other
than the holding of this Senior Note or the receipt of amounts payable in
respect of this Senior Note, and the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident
thereof or being or having been present or engaged in trade or business
therein or having or having had a permanent establishment therein or (ii)
the presentation of this Senior Note (where presentation is required) for
payment on a date more than 30 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
provided for, whichever occurs later, except to the extent that the Holder
would have been entitled to Additional Amounts had this Senior Note been
presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note, with a timely request of the Company addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, regulation or
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administrative practice of the taxing jurisdiction as a precondition to
exemption from all or part of such tax, assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change of Control Payment or interest with
respect to a Senior Note or withholding from the proceeds of a sale or
exchange of a Senior Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount,
redemption amount, Change of Control Payment or interest with respect to a
Senior Note, if such payment can be made, and is in fact made, without such
withholding by any other Paying Agent located inside the United States;
(f) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of a Senior Note to the extent that
the beneficial owner would not have been entitled to the payment of any
such Additional Amounts had the beneficial owner directly held the Senior
Note;
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the Holder of this
Senior Note. All references to principal amount or interest on the Senior Notes
in the Indenture or the Senior Notes shall include any Additional Amounts
payable to the Company pursuant to this Section 3.
4. Method of Payment. The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered Holders of Senior
Notes at the close of business on the record date for the next interest payment
date even though Senior Notes are canceled after the record date and on or
before the interest payment date. Holders must surrender Senior Notes to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium, if any, and interest in money of the United Kingdom that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal, premium, if any, and interest by check
payable in such money. It may mail an interest check to a holder's registered
address. If a Holder so requests, principal, premium, if any, and interest may
be paid by wire transfer of immediately available funds to an account previously
specified in writing by such Holder to the Company and the Trustee.
5. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York, New York and in London, England. Banque
Internationale a Luxembourg S.A. will act as Paying Agent and Registrar in
Luxembourg as long as the Senior Notes are listed on the Luxembourg Stock
Exchange. The Company may change any Paying Agent or Registrar without prior
notice. The Company or any of its Affiliates may act in any such capacity.
6. Indenture. The Company issued the Senior Notes under an Indenture, dated
as of March 13, 1998 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of
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the Senior Notes include those stated in the Indenture and those made part of
the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code (Sections)
77aaa-77bbbb) as in effect on the date of the Indenture. The Senior Notes are
subject to, and qualified by, all such terms, certain of which are summarized
hereon, and Holders are referred to the Indenture and such Act for a statement
of such terms. The Senior Notes are unsecured general obligations of the Company
limited to 125,000,000 pounds sterling in aggregate principal amount.
7. Optional Redemption. Except as provided in Section 8 hereof, the Senior
Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount )
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
Year Percentage
2003........................ 104.750%
2004........................ 103.167%
2005........................ 101.583%
2006 and thereafter......... 100.000%
8. Optional Tax Redemption. (a) The Senior Notes may be redeemed at the
option of the Company, in whole but not in part, upon not less than 30 nor more
than 60 days notice, at any time at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest to the date fixed for redemption
if after the date on which Section 3 of this Senior Note becomes applicable (the
"Relevant Date") there has occurred any change in or amendment to the laws (or
any regulations or official rulings promulgated thereunder) of the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands (or any political subdivision or taxing authority thereof or therein),
or any change in or amendment to the official application or interpretation of
such laws, regulation or rulings (a "Change in Tax Law") which becomes effective
after the Relevant Date, as a result of which the Company is or would be so
required on the next succeeding Interest Payment Date to pay Additional Amounts
with respect to the Senior Notes as described under Section 3 hereof with
respect to withholding taxes imposed by the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) (a "Withholding Tax") and
such Withholding Tax is imposed at a rate that exceeds the rate (if any) at
which Withholding Tax was imposed on the Relevant Date, provided, however, that
(i) this paragraph shall not apply to the extent that, at the Relevant Date it
was known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after the
Relevant Date, (ii) no such notice of redemption may be given earlier than 90
days prior to the earliest date on which the Company would be obliged to pay
such Additional Amounts were a payment in respect of the Senior Notes then due,
(iii) at the time such notice of redemption is given, such obligation to pay
such Additional Amount remains in effect and (iv) the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Company.
The Senior Notes may also be redeemed, in whole but not in part, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid interest to the date fixed for
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redemption if the Person formed after the Relevant Date by a consolidation,
amalgamation, reorganization or reconstruction (or other similar arrangement) of
the Company or the Person into which the Company is merged after the Relevant
Date or to which the Company conveys, transfers or leases its properties and
assets after the Relevant Date substantially as an entirety (collectively, a
"Subsequent Consolidation") is required, as a consequence of such Subsequent
Consolidation and as a consequence of a Change in Tax Law in the United Kingdom,
the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands
occurring after the date of such Subsequent Consolidation to pay Additional
Amounts with respect to Senior Notes with respect to Withholding Tax as
described under Section 3 hereof and such Withholding Tax is imposed at a rate
that exceeds the rate (if any) at which Withholding Tax was or would have been
imposed on the date of such Subsequent Consolidation, provided, however, that
this paragraph shall not apply to the extent that, at the date of such
Subsequent Consolidation it was known or would have been known had professional
advice of a nationally recognized accounting firm in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands, as the
case may be, been sought, that a Change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands was to
occur after such date.
The Company will also pay, or make available for payment, to Holders on the
Redemption Date any Additional Amounts (as described, but subject to the
exceptions referred to, in Section 3 hereof) resulting from the payment of such
Redemption Price.
9. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of the
Senior Notes to be redeemed at his address of record. The Senior Notes in
denominations larger than 1,000 pounds sterling may be redeemed in part but only
in integral multiples of 1,000 pounds sterling. In the event of a redemption of
less than all of the Senior Notes, the Senior Notes will be chosen for
redemption by the Trustee in accordance with the Indenture. On and after the
redemption date, interest ceases to accrue on the Senior Notes or portions of
them called for redemption.
If this Senior Note is redeemed subsequent to a record date with respect to
any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest will be paid to the Person in whose name
this Senior Note is registered at the close of business on such record date.
10. Mandatory Redemption. The Company will not be required to make
mandatory redemption or repurchase payments with respect to the Senior Notes.
There are no sinking fund payments with respect to the Senior Notes.
11. Repurchase at Option of Holder. (a) If there is a Change of Control
Triggering Event, the Company shall be required to offer to purchase on the
Purchase Date all outstanding Senior Notes at a purchase price equal to 101% of
the aggregate principal amount thereof, plus accrued and unpaid interest to the
Purchase Date. Holders of Senior Notes that are subject to an offer to purchase
will receive a Change of Control offer from the Company prior to any related
Purchase Date and may elect to have such Senior Notes or portions thereof in
authorized denominations purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
and when the aggregate amount of Excess Proceeds from such Asset Sales exceeds
$15 million, the Company shall be required to make an offer (an "Asset Sale
Offer") to all holders of the Senior Notes and Other Qualified Notes to purchase
the maximum principal amount of Senior Notes and Other Qualified Notes
(determined on a pro rata basis according to the principal amount or accreted
value, as the case may be, of the Senior Notes and the Other Qualified Notes;
provided, however, that the asset sale offer must be
9
<PAGE>
made first to the holders of the Applicable Notes) that may be purchased out of
the Excess Proceeds, if any, remaining after the consummation of an asset sale
offer made to the holders of the Applicable Notes, with respect to the Senior
Notes, at an offer price in cash in an amount equal to 100% of the outstanding
principal amount thereof plus accrued and unpaid interest, if any, to the date
fixed for the closing of such offer. To the extent that the aggregate principal
amount or accreted value, as the case may be, of Senior Notes, Applicable Notes
and Other Qualified Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount or accreted value, as the case may
be, of Senior Notes and Other Qualified Notes surrendered by holders thereof
exceeds the amount of Excess Proceeds, if any, remaining after the consummation
of an asset sale offer made to holders of the Applicable Notes, then such
remaining Excess Proceeds will be allocated pro rata according to principal
amount or accreted value, as the case may be, to the Senior Notes and each issue
of the Other Qualified Notes and, the Trustee will select the Senior Notes to be
purchased in accordance with Section 3.09(e) of the Indenture. Upon completion
of such offer to purchase, the amount of Excess Proceeds will be reset at zero.
12. Denominations, Transfer, Exchange. The Senior Notes are in registered
form, without coupons, in denominations of 1,000 pounds sterling and integral
multiples of 1,000 pounds sterling. The transfer of Senior Notes may be
registered, and Senior Notes may be exchanged, as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Senior Note or portion of a Senior Note selected for
redemption (except the unredeemed portion of any Senior Note being redeemed in
part). Also, it need not exchange or register the transfer of any Senior Note
for a period of 15 days before a selection of Senior Notes to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 4 of this Senior
Note, the registered Holder of a Senior Note may be treated as its owner for all
purposes.
14. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of Senior
Notes entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
15. Defaults and Remedies. The Senior Notes shall have the Events of
Default set forth in Section 6.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the then outstanding Senior Notes by notice to the Company
and the Trustee may declare all the Senior Notes to be due and payable
immediately, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all unpaid principal and interest accrued on
the Senior Notes shall become due and payable immediately without further action
or notice. The Holders of a majority in principal amount of the Senior Notes
then outstanding by written notice to the Trustee may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration. Holders may not enforce the Indenture or the Senior Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Senior Notes issued under
the Indenture may direct the Trustee in its exercise of any trust or power. The
Company must furnish annually compliance certificates to the Trustee. The above
description of Events of Default
10
<PAGE>
and remedies is qualified by reference, and subject in its entirety, to the more
complete description thereof contained in the Indenture.
16. Amendments, Supplements and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Senior Notes. Without the consent of any Holder, the Indenture or
the Senior Notes may be amended among other things, to cure any ambiguity,
defect or inconsistency, to provide for assumption of the Company's obligations
to Holders, to make any change that does not adversely affect the rights of any
Holder or to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
17. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other things, engage in
certain transactions with Affiliates, incur additional indebtedness and make
payments in respect of Capital Stock. The limitations are subject to a number of
important qualifications and exceptions.
18. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity may become the owner or pledgee of the Senior Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not Trustee, subject to certain limitations provided for in
the Indenture and in the TIA. Any Agent may do the same with like rights.
19. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE SENIOR NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
21. Authentication. The Senior Notes shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
22. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (- Custodian), and UGMA (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder of the Senior Notes upon written
request and without charge a copy of the Indenture. Request may be made to:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
General Counsel
11
<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
(I) or (we) assign and transfer this Senior Note to
__________________________________________
(Insert assignee's social security or tax I.D. no.)
__________________________________________
__________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________ agent to transfer this
Senior Note on the books of the Company. The agent may substitute another to act
for him.
Your Signature: ______________________________________________
(Sign exactly as your name appears on the other side of this
Senior Note)
Date: __________________
Signature Guarantee: * ____________________________________________
In connection with any transfer of any of the Senior Notes evidenced by
this certificate occurring prior to the date that is two years after
the later of the date of original issuance of such Senior Notes and the
last date, if any, on which such Senior Notes were owned by the Company
or any Affiliate of the Company, the undersigned confirms that such
Senior Notes are being transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) |_| pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) |_| pursuant to another available exemption from the
registration requirements of the Securities Act of 1933. Unless one
of the boxes is checked, the Trustee will refuse to register any of the
Senior Notes evidenced by this certificate in the name of any Person
other than the registered Holder thereof; provided, however, that if
box (2), (3) or (4) is checked, the Trustee may require, prior to
registering any such transfer of the Senior Notes such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that
______________________
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange
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<PAGE>
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933, such as the exemption provided by Rule 144 under such Act.
__________________________
Signature
Signature Guarantee*
__________________________
Signature must be guaranteed __________________________
Signature
__________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Senior
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Date: _____________________
__________________________
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
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<PAGE>
NOTICE: To be executed by an executive officer
14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note or a portion thereof
repurchased by the Company pursuant to Section 3.09, 4.10 or 4.13 of the
Indenture, check the box: [ ]
If the purchase is in part, indicate the portion (in denominations of 1,000
pounds sterling or any integral multiple thereof) to be
purchased:______________________
Your Signature: ______________________________________________________
(Sign exactly as your name appears on the other side of
this Senior Note)
Date: ________________________
Signature Guarantee:**/
___________________________
**/ Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
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[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
__________________ pounds sterling. The following increases or decreases in the
principal amount of this Global Note have been made:
================================================================================
Amount of Amount of Principal Signature of Date of
decrease in increase in amount of authorized exchange
principal principal this Global officer of following such
amount of this amount of this Note Trustee or decrease or
Global Note Global Note Notes Custodian increase
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
16
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
[Global Notes Legend, if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
No.___________ __________ Pounds Sterling
CUSIP No. [ ]CINS No. [ ]
9-1/2% SERIES B SENIOR NOTE DUE 2008
NTL Incorporated, a Delaware corporation (the "Company") promises to pay to
_________________________ or registered assigns, the principal sum of [ ] [ ]
pounds sterling [or such other amount as is indicated on Schedule A hereof]****
on April 1, 2008, subject to the further provisions of this Senior Note set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Interest Payment Dates: April 1 and October 1, commencing October 1, 1998
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Senior Note to be
signed manually or by facsimile by its duly authorized officers.
Dated: ________________
NTL INCORPORATED,
by:____________________________________
by:____________________________________
_________________________
**** Applicable to Global Notes only.
2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9-1/2% Series B Senior Notes Due 2008
described in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________________
Authorized Officer
3
<PAGE>
(FORM OF REVERSE OF EXCHANGE NOTE)
NTL INCORPORATED
9-1/2% Series B Senior Note Due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 9-1/2% Series B Senior Notes Due 2008 (the "Senior Notes"). The
Senior Notes will accrue interest at a rate of 9-1/2% per annum. The Company
promises to pay interest on the Senior Notes in cash semiannually on each April
1 and October 1, commencing October 1, 1998, to Holders of record on the
immediately preceding March 15 and September 15, respectively, at the rate of
9-1/2% per annum. Interest on the Senior Notes will accrue from the most recent
date to which interest has been paid on the Company's 9-1/2% Senior Notes Due
2008, or the Senior Notes, as the case may be, or if no interest has been paid,
from March 13, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company will pay interest on overdue principal and
premium, if any, at the interest rate borne by the Senior Notes, compounded
semiannually, and it shall pay interest on overdue installments of interest
(without regard to any applicable grace period) at the same interest rate
compounded semiannually. Any interest paid on this Senior Note shall be
increased to the extent necessary to pay Additional Amounts as set forth in this
Senior Note.
2. Additional Amounts. This Section 2 shall apply only in the event that
the Company becomes, or a successor to the Company is, a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on this Senior Note shall be made without deduction for or on account
of, any and all present or future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction of such taxes, duties,
assessments or governmental charges is then required by law. If any deduction or
withholding for or on account of any present or future taxes, assessments or
other governmental charges of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or taxing authority thereof or therein)
shall at any time be required in respect of any amounts to be paid by the
Company under this Senior Note, the Company shall pay or cause to be paid such
additional amounts ("Additional Amounts") as may be necessary in order that the
net amounts received by a Holder of this Senior Note after such deduction or
withholding shall be not less than the amounts specified in this Senior Note to
which the Holder of this Senior Note is entitled; provided, however, that the
Company shall not be required to make any payment of Additional Amounts for or
on account of:
(a) any tax, assessment or other governmental charge to the extent
such tax, assessment or other governmental charge would not have been
imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member
or shareholder of, or possessor of a power over, such Holder, if such
Holder is an estate, nominee, trust, partnership or corporation), other
than the holding of this Senior Note or the receipt of amounts payable in
respect of this Senior Note, the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands or any political
subdivision or taxing authority thereof or therein, including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident
thereof or being or having been present or engaged in trade or business
therein or having or having had a
4
<PAGE>
permanent establishment therein or (ii) the presentation of this Senior
Note (where presentation is required) for payment on a date more than 30
days after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for, whichever occurs later,
except to the extent that the Holder would have been entitled to Additional
Amounts had this Senior Note been presented on the last day of such period
of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note, with a timely request of the Company addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change of Control Payment or interest with
respect to a Senior Note or withholding from the proceeds of a sale or
exchange of a Senior Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount,
redemption amount, Change of Control Payment or interest with respect to a
Senior Note, if such payment can be made, and is in fact made, without such
withholding by any other Paying Agent located inside the United States;
(f) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of a Senior Note to the extent that
the beneficial owner would not have been entitled to the payment of any
such Additional Amounts had the beneficial owner directly held the Senior
Note;
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the Holder of this
Senior Note. All references to principal amount or interest on the Senior Notes
in the Indenture or the Senior Notes shall include any Additional Amounts
payable to the Company pursuant to this Section 2.
3. Method of Payment. The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered Holders of Senior
Notes at the close of business on the record date for the next interest payment
date even though Senior Notes are canceled after the record date and on or
before the interest payment date. Holders must surrender Senior Notes to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium, if any, and interest in money of the United Kingdom that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal, premium, if any, and interest by check
payable
5
<PAGE>
in such money. It may mail an interest check to a holder's registered address.
If a Holder so requests, principal, premium, if any, and interest may be paid by
wire transfer of immediately available funds to an account previously specified
in writing by such Holder to the Company and the Trustee.
4. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York and in London, England. Banque Internationale
a Luxembourg S.A. will act as Paying Agent and Registrar in Luxembourg as long
as the Senior Notes are listed on the Luxembourg Stock Exchange. The Company may
change any Paying Agent or Registrar without prior notice. The Company or any of
its Affiliates may act in any such capacity.
5. Indenture. The Company issued the Senior Notes under an indenture, dated
as of March 13, 1998 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the Senior Notes include those stated
in the Indenture and those made part of the Indenture by the Trust Indenture Act
of 1939 (15 U.S. Code (Sections) 77aaa-77bbbb) as in effect on the date of the
Indenture. The Senior Notes are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior Notes are
unsecured general obligations of the Company limited to 125,000,000 pounds
sterling in aggregate principal amount.
6. Optional Redemption. Except as provided in Section 7 herein, the Senior
Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
Year Percentage
2003 ........................... 104.750%
2004............................ 103.167%
2005............................ 101.583%
2006 and thereafter............. 100.000%
7. Optional Tax Redemption. (a) The Senior Notes may be redeemed at the
option of the Company, in whole but not in part, upon not less than 30 nor more
than 60 days notice, at any time at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest to the date fixed for redemption
if after the date on which Section 2 of this Senior Note becomes applicable (the
"Relevant Date") there has occurred any change in or amendment to the laws (or
any regulations or official rulings promulgated thereunder) of the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands (or any political subdivision or taxing authority thereof or therein),
or any change in or amendment to the official application or interpretation of
such laws, regulations or rulings (a "Change in Tax Law") which becomes
effective after the Relevant Date, as a result of which the Company is or would
be so required on the next succeeding Interest Payment Date to pay Additional
Amounts with respect to the Senior Notes as described under Section 2 hereof
with respect to withholding taxes imposed by the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands (or any
political subdivision or taxing authority thereof or therein) (a "Withholding
Tax') and such Withholding Tax is imposed at a rate that exceeds the rate (if
any) at which
6
<PAGE>
Withholding Tax was imposed on the Relevant Date, provided, however, that (i)
this paragraph shall not apply to the extent that, at the Relevant Date it was
known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after the
Relevant Date, (ii) no such notice of redemption may be given earlier than 90
days prior to the earliest date on which the Company would be obliged to pay
such Additional Amounts were a payment in respect of the Senior Notes then due,
(iii) at the time such notice of redemption is given, such obligation to pay
such Additional Amount remains in effect and (iv) the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Company.
(b) The Senior Notes may also be redeemed, in whole but not in part, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid interest to the date fixed for redemption if the Person formed after
the Relevant Date by a consolidation, amalgamation, reorganization or
reconstruction (or other similar arrangement) of the Company or the Person into
which the Company is merged after the Relevant Date or to which the Company
conveys, transfers or leases its properties and assets after the Relevant Date
substantially as an entirety (collectively, a "Subsequent Consolidation") is
required, as a consequence of such Subsequent Consolidation and as a consequence
of a Change in Tax Law in the United Kingdom, the Netherlands, the Netherlands
Antilles, Bermuda or the Cayman Islands occurring after the date of such
Subsequent Consolidation to pay Additional Amounts with respect to Senior Notes
with respect to Withholding Tax as described under Section 2 hereof and such
Withholding Tax is imposed at a rate that exceeds the rate (if any) at which
Withholding Tax was or would have been imposed on the date of such Subsequent
Consolidation, provided, however, that this paragraph shall not apply to the
extent that, at the date of such Subsequent Consolidation it was known or would
have been known had professional advice of a nationally recognized accounting
firm in the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda
or the Cayman Islands, as the case may be, been sought, that a Change in Tax Law
in the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands was to occur after such date.
The Company will also pay, or make available for payment, to Holders on the
Redemption Date any Additional Amounts (as described, but subject to the
exceptions referred to, in Section 2 hereof) resulting from the payment of such
Redemption Price.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of the
Senior Notes to be redeemed at his address of record. The Senior Notes in
denominations larger than 1,000 pounds sterling may be redeemed in part but only
in integral multiples of 1,000 pounds sterling. In the event of a redemption of
less than all of the Senior Notes, the Senior Notes will be chosen for
redemption by the Trustee in accordance with the Indenture. On and after the
redemption date, interest ceases to accrue on the Senior Notes or portions of
them called for redemption. If this Senior Note is redeemed subsequent to a
record date with respect to any interest payment date specified above and on or
prior to such interest payment date, then any accrued interest will be paid to
the Person in whose name this Senior Note is registered at the close of business
on such record date.
9. Mandatory Redemption. The Company will not be required to make mandatory
redemption or repurchase payments with respect to the Senior Notes. There are no
sinking fund payments with respect to the Senior Notes.
10. Repurchase at Option of Holder. (a) If there is a Change of Control
Triggering Event, the Company shall be required to offer to purchase on the
Purchase Date all outstanding Senior Notes at a
7
<PAGE>
purchase price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest to the Purchase Date. Holders of Senior Notes that
are subject to an offer to purchase will receive a Change of Control offer from
the Company prior to any related Purchase Date and may elect to have such Senior
Notes or portions thereof in authorized denominations purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
and when the aggregate amount of Excess Proceeds from such Asset Sales exceeds
$15 million, the Company shall be required to make an offer (an "Asset Sale
Offer") to all holders of the Senior Notes and Other Qualified Notes to purchase
the maximum principal amount of Senior Notes and other Qualified Notes
(determined on a pro rata basis according to the principal amount or accreted
value, as the case may be, of the Senior Notes and the Other Qualified Notes;
provided, however, that the asset sale offer must be made first to the holders
of the Applicable Notes) that may be purchased out of the Excess Proceeds, if
any, remaining after the consummation of an asset sale offer made to the holders
of the Applicable Notes with respect to the Senior Notes, at an offer price in
cash in an amount equal to 100% of the outstanding principal amount thereof plus
accrued and unpaid interest, if any, to the date fixed for the closing of such
offer. To the extent that the aggregate principal amount or accreted value, as
the case may be, of Senior Notes, Applicable Notes and Other Qualified Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use such deficiency for general corporate purposes. If the aggregate
principal amount or accreted value, as the case may be, of Senior Notes and
Other Qualified Notes surrendered by holders thereof exceeds the amount of
Excess Proceeds, if any, remaining after the consummation of an asset sale offer
made to the holders of the Applicable Notes, then any remaining Excess Proceeds
will be allocated pro rata according to principal amount or accreted value, as
the case may be, to the Senior Notes and each issue of the Other Qualified Notes
and, the Trustee will select the Senior Notes to be purchased in accordance with
Section 3.09(e) of the Indenture. Upon completion of such offer to purchase, the
amount of Excess Proceeds will be reset at zero.
11. Denominations, Transfer, Exchange. The Senior Notes are in registered
form, without coupons, in denominations of 1,000 pounds sterling and integral
multiples of 1,000 pounds sterling. The transfer of Senior Notes may be
registered, and Senior Notes may be exchanged, as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Senior Note or portion of a Senior Note selected for
redemption (except the unredeemed portion of any Senior Note being redeemed in
part). Also, it need not exchange or register the transfer of any Senior Note
for a period of 15 days before a selection of Senior Notes to be redeemed.
12. Persons Deemed Owners. Except as provided in paragraph 3 of this Senior
Note, the registered Holder of a Senior Note may be treated as its owner for all
purposes.
13. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of Senior
Notes entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
14. Defaults and Remedies. The Senior Notes shall have the Events of
Default as set forth in Section 6.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the then outstanding Senior Notes by notice to the Company
and the
8
<PAGE>
Trustee may declare all the Senior Notes to be due and payable immediately,
except that in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all unpaid principal and interest accrued on the
Senior Notes shall become due and payable immediately without further action or
notice. The Holders of a majority in principal amount of the Senior Notes then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration. Holders may not enforce the Indenture or the Senior Notes as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Senior Notes issued under the
Indenture may direct the Trustee in its exercise of any trust or power. The
Company must furnish annually compliance certificates to the Trustee. The above
description of Events of Default and remedies is qualified by reference, and
subject in its entirety, to the more complete description thereof contained in
the Indenture.
15. Amendments, Supplements and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Senior Notes. Without the consent of any Holder, the Indenture or
the Senior Notes may be amended among other things, to cure any ambiguity,
defect or inconsistency, to provide for assumption of the Company's obligations
to Holders, to make any change that does not adversely affect the rights of any
Holder or to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
16. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other things, engage in
certain transactions with Affiliates, incur additional Indebtedness and make
payments in respect of Capital Stock. The limitations are subject to a number of
important qualifications and exceptions.
17. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity may become the owner or pledgee of the Senior Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not Trustee, subject to certain limitations provided for in
the Indenture and in the TIA. Any Agent may do the same with like rights.
18. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE SENIOR NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
20. Authentication. The Senior Notes shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
9
<PAGE>
21. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and UGMA (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder of the Senior Notes upon written
request and without charge a copy of the Indenture. Request may be made to:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
General Counsel
10
<PAGE>
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
(I) or (we) assign and transfer this Senior Note to
_____________________ (Insert assignee's social security or tax I.D. no.)
______________________________________
______________________________________
_____________________ (Print or type assignee's name, address and zip code)
and irrevocably appoint __________________________________________ agent to
transfer this Senior Note on the books of the Company. The agent may substitute
another to act for him.
Your Signature:________________________________________
(Sign exactly as your name appears
on the other side of this Senior Note)
Date: __________________
Signature Guarantee: **/ ______________________________
_________________________
**/ Signature must be guaranteed by a commercial Bank, trust company or member
of the New York Stock Exchange.
11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note or a portion thereof
repurchased by the Company pursuant to Section 3.09, 4.10 or 4.13 of the
Indenture, check the box: |_|
If the purchase is in part, indicate the portion (in denominations of 1,000
pounds sterling or any integral multiple thereof) to be purchased:
_____________________
Your Signature: _____________________________________________
(Sign exactly as your name appears on the
other side of this Senior Note)
Date: ________________________
Signature Guarantee:***
_____________________
*** Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
12
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
__________________ pounds sterling. The following increases or decreases in the
principal amount of this Global Note have been made:
================================================================================
Amount of Amount of Principal Signature of Date of
decrease in increase in amount of authorized exchange
principal principal this Global officer of following such
amount of this amount of this Note Trustee or decrease or
Global Note Global Note Notes Custodian increase
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to (Section) 2.06(a)(ii)
of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-1/2% Senior Notes
Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held in the form of the [Rule 144A Global Note (CUSIP No.
)] with the Depositary in the name of [name of transferor] (the "Transferor") to
effect the transfer of the Senior Notes in exchange for an equivalent beneficial
interest in the Regulation S Global Notes.
In connection with such request, the Transferor does hereby certify that
such transfer has been effected in accordance with the transfer restrictions set
forth in the Senior Notes and (i) with respect to transfers made in reliance on
Regulation S, does hereby certify that:
(1) the offer of the Senior Notes was not made to a Person in the
United States;
(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor any
Person acting on its behalf knows that the transaction was pre-arranged
with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933, as
amended (the "Securities Act");
and (ii) with respect to transfers made in reliance on Rule 144 does hereby
certify that the Senior Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act; and (iii) with respect to transfers made
in reliance on Rule 144A, does hereby certify that such Senior Notes are being
transferred in accordance with Rule 144A under the Securities Act to a
transferee that the Transferor reasonably believes is purchasing the Senior
Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion and the transferee and any such account is
a "qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the
<PAGE>
requirements of Rule 144A and in accordance with applicable securities laws of
any state of the United States or any other jurisdiction.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the
case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Capitalized terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S.
[Name of Transferor]
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
2
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to (Section) 2.06(a)(iii)
of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-1/2% Senior Notes
Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held in the form of the Regulation S Global Note (CINS
No. [ ]) with the Depositary in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Senior Notes in exchange for an
equivalent beneficial interest in the Rule 144A Global Note.
In connection with such request, and in respect of such Senior Notes the
Transferor does hereby certify that such Senior Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Senior Notes and
(ii) Rule 144A under the United States Securities Act of 1933, as amended, to a
transferee that the Transferor reasonably believes is purchasing the Senior
Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion and the transferee and any such account is
a "qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
[Name of Transferor],
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to (Section) 2.06(a)(iv)
or (Section) 2.06(a)(v) of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-1/2% Senior Notes
Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held [in the form of the [Rule 144A/Regulation S]
[Global] [Restricted] Note (CUSIP No. [ ] CINS No. [ ]) with the Depositary in
the name of [name of transferor] (the "Transferor") to effect the transfer of
the Senior Notes.
In connection with such request, and in respect of such Senior Notes, the
Transferor does hereby certify that such Senior Notes are being transferred (i)
in accordance with the transfer restrictions set forth in the Senior Notes and
(ii) in accordance with applicable securities laws of any state of the United
States or any other jurisdiction.
*Insert, if appropriate.
[Name of Transferor],
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
<PAGE>
EXHIBIT F
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-1/2% Senior Notes
Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13,1998 (the
"Indenture), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held [in the form of the [Rule 144/Regulation S]
[Restricted] [Global] Note (CUSIP No. [ ] CINS No. [ ]) with the Depositary * *
in the name of [name of transferor] (the "Transferor") to effect the transfer of
the Senior Notes to the undersigned.
In connection with such request, and in respect of such Senior Notes we
confirm that:
1. We understand that the Senior Notes were originally offered in a
transaction not involving any public offering in the United States within the
meaning of the United States Securities Act of 1933, as amended (the "Securities
Act"), that the Senior Notes have not been registered under the Securities Act
and that (A) the Senior Notes may be offered, resold, pledged or otherwise
transferred only (i) to a Person who the seller reasonably believes is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, in a transaction
meeting the requirements of Rule 144 under the Securities Act, to a Person who
the seller reasonably believes is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act), outside the United States in a transaction meeting the requirements of
Rule 903 or 904 of Regulation S under the Securities Act or in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (ii) to the
Company, (iii) pursuant to any other available exemption from registration or
(iv) pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction and (B) the purchaser will, and each
subsequent Holder is required to, notify any subsequent purchaser from it of the
resale restrictions set forth in (A) above.
2. We are a corporation, partnership or other entity having such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Senior Notes, and we are (or any
account for which we are purchasing under paragraph 4 below is) an
_____________________
* Insert and modify if appropriate
<PAGE>
institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act, able to bear the economic risk of our proposed
investment in the Notes.
3. We are acquiring the Senior Notes for our own account (or for accounts
as to which we exercise sole investment discretion and have authority to make,
and do make, the statements contained in this letter) and not with a view to any
distribution of the Senior Notes, subject, nevertheless, to the understanding
that the disposition of our property shall at all times be and remain within our
control.
4. We are, and each account (if any) for which we are purchasing Senior
Notes is, purchasing Senior Notes having an aggregate principal amount of not
less than 100,000 pounds sterling.
5. We understand that (a) the Senior Notes will be delivered to us in
registered form only and that the certificate delivered to us in respect of the
Senior Notes will bear a legend substantially to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS PRIOR TO
THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE
903(c)(2) OF REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE THAT MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, (4) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (4) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM.
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
2
<PAGE>
6. We agree that in the event that at some future time we wish to dispose
of any of the Senior Notes, we will not do so unless:
(a) the Senior Notes are sold to the Company;
(b) the Senior Notes are sold to a qualified institutional buyer in
compliance with Rule 144A under the Securities Act;
(c) the Senior Notes are sold outside the United States in compliance
with Rule 903 or Rule 904 under the Securities Act;
(d) the Senior Notes are sold pursuant to an effective registration
statement under the Securities Act; or
(e) the Senior Notes are sold pursuant to any other available
exemption from registration, subject to the requirements of the legend set
forth above.
Very truly yours,
[PURCHASER]
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
3
<PAGE>
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S GLOBAL NOTE FOR
RESTRICTED NOTES
(Transfers pursuant to (Section) 2.06(a)(viii))
(Transferor)
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-1/2% Senior Notes
Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This certificate relates to [ ] pounds sterling aggregate principal amount
of Senior Notes which are held in the form of the Regulation S Global Note (CINS
No. [ ]) with the Depositary in the name of [name of transferor] (the
"Transferor") to effect the transfer of the beneficial interest in such
Regulation S Global Note for a beneficial interest in an equivalent aggregate
principal amount of Restricted Securities.
In connection with such request, and in respect of such Senior Notes, we
confirm that:
We are either not a U.S. Person (as defined below) or we have purchased our
beneficial interest in the above referenced Regulation S Global Note in a
transaction that is exempt from the registration requirements under the
Securities Act.
We are delivering this certificate in connection with obtaining a
beneficial interest in Restricted Securities in exchange for our beneficial
interest in the Regulation S Global Note.
For purposes of this certificate, "U.S. Person" means (i) any individual
resident in the United States, (ii) any partnership or corporation organized or
incorporated under the laws of the United States, (iii) any estate of which an
executor or administrator is a U.S. Person (other than an estate governed by
foreign law and of which at least one executor or administrator is a non-U.S.
Person who has sole or shared investment discretion with respect to its assets),
(iv) any trust of which any trustee is a U.S. Person (other than a trust of
which at least one trustee is a non-U.S. Person who has sole or shared
investment discretion with respect to its assets and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. Person), (v) any agency or
branch of a foreign entity located in the United States, (vi) any non-
discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a U.S. Person, (vii) any
discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated or (if an individual) resident
in the United States (other than such an account held for the benefit or account
of a non-U.S. Person), (viii) any partnership or corporation organized or
incorporated under the laws of a foreign jurisdiction and formed by a U.S.
Person principally for the purpose of investing in securities not registered
under the Securities Act (unless it is organized or incorporated, and owned, by
accredited investors within the
<PAGE>
meaning of Rule 501(a) under the Securities Act who are not natural Persons,
estates or trusts); provided, however, that the term "U.S. Person" shall not
include (A) a branch or agency of a U.S. Person that is located and operating
outside the United States for valid business purposes as a locally regulated
branch or agency engaged in the banking or insurance business, (B) any employee
benefit plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a copy hereof
to any interested party in any administrative or other proceedings with respect
to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:___________________________
Name:
Title:
Dated: To be completed by the account
Holder as, or as agent for, the
beneficial owner(s) of the Senior
Notes to which this certificate
relates.
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
2
EXHIBIT 4.11
EXECUTION COPY
================================================================================
NTL INCORPORATED
$1,300,000,000
9-3/4% SENIOR DEFERRED COUPON NOTES DUE 2008
-----------------------------------------
INDENTURE
Dated as of March 13, 1998
-----------------------------------------
------------------------
The Chase Manhattan Bank
Trustee
------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I......................................................................1
Section 1.01. Definitions...................................................1
Section 1.02. Other Definitions............................................14
Section 1.03. Incorporation by Reference of Trust Indenture Act............15
Section 1.04. Rules of Construction........................................15
ARTICLE II. THE NOTES.........................................................16
Section 2.01. Form and Dating..............................................16
Section 2.02. Execution and Authentication.................................18
Section 2.03. Registrar and Paying Agent...................................18
Section 2.04. Paying Agent to Hold Money in Trust..........................19
Section 2.05. Holder Lists.................................................19
Section 2.06. Transfer and Exchange........................................19
Section 2.07. Replacement Notes............................................23
Section 2.08. Outstanding Notes............................................24
Section 2.09. Treasury Notes...............................................24
Section 2.10. Temporary Notes; Global Notes................................24
Section 2.11. Cancellation.................................................25
Section 2.12. Defaulted Interest...........................................25
ARTICLE III. REDEMPTION.......................................................25
Section 3.01. Notices to Trustee...........................................25
Section 3.02. Selection of Notes to Be Redeemed............................26
Section 3.03. Notice of Redemption.........................................26
Section 3.04. Effect of Notice of Redemption...............................27
Section 3.05. Deposit of Redemption Price..................................27
Section 3.06. Notes Redeemed in Part.......................................27
Section 3.07. Optional Redemption and Optional Tax Redemption..............27
Section 3.08. Mandatory Redemption.........................................27
Section 3.09. Asset Sale Offer and Purchase Offer..........................27
ARTICLE IV. COVENANTS.........................................................30
Section 4.01. Payment of Notes.............................................30
Section 4.02. Reports......................................................30
Section 4.03. Compliance Certificate.......................................31
Section 4.04. Stay, Extension and Usury Laws...............................31
Section 4.05. Corporate Existence..........................................32
Section 4.06. Taxes........................................................32
Section 4.07. Limitations on Liens.........................................32
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock...32
Section 4.09. Restricted Payments..........................................35
i
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Section 4.10. Asset Sales..................................................37
Section 4.11. Transactions with Affiliates.................................40
Section 4.12. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries....................................41
Section 4.13. Change of Control............................................43
Section 4.14. Payment of Additional Amounts................................43
ARTICLE V. SUCCESSORS.........................................................44
Section 5.01. Merger, Consolidation or Sale of Assets......................44
Section 5.02. Successor Corporation Substituted............................44
ARTICLE VI. DEFAULTS AND REMEDIES.............................................45
Section 6.01. Events of Default............................................45
Section 6.02. Acceleration.................................................46
Section 6.03. Other Remedies...............................................47
Section 6.04. Waiver of Past Defaults......................................48
Section 6.05. Control by majority..........................................48
Section 6.06. Limitation on Suits..........................................48
Section 6.07. Rights of Holders to Receive Payment.........................48
Section 6.08. Collection Suit by Trustee...................................49
Section 6.09. Trustee May File Proofs of Claim.............................49
Section 6.10. Priorities...................................................49
Section 6.11. Undertaking for Costs........................................49
ARTICLE VII. TRUSTEE..........................................................50
Section 7.01. Duties of Trustee............................................50
Section 7.02. Rights of Trustee............................................50
Section 7.03. Individual Rights of Trustee.................................51
Section 7.04. Trustee's Disclaimer.........................................51
Section 7.05. Notice of Defaults...........................................51
Section 7.06. Reports by Trustee to Holders................................51
Section 7.07. Compensation and Indemnity...................................52
Section 7.08. Replacement of Trustee.......................................52
Section 7.09. Successor Trustee by Merger, Etc.............................53
Section 7.10. Eligibility; Disqualification................................53
Section 7.11. Preferential Collection of Claims Against Company............54
ARTICLE VIII. DISCHARGE OF INDENTURE..........................................54
Section 8.01. Termination of Company's Obligations.........................54
Section 8.02. Option to Effect Defeasance..................................54
Section 8.03. Application of Trust Money...................................56
Section 8.04. Repayment to Company.........................................56
Section 8.05. Reinstatement................................................56
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS...............................57
Section 9.01. Without Consent of Holders...................................57
Section 9.02. With Consent of Holders......................................57
Section 9.03. Compliance with Trust Indenture Act..........................58
Section 9.04. Revocation and Effect of Consents............................58
Section 9.05. Notation on or Exchange of Notes.............................59
Section 9.06. Trustee Protected............................................59
ii
<PAGE>
ARTICLE X. MISCELLANEOUS......................................................59
Section 10.01. Trust Indenture Act Controls...............................59
Section 10.02. Notices....................................................59
Section 10.03. Communication by Holders with Other Holders................60
Section 10.04. Certificate and Opinion as to Conditions Precedent.........60
Section 10.05. Statements Required in Certificate or Opinion..............60
Section 10.06. Rules by Trustee and Agents................................60
Section 10.07. Legal Holidays.............................................61
Section 10.08. No Recourse Against Others.................................61
Section 10.09. Counterparts and Facsimile Signatures......................61
Section 10.10. Variable Provisions........................................61
Section 10.11. Governing Law..............................................62
Section 10.12. No Adverse Interpretation of Other Agreements..............62
Section 10.13. Successors.................................................62
Section 10.14. Severability...............................................62
Section 10.15. Table of Contents, Headings, Etc...........................62
iii
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
310 (a)(1)..............................................................7.10
(a)(2) .................................................................7.10
(a)(3)..................................................................N.A.
(a)(4)..................................................................N.A.
(a)(5)..................................................................7.10
(b).....................................................................7.08,
7.10
(c).....................................................................N.A.
311(a)..................................................................7.11
(b).....................................................................7.11
(c).....................................................................N.A.
312 (a).................................................................2.05
(b).....................................................................10.03
(c).....................................................................10.03
313(a)..................................................................7.06
(b)(1)..................................................................N.A.
(b)(2)..................................................................7.06
(c).....................................................................7.06
(d).....................................................................7.06
314(a)..................................................................4.02,
4.03
(b).....................................................................N.A.
(c)(1)..................................................................10.04
(c)(2)..................................................................10.04
(c)(3)..................................................................N.A.
(d).....................................................................N.A.
(e).....................................................................N.A.
(f).....................................................................N.A.
315(a)..................................................................7.01(b)
(b).....................................................................7.05
(c) ....................................................................7.01(a)
(d).....................................................................7.01(c)
(e).....................................................................6.11
316 (a)(last sentence)..................................................2.09
(a)(1)(A)...............................................................6.05
(a)(1)(B)...............................................................6.04
(a)(2)..................................................................N.A.
(b).....................................................................6.07
iv
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(c).....................................................................9.04
317 (a)(1)..............................................................6.08
(a)(2)..................................................................6.09
(b).....................................................................2.04
318 (a).................................................................N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
v
<PAGE>
INDENTURE, dated as of March 13, 1998, between NTL Incorporated, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, a New York
corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders (as defined in Section 1.01) of the
Company's 9-3/4% Senior Deferred Coupon Notes Due 2008 (the "Initial Notes")
and, if and when issued in exchange for Initial Notes, the Company's 9-3/4%
Series B Senior Deferred Coupon Notes Due 2008 (the "Exchange Notes" and,
together with the Initial Notes, the "Notes"):
ARTICLE I.
SECTION 1.01. DEFINITIONS.
"10% Notes" means the Company's 10% Series B Senior Notes Due 2007.
"11-1/2% Notes" means the Company's 11-1/2% Series B Senior Deferred Coupon
Notes Due 2006.
"12-3/4% Notes" means the Company's 12-3/4% Series A Senior Deferred Coupon
Notes Due 2005.
"Accreted Value" means, as of any date of determination prior to April 1,
2003, with respect to any Note, the sum of (a) the initial offering price (which
is $617.24 per $1,000 principal amount at maturity of the Notes) of such Note
and (b) the portion of the excess of the principal amount of such Note over such
initial offering price which shall have been accreted thereon through such date,
such amount to be so accreted on a daily basis at a rate of 9.75% per annum of
the initial offering price of a Note, compounded semiannually on each April 1
and October 1 from the date of issuance of the Notes through the date of
determination, computed on the basis of a 360-day year of twelve 30-day months.
"Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person (the "Acquired Person") existing at the time such Acquired
Person merged with or into or became a Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
Acquired Person merging with or into or becoming a Subsidiary of such specified
Person.
"Acquired Person" has the meaning specified in the definition of Acquired
Debt.
"Adjusted Total Assets" means the total amount of assets of the Company and
its Restricted Subsidiaries (including the amount of any Investment in any
Non-Restricted Subsidiary), except to the extent resulting from write-ups of
assets (other than write-ups in connection with accounting for acquisitions in
conformity with GAAP), after deducting therefrom (i) all current liabilities of
the Company and its Restricted Subsidiaries, and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as calculated in conformity with GAAP. For purposes of this
Adjusted Total Assets definition, (a) assets shall be calculated less applicable
accumulated depreciation, accumulated amortization and other valuation reserves,
and (b) all calculations shall exclude all intercompany items.
"Adjusted Total Controlled Assets" means the total amount of assets of the
Company and its Cable Controlled Subsidiaries, except to the extent resulting
from write-ups of assets (other than write-
<PAGE>
ups in connection with accounting for acquisitions in conformity with GAAP),
after deducting therefrom (i) all current liabilities of the Company and such
Cable Controlled Subsidiaries; and (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles of the
Company and such Restricted Subsidiaries, all as calculated in conformity with
GAAP; provided that Adjusted Total Controlled Assets shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount equal to the
aggregate amount of all Investments of the Company or any such Cable Controlled
Subsidiaries in any Person other than a Cable Controlled Subsidiary, except Cash
Equivalents. For purposes of this Adjusted Total Controlled Assets definition,
(a) assets shall be calculated less applicable accumulated depreciation,
accumulated amortization and other valuation reserves, and (b) all calculations
shall exclude all intercompany items.
"Affiliate" of any specified Person means any other Person directly
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar or Paying Agent.
"Annualized Pro Forma EBITDA" means, with respect to any Person, such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Applicable Notes" means the Company's 10 7/8% Senior Deferred Coupon Notes
Due 2003.
"Asset Sale" means (i) any sale, lease, transfer, conveyance or other
disposition of any assets (including by way of a sale-and-leaseback) other than
the sale or transfer of inventory or goods held for sale in the ordinary course
of business (provided that the sale, lease, transfer, conveyance or other
disposition of all or substantially all of the assets of the Company shall be
governed by Section 4.13 or 5.01 hereof) or (ii) any issuance, sale, lease,
transfer, conveyance or other disposition of any Equity Interests of any of the
Company's Restricted Subsidiaries to any Person; in either case other than (A)
to (w) the Company, (x) any Wholly Owned Subsidiary, or (y) any Subsidiary which
is a Subsidiary of the Company on the Issuance Date provided that at the time of
and after giving effect to such issuance, sale, lease, transfer, conveyance or
other disposition to such Subsidiary, the Company's ownership percentage in such
Subsidiary is equal to or greater than such percentage on the Issuance Date or
(B) the issuance, sale, transfer, conveyance or other disposition of Equity
Interests of a Subsidiary in exchange for capital contributions made on a pro
rata basis by the holders of the Equity Interests of such Subsidiary.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Business Day" means any day that is not a Legal Holiday.
2
<PAGE>
"Cable Assets" means tangible or intangible assets, licenses (including,
without limitation, Licenses) and computer software used in connection with a
Cable Business.
"Cable Business" means (i) any Person directly or indirectly operating, or
owning a license to operate, a cable and/or television and/or telephone and/or
telecommunications system or service principally within the United Kingdom
and/or the Republic of Ireland and (ii) any Cable Related Business.
"Cable Controlled Property" means a Cable Controlled Subsidiary or a Cable
Asset held by a Cable Controlled Subsidiary.
"Cable Controlled Subsidiary" means any Restricted Subsidiary that is
primarily engaged, directly or indirectly, in one or more Cable Businesses.
"Cable Related Business" means a Person which directly or indirectly owns
or provides a service or product used in a Cable Business, including, without
limitation, any television programming, production and/or licensing business or
any programming guide or telephone directory business or content or software
related thereto.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Capital Stock Sale Proceeds" means the aggregate net sale proceeds
(including from the sale of any property received for the Capital Stock or the
fair market value of such property, as determined by an independent appraisal
firm) received by the Company or any Subsidiary of the Company from the issue or
sale (other than to a Subsidiary) by the Company of any class of its Capital
Stock after October 14, 1993 (including Capital Stock of the Company issued
after October 14, 1993 upon conversion of or in exchange for other securities of
the Company).
"Cash Equivalents" means (i) Permitted Currency, (ii) securities issued or
directly and fully guaranteed or insured by the United States government, a
European Union member government or any agency or instrumentality thereof having
maturities of not more than six months and one day from the date of acquisition,
(iii) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any commercial bank(s) domiciled in the United States, the United Kingdom,
the Republic of Ireland or any other European Union member having capital and
surplus in excess of $500 million, (iv) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated P-1
or the equivalent thereof by Moody's or A-1 or the equivalent thereof by S & P
and in each case maturing within six months and one day after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i)-(v) of this
definition.
"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of the Company to any "Person" or "group"
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the
3
<PAGE>
Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act) (other
than any Permitted Holder), (ii) the approval by the requisite stockholders of
the Company of a plan of liquidation or dissolution of the Company, (iii) any
"Person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d- 5(b)(1) under the Exchange Act),
other than any Permitted Holder, becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of
all classes of the voting stock of the Company and/or warrants or options to
acquire such voting stock, calculated on a fully diluted basis, unless, as a
result of such transaction, the ultimate direct or indirect ownership of the
Company is substantially the same immediately after such transaction as it was
immediately prior to such transaction, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Company's Board of Directors (together with any new directors whose election
or appointment by such board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Company's Board
of Directors then in office.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Ratings Decline.
"Company" means the party named as such above until a successor replaces it
in accordance with Article V and thereafter means the successor.
"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, Restricted Subsidiary
Preferred Stock Dividends and the interest component of rentals in respect of
any capital lease obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such Person and its Subsidiaries (other than
Non-Restricted Subsidiaries) during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
capital lease obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
capital lease obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
(other than Non-Restricted Subsidiaries) for such period, on a consolidated
basis, determined in accordance with GAAP; provided that (i) the Net Income of
any Person that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid to the referent Person or a Wholly Owned
Subsidiary, (ii) the Net Income of any Person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having ordinary voting
power for the election of
4
<PAGE>
directors or other governing body of such Subsidiary is owned by the referent
Person directly or indirectly through one or more Subsidiaries) shall be
included only to the extent of the amount of dividends or distributions paid to
the referent Person or a Wholly Owned Subsidiary, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iv) the cumulative effect of
a change in accounting principles shall be excluded.
"Convertible Subordinated Notes" means the Company's 7-1/4% Convertible
Subordinated Notes issued pursuant to an indenture dated as of April 20, 1995,
between the Company and The Chase Manhattan Bank (formerly known as Chemical
Bank), as trustee, and the Company's 7% Convertible Subordinated Notes issued
pursuant to an indenture dated as of June 12, 1996, between the Company and The
Chase Manhattan Bank (formerly known as Chemical Bank), as trustee.
"Credit Facility" means the Facilities Agreement, dated October 17, 1997,
between NTL (UK) Group Inc., as principal guarantor, Chase Manhattan plc, as
arranger, Chase Manhattan International Limited, as agent and security trustee
and the Chase Manhattan Bank as issuer, as such Facilities Agreement may be
supplemented, amended, restated, modified, renewed, refunded, replaced or
refinanced, in whole or in part, from time to time in an aggregate outstanding
principal amount not to exceed the greater of (i) 555 million pounds sterling
and (ii) the amount of the aggregate commitments thereunder as the same may be
increased after the date of the Indenture as contemplated by the Facilities
Agreement as amended or supplemented to the date of the Indenture, but in no
event greater than 875 million pounds sterling, less in each case, the aggregate
amount of all Net Proceeds of Asset Sales that have been applied to permanently
reduce Indebtedness under the Credit Facility pursuant Section 4.10 hereof.
Indebtedness that may otherwise be incurred under this Indenture may, but need
not, be incurred under the Credit Facility without regard to the limit set forth
in the preceding sentence. Indebtedness outstanding under the Credit Facility on
the date hereof shall be deemed to have been incurred on such date in reliance
on the exception provided by Section 4.08(b)(i).
"Cumulative EBITDA" means the cumulative EBITDA of the Company from and
after the Issuance Date 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; provided, however, that EBITDA of Non-Restricted Subsidiaries
shall not be included.
"Cumulative Interest Expense" means the aggregate amount of Consolidated
Interest Expense paid, accrued or scheduled to be paid or accrued by the Company
from the Issuance Date 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 that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Depositary" shall mean The Depository Trust Company, its nominees and
their respective successors.
5
<PAGE>
"Disqualified Stock" means 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 the date
on which the Notes mature.
"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 item reducing
Consolidated Net Income for such period (excluding any such non-cash item to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
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.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any Indebtedness that is
convertible into, or exchangeable for Capital Stock).
"European Union member" means any country that is or becomes a member of
the European Union or any successor organization thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Rate Contract" means, with respect to any Person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, the principal purpose of
which is to provide protection against fluctuations in currency exchange rates.
An Exchange Rate Contract may also include an Interest Rate Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the Issuance Date, until such amounts are repaid,
including, without limitation, the Existing Notes.
"Existing Notes" means the Old Notes and the Convertible Subordinated
Notes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date and are applied on a consistent basis.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without
6
<PAGE>
limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness.
"Holder" means a Person in whose name a Note is registered in the register
referred to in Section 2.03.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
and also includes, to the extent not otherwise included, the Guarantee of items
which would be included within this definition. The amount of any Indebtedness
outstanding as of any date shall be the accreted value thereof, in the case of
any Indebtedness issued with original issue discount
"Indenture" means this Indenture, as amended from time to time.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International, Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co. International Limited, BT Alex. Brown
Incorporated, BT Alex. Brown International, Division of Bankers Trust
International PLC, Chase Securities Inc., Salomon Brothers Inc and Salomon
Brothers International Limited.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
similar agreement, the principal purpose of which is to protect the party
indicated therein against fluctuations in interest rates.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's. In the event that the
Company shall be permitted to select any other Rating Agency, the equivalent of
such ratings by such Rating Agency shall be used.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar advances and loans, joint property ownership and other arrangements, in
each case, made to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the date on which the Notes are first authenticated
and issued.
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"License" means any license issued or awarded pursuant to the Broadcasting
Act 1990, the Cable and Broadcasting Act 1984, the Telecommunications Act 1984
or the Wireless Telegraphy Act 1948 (in each case, as such Acts may, from time
to time, be amended, modified or re-enacted) (or equivalent statutes of any
jurisdiction) to operate or own a Cable Business.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent or successor statutes) of any
jurisdiction).
"Long Distance/Microwave Assets" means any assets, tangible or intangible,
choate or inchoate, primarily used in the business conducted by OCOM Corporation
in the United States as of the Issuance Date.
"Material License" means a License held by the Company or any of its
Subsidiaries which License at the time of determination covers a number of Net
Households which equals or exceeds 5% of the aggregate number of Net Households
covered by all of the Licenses held by the Company and its Subsidiaries at such
time.
"Material Subsidiary" means (i) NTL UK Group, Inc. (formerly known as OCOM
Sub II, Inc.), NTL Investment Holdings Limited, NTL Group Limited, CableTel
Surrey Limited, CableTel Cardiff Limited, CableTel Glasgow, CableTel Newport and
CableTel Kirklees and (ii) any other Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof).
"Monetize" means a strategy with respect to Equity Interests that generates
an amount of cash equal to the fair value of such Equity Interests.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Households" means the product of (i) the number of households covered
by a License in the United Kingdom and (ii) the percentage of the entity holding
such License which is owned directly or indirectly by the Company.
"Net Income" means, with respect to any Person for a specific period, the
net income (loss) of such Person during such period, determined in accordance
with GAAP, excluding, however, any gain (but not loss) during such period,
together with any related provision for taxes on such gain (but not loss),
realized during such period in connection with any Asset Sale (including,
without limitation, dispositions pursuant to sale-and-leaseback transactions),
and excluding any extraordinary gain (but not loss) during such period, together
with any related provision for taxes on such extraordinary gain (but not loss).
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"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets.
"Non-Controlled Subsidiary" means an entity which is not a Cable Controlled
Subsidiary.
"Non-Recourse Debt" means Indebtedness or that portion of Indebtedness as
to which none of the Company, nor any Restricted Subsidiary: (i) provides credit
support (including any undertaking, agreement or instrument which would
constitute Indebtedness); (ii) is directly or indirectly liable; or (iii)
constitutes the lender.
"Non-Restricted Subsidiary" means (A) a Subsidiary that (a) at the time of
its designation by the Board of Directors as a Non-Restricted Subsidiary has not
acquired any assets (other than as specifically permitted by clause (e) of
"Permitted Investments" or Section 4.09 hereof), at any previous time, directly
or indirectly from the Company or any of its Restricted Subsidiaries, (b) has no
Indebtedness other than Non-Recourse Debt and (c) that at the time of such
designation, after giving pro forma effect to such designation, the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company is equal to or less
than the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding such designation, provided, however, that if the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company immediately preceding
such designation is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio immediately
preceding such designation; (B) any Subsidiary which (a) has been acquired or
capitalized out of or by Equity Interests (other than Disqualified Stock) of the
Company or Capital Stock Sale Proceeds therefrom, (b) has no Indebtedness other
than Non-Recourse Debt and (c) is designated as a Non-Restricted Subsidiary by
the Board of Directors or is merged, amalgamated or consolidated with or into,
or its assets or capital stock is to be transferred to, a Non-Restricted
Subsidiary; or (C) any Subsidiary of a Non-Restricted Subsidiary.
"Notes" has the meaning set forth in the preamble hereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the President, the Treasurer or a Vice
President of the Company. See Sections 10.04 and 10.05 hereof.
"Old Notes" means the Applicable Notes, the 12-3/4% Notes, the 11-1/2%
Notes and the 10% Notes.
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"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 10.04 and 10.05 hereof.
"Other Qualified Notes" means any outstanding senior indebtedness of the
Company issued pursuant to an indenture having a provision substantially similar
to Section 4.10 hereof (including, without limitation, the 12 -3/4% Notes, the
11 -1/2% Notes and the 10% Notes).
"Permitted Acquired Debt" means, with respect to any Acquired Person
(including, for this purpose, any Non-Restricted Subsidiary at the time such
Non-Restricted Subsidiary becomes a Restricted Subsidiary), Acquired Debt of
such Acquired Person and its Subsidiaries in an amount (determined on a
consolidated basis) not exceeding the sum of (x) amount of the gross book value
of property, plant and equipment of the Acquired Person and its Subsidiaries as
set forth on the most recent consolidated balance sheet of the Acquired Person
(which may be unaudited) prior to the date it becomes an Acquired Person and (y)
the aggregate amount of any Cash Equivalents held by such Acquired Person at the
time it becomes an Acquired Person.
"Permitted Currency" means the lawful currency of the United States or a
European Union member.
"Permitted Designee" means (i) a spouse or a child of a Permitted Holder,
(ii) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder, (iii) in the event of the death or incompetence of a Permitted
Holder, his estate, heirs, executor, administrator, committee or other personal
representative or (iv) any Person so long as a Permitted Holder owns at least
50% of the voting power of all classes of the voting stock of such Person.
"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Permitted Investments" means (a) any Investments in the Company or in a
Cable Controlled Property or in a Qualified Subsidiary (including, without
limitation, (i) Guarantees of Indebtedness of the Company, a Cable Controlled
Subsidiary or a Qualified Subsidiary, (ii) Liens securing such Indebtedness or
Guarantees or (iii) the payment of any balance deferred and unpaid of the
purchase price of any Qualified Subsidiary); (b) any Investments in Cash
Equivalents; (c) Investments by the Company in Indebtedness of a counter-party
to an Exchange Rate Contract for hedging a Permitted Currency exchange risk that
are made, for purposes other than speculation, in connection with such contract
to hedge not more than the aggregate principal amount of the Indebtedness being
hedged (or, in the case of Indebtedness issued with original issue discount,
based on the amounts payable after the amortization of such discount); (d)
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Cable Controlled Subsidiary
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Subsidiary of the Company; and (e) any issuance,
transfer or other conveyance of Equity Interests (other than Disqualified Stock)
in the Company (or any Capital Stock Sale Proceeds therefrom) to a Subsidiary of
the Company.
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"Permitted Liens" means (a) Liens in favor of the Company; (b) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided, that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not secure any property or assets of the Company or any of
its Subsidiaries other than the property or assets subject to the Liens prior to
such merger or consolidation; (c) 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 60
days past due or are being contested in good faith and by appropriate
proceedings; (d) Liens existing on the Issuance Date; (e) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor and (f) easements, rights of way, restrictions and other
similar easements, licenses, restrictions on the use of properties or minor
imperfections of title that, in the aggregate, are not material in amount, and
do not in any case materially detract from the properties subject thereto or
interfere with the ordinary conduct of the business of the Company or its
Restricted Subsidiaries.
"Permitted Non-Controlled Assets" means Equity Interests in any Person
primarily engaged, directly or indirectly, in one or more Cable Businesses if
such Equity Interests (x) were acquired by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale or any Investment otherwise
permitted under the terms of the Indenture and (y) to the extent that, after
giving pro forma effect to the acquisition thereof by the Company or any of its
Restricted Subsidiaries, Adjusted Total Controlled Assets is greater than 80% of
Adjusted Total Assets based on the most recent consolidated balance sheet of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Stock" means the 13% Senior Redeemable Exchangeable Preferred
Stock of the Company with an original aggregate liquidation preference of
$100,000,000.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP 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 (without giving
effect to clause (iii) of the definition of Consolidated Net Income); 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.
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"Purchase Agreement" means the Purchase Agreement, dated as of March 6,
1998, between the Company and the Initial Purchasers.
"Qualified Subsidiary" means a Wholly Owned Subsidiary, or an entity that
will become a Wholly Owned Subsidiary after giving effect to the transaction
being considered, that at the time of and after giving effect to the
consummation of the transaction under consideration, (i) is a Cable Business or
holds only Cable Assets, (ii) has no Indebtedness (other than Indebtedness being
incurred to consummate such transaction) and (iii) has no encumbrances or
restrictions (other than such encumbrances or restrictions imposed or permitted
by this Indenture, the indentures governing the Old Notes or any other
instrument governing unsecured indebtedness of the Company which is pari passu
with the Notes) on its ability to pay dividends or make any other distributions
to the Company or any of its Subsidiaries.
"Rating Agencies" means (i) S&P, (ii) Moody's and (iii) if S&P or Moody's
or both shall not make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Company, which shall be substituted for S&P or Moody's or both, as the case
may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories) and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining whether
the rating of the Notes has decreased by one or more gradations, gradations
within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the
equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB to BB-, as well as
from BB-to B+, will constitute a decrease of one gradation).
"Rating Date" means that date which is 90 days prior to the earlier of (x)
a Change of Control and (y) public notice of the occurrence of a Change of
Control or of the intention by the Company or any Permitted Holder to effect a
Change of Control.
"Ratings Decline" means the occurrence of any of the following events on,
or within six months after, the date of public notice of the occurrence of a
Change of Control or of the intention of the Company or any Person to effect a
Change of Control (which period shall be extended so long as the rating of any
of the Company's debt securities is under publicly announced consideration for
possible downgrade by any of the Rating Agencies): (a) in the event that any of
the Company's debt securities are rated by both of the Rating Agencies on the
Rating Date as Investment Grade, the rating of such securities by either of the
Rating Agencies shall be below Investment Grade, (b) in the event that any of
the Company's debt securities are rated by either, but not both, of the Rating
Agencies on the Rating Date as Investment Grade, the rating of such securities
by both of the Rating Agencies shall be below Investment Grade, or (c) in the
event any of the Company's debt securities are rated below Investment Grade by
both of the Rating Agencies on the Rating Date, the rating of such securities by
either Rating Agency shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating Categories).
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"Redeemable Dividend" means, for any dividend with regard to Disqualified
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 Disqualified Stock.
"Registered Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Notes, dated March 13, 1998, between the Company and the Initial
Purchasers party thereto.
"Replacement Assets" means (w) Cable Assets, (x) Equity Interests of any
Person engaged, directly or indirectly, primarily in a Cable Business, which
Person is or will become on the date of acquisition thereof a Restricted
Subsidiary as a result of the Company's acquiring such Equity Interests, (y)
Permitted Non-Controlled Assets or (z) any combination of the foregoing.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary of the Company which is not a
Non-Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, 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 preferred stock.
"S&P" means Standard & Poor's Ratings Group and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subordinated Debentures" means the debentures exchangeable by the Company
for the Preferred Stock in accordance with the Certificate of Designations
therefor.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (Sections)
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor.
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"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by the Company.
SECTION 1.02. OTHER DEFINITIONS.
Defined
Term in Section
"Additional Amounts" 4.14
"Affiliate Transaction" 4.11
"Agent Member" 2.01
"Asset Sale Offer" 4.10
"Bankruptcy Law" 6.01
"Cedel" 2.01
"Change of Control Payment" 4.13
"Commencement Date" 3.09
"Custodian" 6.01
"Defeasance" 8.02
"Euroclear" 2.01
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Global Note" 2.01
"incur" 4.08
"Judgment Currency" 10.07
"Legal Holiday" 10.08
"Offer Amount" 3.09
"Officer" 10.11
"Paying Agent" 2.03
"Payment Default" 6.01
"Purchase Date" 3.09
"Purchase Offer" 4.13
"QIBs" 2.01
"Rate of Exchange" 10.07
"Refinancing Indebtedness" 4.08
"Regulation S" 2.01
"Regulation S Global Note" 2.01
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"Registrar" 2.03
"Restricted Notes" 2.01
"Restricted Payments" 4.09
"Rule 144A" 2.01
"Rule 144A Global Note" 2.01
"Tender Period" 3.09
"U.S. Government Obligations" 8.02
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP consistently applied;
(c) references to "GAAP" shall mean GAAP in effect as of the time when and
for the period as to which such accounting principles are to be applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and in the plural include the
singular;
(f) provisions apply to successive events and transactions;
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(g) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules adopted
by the SEC from time to time; and
(h) a reference to "$" or U.S. Dollars is to United States dollars and a
reference to "Pounds Sterling" is to British pounds sterling.
ARTICLE II.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto, which is
hereby incorporated by reference and expressly made a part of this Indenture.
The Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated by
reference and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
The Company shall furnish any such legend not contained in Exhibit A or Exhibit
B to the Trustee in writing. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof. The terms and provisions of the Notes set forth in Exhibit A
and Exhibit B are part of this Indenture and to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. The Initial Notes are being offered and sold by the
Company pursuant to the Purchase Agreement.
Initial Notes offered and sold in reliance on Regulation S under the
Securities Act ("Regulation S"), as provided in the Purchase Agreement, shall be
issued initially in the form of one or more permanent Global Notes in
definitive, fully registered form without interest coupons with the Global Notes
Legend and Restricted Notes Legend set forth in Exhibit A hereto (the
"Regulation S Global Note"), which shall be deposited on behalf of the
purchasers of the Initial Notes represented thereby with the Trustee, at its New
York office, as custodian, for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank,
societe anonyme ("Cedel"), duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Initial Notes offered and sold to Qualified Institutional Buyers ("QIBs")
in reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in
the Purchase Agreement, shall be issued initially in the form of one or more
permanent Global Notes in definitive, fully registered form
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without interest coupons with the Global Notes Legend and Restricted Notes
Legend set forth in Exhibit A hereto ("Rule 144A Global Note"), which shall be
deposited on behalf of the purchasers of the Initial Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Rule 144A Global Note may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee as hereinafter provided.
Upon consummation of the Registered Exchange Offer, the Exchange Notes may
be issued in the form of one or more permanent Global Notes in definitive, fully
registered form without interest coupons with the Global Notes Legend but not
the Restricted Notes Legend set forth in Exhibit A hereto, registered in the
name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of such Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 2.01(c) shall apply only to the
Regulation S Global Note, the Rule 144A Global Note and the Exchange Notes
issued in the form of one or more permanent Global Notes (collectively, the
"Global Notes") deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(c), authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depositary for such Global Note
or Global Notes or the nominee of such Depositary and (b) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instructions or
held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of an owner of a beneficial
interest in any Global Note.
(d) Certificated Notes. In addition to the provisions of Section 2.10,
owners of beneficial interests in Global Notes may, upon request to the Trustee,
receive a certificated Initial Note, which certificated Initial Note shall bear
the Restricted Notes Legend set forth in Exhibit A hereto ("Restricted Notes").
After a transfer of any Initial Notes during the period of the
effectiveness of a Shelf Registration Statement with respect to the Initial
Notes and pursuant thereto, all requirements for Restricted Notes Legends on
such Initial Note will cease to apply, and a certificated Initial Note without a
Restricted Notes Legend will be available to the Holder of such Initial Notes.
Upon the consummation
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of a Registered Exchange Offer with respect to the Initial Notes pursuant to
which Holders of Initial Notes are offered Exchange Notes in exchange for their
Initial Notes, certificated Initial Notes with the Restricted Notes Legend set
forth in Exhibit A hereto will be available to Holders of such Initial Notes
that do not exchange their Initial Notes, and Exchange Notes in certificated
form without the Restricted Notes Legend set forth in Exhibit A hereto will be
available to Holders that exchange such Initial Notes in such Registered
Exchange Offer.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of an
authorized officer of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate (1) Initial Notes for original issue up to an aggregate
principal amount stated in paragraph 6 of the Initial Notes and (2) Exchange
Notes for issue only in a Registered Exchange Offer, pursuant to the
Registration Rights Agreement, in exchange for Initial Notes for a like
principal amount. The aggregate principal amount of Notes outstanding at any
time shall not exceed the amount set forth herein, except as provided in Section
2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders, the Company or an Affiliate.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain in the Borough of Manhattan, City of New York,
State of New York and, as long as the Notes are listed on the Luxembourg Stock
Exchange, in Luxembourg, (i) offices or agencies where the Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
offices or agencies where the Notes may be presented for payment ("Paying
Agent"). The Company initially designates the Trustee at its corporate trust
offices in the Borough of Manhattan, City of New York, State of New York to act
as principal Registrar and Paying Agent and Banque Internationale a Luxembourg
S.A. to act as a Registrar and Paying Agent. Until otherwise designated by the
Company, the Company shall also provide a Registrar and Paying Agent in London,
England at the offices of the Trustee maintained for that purpose. The Paying
Agent located at the offices of the Trustee in London, England shall be the
principal Paying Agent. The principal Registrar shall keep a register of the
Notes and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents in such other locations
as it shall determine. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The
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Company may change any Paying Agent or Registrar without prior notice to any
Holder. The Company shall notify the Trustee 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 Affiliates may act as Paying Agent or Registrar.
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
or interest on the Notes, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee
and to account for any money disbursed by it. 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 an Affiliate
of the Company) shall have no further liability for the money. If the Company or
an Affiliate of the Company 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.
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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or 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 Holders.
SECTION 2.06. TRANSFER AND EXCHANGE.
Where Notes are presented to the Registrar or a co-registrar with a request
to register a transfer or to exchange them for an equal principal amount of
Notes of other denominations, the Registrar shall register the transfer or make
the exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Company shall issue and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made for any registration of transfer or exchange (except as otherwise
expressly permitted herein), 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 tax or similar governmental
charge payable upon exchanges pursuant to Sections 2.10, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note for a period beginning at the opening of business 15 days
before the day of any selection of Notes to be redeemed under Section 3.02
hereof and ending at the close of business on the day of selection, or (ii) to
register the transfer, or exchange, of any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
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(a) Notwithstanding any provision to the contrary herein, so long as a
Global Note remains outstanding and is held by or on behalf of the Depositary,
transfers of a Global Note, in whole or in part, or of any beneficial interest
therein, shall only be made in accordance with Section 2.01(b) and this Section
2.06(a); provided, however, that beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the Restricted Notes Legend and under the heading "Notice to
Investors" in the Company's Offering Memorandum dated March 6, 1998.
(i) Except for transfers or exchanges made in accordance with clauses
(ii) through (iv) of this Section 2.06(a), transfers of a Global Note shall
be limited to transfers of such Global Note in whole, but not in part, to
nominees of the Depositary or to a successor of the Depositary or such
successor's nominee.
(ii) Rule 144A Global Note to Regulation S Global Note. If an owner of
a beneficial interest in the Rule 144A Global Note deposited with the
Depositary or the Trustee as custodian for the Depositary wishes at any
time to transfer its interest in such Rule 144A Global Note to a Person who
is required to take delivery thereof in the form of an interest in the
Regulation S Global Note, such owner may, subject to the rules and
procedures of the Depositary, exchange or cause the exchange of such
interest for an equivalent beneficial interest in the Regulation S Global
Notes. Upon receipt by the principal Registrar of (1) instructions given in
accordance with the Depositary's procedures from an Agent Member directing
the principal Registrar to credit or cause to be credited a beneficial
interest in the Regulation S Global Note in an amount equal to the
beneficial interest in the Rule 144A Global Note to be exchanged, (2) a
written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary
and the Euroclear or Cedel account to be credited with such increase and
(3) a certificate in the form of Exhibit C attached hereto given by the
Holder of such beneficial interest, then the principal Registrar shall
instruct the Depositary to reduce or cause to be reduced the principal
amount of the Rule 144A Global Note and to increase or cause to be
increased the principal amount of the Regulation S Global Note by the
aggregate principal amount of the beneficial interest in the Rule 144A
Global Note equal to the beneficial interest in the Regulation S Global
Note to be exchanged or transferred, to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial
Interest in the Regulation S Global Note equal to the reduction in the
principal amount of the Rule 144A Global Note and to debit or cause to be
debited from the account of the Person making such exchange or transfer the
beneficial interest in the Rule 144A Global Note that is being exchanged or
transferred.
(iii) Regulation S Global Note to Rule 144A Global Note. If an owner
of a beneficial interest in the Regulation S Global Note deposited with the
Depositary or with the Trustee as custodian for the Depositary wishes at
any time to transfer its interest in such Regulation S Global Note to a
Person who is required to take delivery thereof in the form of an interest
in the Rule 144A Global Note, such Holder may, subject to the rules and
procedures of Euroclear or Cedel, as the case may be, and the Depositary,
exchange
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or cause the exchange of such interest for an equivalent beneficial
interest in the Rule 144A Global Note. Upon receipt by the principal
Registrar of (1) instructions from Euroclear or Cedel, if applicable, and
the Depositary, directing the principal Registrar to credit or cause to be
credited a beneficial interest in the Rule 144A Global Note equal to the
beneficial interest in the Regulation S Global Note to be exchanged or
transferred, such instructions to contain information regarding the
participant account with the Depositary to be credited with such increase,
(2) a written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary
and (3) a certificate in the form of Exhibit D attached hereto given by the
owner of such beneficial interest, then Euroclear or Cedel or the principal
Registrar, as the case may be, will instruct the Depositary to reduce or
cause to be reduced the Regulation S Global Note and to increase or cause
to be increased the principal amount of the Rule 144A Global Note by the
aggregate principal amount of the beneficial interest in the Regulation S
Global Note to be exchanged or transferred, and the principal Registrar
shall instruct the Depositary, concurrently with such reduction, to credit
or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the Rule 144A Global Note equal to
the reduction in the principal amount of the Regulation S Global Note and
to debit or cause to be debited from the account of the Person making such
exchange or transfer the beneficial interest in the Regulation S Global
Note that is being exchanged or transferred.
(iv) Global Note to Restricted Note. If an owner of a beneficial
interest in a Global Note deposited with the Depositary or with the Trustee
as custodian for the Depositary wishes at any time to transfer its interest
in such Global Note to a Person who is required to take delivery thereof in
the form of a Restricted Note, such owner may, subject to the rules and
procedures of Euroclear or Cedel, if applicable, and the Depositary, cause
the exchange of such interest for one or more Restricted Notes of any
authorized denomination or denominations and of the same aggregate
principal amount. Upon receipt by the principal Registrar of (1)
instructions from Euroclear or Cedel, if applicable, and the Depositary
directing the principal Registrar to authenticate and deliver one or more
Restricted Notes of the same aggregate principal amount as the beneficial
interest in the Global Note to be exchanged, such instructions to contain
the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Restricted Notes to be so
issued and appropriate delivery instructions, (2) a certificate in the form
of Exhibit E attached hereto given by the owner of such beneficial interest
to the effect set forth therein, (3) a certificate in the form of Exhibit F
attached hereto given by the Person acquiring the Restricted Notes for
which such interest is being exchanged, to the effect set forth therein,
and (4) such other certifications, legal opinions or other information as
the Company may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then Euroclear or Cedel,
if applicable, or the principal Registrar, as the case may be, will
instruct the Depositary to reduce or cause to be reduced such Global Note
by the aggregate principal amount of the beneficial interest therein to be
exchanged and to debit or cause to be debited from the account of the
Person making such transfer the beneficial
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interest in the Global Note that is being transferred, and concurrently
with such reduction and debit the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Restricted Notes of the same
aggregate principal amount in accordance with the instructions referred to
above.
(v) Restricted Note to Restricted Note. If a Holder of a Restricted
Note wishes at any time to transfer such Restricted Note to a Person who is
required to take delivery thereof in the form of a Restricted Note, such
Holder may, subject to the restrictions on transfer set forth herein and in
such Restricted Note, cause the exchange of such Restricted Note for one or
more Restricted Notes of any authorized denomination or denominations and
of the same aggregate principal amount. Upon receipt by the principal
Registrar of (1) such Restricted Note, duly endorsed as provided herein,
(2) instructions from such Holder directing the principal Registrar to
authenticate and deliver one or more Restricted Notes of the same aggregate
principal amount as the Restricted Note to be exchanged, such instructions
to contain the name or authorized denomination or denominations of the
Restricted Notes to be so issued and appropriate delivery instructions, (3)
a certificate from the Holder of the Restricted Note to be exchanged in the
form of Exhibit E attached hereto, (4) a certificate in the form of Exhibit
F attached hereto given by the Person acquiring the Restricted Notes for
which such interest is being exchanged, to the effect set forth therein,
and (5) such other certifications, legal opinions or other information as
the Company may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the Registrar shall
cancel or cause to be canceled such Restricted Note and concurrently
therewith, the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Restricted Notes of the same aggregate principal
amount, in accordance with the instructions referred to above.
(vi) Other Exchanges. In the event that a beneficial interest in a
Global Note is exchanged for Notes in definitive registered form pursuant
to Section 2.10, prior to the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially consistent with the
provisions of clauses (ii) through (v) above (including the certification
requirements intended to ensure that such transfers comply with Rule 144A,
Rule 144, Regulation S or any other available exemption from registration,
as the case may be) and such other procedures as may from time to time be
adopted by the Company.
(vii) Restricted Period. Prior to the termination of the "restricted
period" (as defined in Regulation S) with respect to the issuance of the
Notes, transfers of interests in the Regulation S Global Note to "U.S.
Persons" (as defined in Regulation S) shall be limited to transfers to QIBs
made pursuant to the provisions of Sections 2.06(a)(iii). The Company shall
advise the Trustee as to the termination of the restricted period and the
Trustee may rely conclusively thereon.
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(viii) Regulation S Global Note to Certificated Note. Upon proper
presentment to the Trustee of a certificate substantially in the form of
Exhibit G hereto and subject to the rules and procedures of the Depositary
or its direct or indirect participants, including Euroclear and Cedel, an
interest in a Regulation S Global Note may be exchanged for a certificated
Restricted Note. At any time following consummation of the Exchange Offer
pursuant to the Registration Rights Agreement (provided that such
consummation is after the expiration of the 40-day restricted period
provided for in Rule 903 of Regulation S), such exchange may be made
without presentment of the certificate in substantially the form of Exhibit
G by any Holder who certifies to the Trustee that such Holder would have
been able to participate in such Exchange Offer and resell Exchange Notes
without delivery of a prospectus under applicable rules and interpretations
of the Commission, and such certificated Note shall be free from any
restriction on transfer (other than such as are solely attributable to such
Holder's status).
(b) Except in connection with a Registered Exchange Offer or a Shelf
Registration Statement contemplated by and in accordance with the terms of the
Registration Rights Agreement, if Initial Notes are issued upon the transfer,
exchange or replacement of Initial Notes bearing the Restricted Securities
Legend set forth in Exhibit A hereto, or if a request is made to remove such
Restricted Notes Legend on Initial Notes, the Initial Notes so issued shall bear
the Restricted Notes Legend, or the Restricted Notes Legend shall not be
removed, as the case may be, unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel licensed to
practice law in the State of New York, as may be reasonably required by the
Company, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of Rule 144A, Rule 144, Regulation S or any other available exemption from
registration under the Securities Act or, with respect to Restricted Notes, that
such Notes are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon provision of such satisfactory evidence, the Trustee, at
the direction of the Company, shall authenticate and deliver Initial Notes that
do not bear the legend.
(c) Neither the Company nor the Trustee shall have any responsibility for
any actions taken or not taken by the Depositary and the Company shall have no
responsibility for any actions taken or not taken by the Trustee as agent or
custodian of the Depositary.
SECTION 2.07. REPLACEMENT NOTES.
If the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken or if such Note is mutilated and is surrendered to the Trustee,
the Company shall issue and the Trustee shall authenticate a replacement Note if
the Trustee's and the Company's requirements are met. If required by the Trustee
or the Company, an indemnity bond must be sufficient in the judgment of both to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article III hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.
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Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
and those described in this Section as not outstanding.
If a Note is replaced, paid or purchased pursuant to Section 2.07 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced, paid or purchased Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
Except as set forth in Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate of the Company shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES; GLOBAL NOTES.
(a) Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes. Holders of temporary Notes shall be entitled to
all of the benefits of this Indenture.
(b) A Global Note deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Notes only in
accordance with Section 2.01(d) or if such transfer complies with Section 2.06
and (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Note or if at any time such Depositary
ceases to be a "clearing agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within 90 days of such
notice, or (ii) an Event of Default has occurred and is continuing.
(c) Any Global Note that is transferable to the beneficial owners thereof
in the form of certificated Notes pursuant Section 2.01(d) or to this Section
2.10 shall be surrendered by the Depositary
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to the Trustee to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Note, an equal aggregate principal
amount of Initial Notes of authorized denominations in the form of certificated
Notes. Any portion of a Global Note transferred pursuant to this Section shall
be executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any Initial Note in the form of certificated Notes delivered in exchange
for an interest in the Global Notes shall, except as otherwise provided by
Section 2.06(b) bear the Restricted Notes Legend set forth in Exhibit A hereto.
(d) The registered Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
(e) In the event of the occurrence of either of the events specified in
Section 2.10(b), the Company will promptly make available to the Trustee a
reasonable supply of certificated Notes in definitive, fully registered form
without interest coupons.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall promptly cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes as the Company directs. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company fails to make a payment of interest on the Notes, it shall
pay such defaulted interest plus any interest payable on the defaulted interest,
in any lawful manner. It may pay such defaulted interest, plus any such interest
payable on it, to the Persons who are Holders on a subsequent special record
date. The Company shall fix any such record date and payment date, provided that
no such record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before any such record date, the
Company shall mail to Holders a notice that states the special record date, the
related payment date and amount of such interest to be paid.
ARTICLE III.
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of the Notes and Section 3.07 hereof or pursuant to the Optional Tax
Redemption provision of the Notes (Section 8 of the Initial Notes and Section 7
of the Exchange Notes), it shall notify the Trustee of the redemption date and
the principal amount of Notes to be redeemed, and in connection with an Optional
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Tax Redemption as provided in the Notes, such notice shall be accompanied by an
Officers' Certificate to the effect that the conditions to such redemption
contained herein have been complied with. The Company shall give each notice
provided for in this Section 3.01 at least 50 days before the redemption date
(unless a shorter notice period shall be satisfactory to the Trustee).
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes shall be made by the Trustee on a pro rata basis or by lot or by method
that complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate, provided that no
Notes of $1,000 or less shall be redeemed in part. The Trustee shall make the
selection not more than 60 days and not less than 30 days before the redemption
date from Notes outstanding not previously called for redemption. Notes and
portions of Notes selected shall be in amounts of $1,000 or integral multiples
of $1,000. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee
shall notify the Company promptly of the Notes or portions of Notes to be called
for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address. The notice shall
identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the
principal amount thereof redeemed, and that, after the redemption date, upon
surrender of such Note, a new Note in principal amount equal to the unredeemed
portion thereof shall be issued in the name of the Holder thereof upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price plus accrued interest;
(f) that interest on Notes called for redemption ceases to accrue on and
after the redemption date; and
(g) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense; provided that the Company shall have
delivered to the Trustee, at least 45 days prior
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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.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become due and payable on the redemption date at the
price set forth in the Note. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money not required for that
purpose.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION AND OPTIONAL TAX REDEMPTION.
The Company may redeem all or any portion of the Notes, upon the terms and
at the redemption prices set forth in each of the Notes. The Company may also
redeem all of the Notes in accordance with the Optional Tax Redemption provision
of the Notes (Section 8 of the Initial Notes and Section 7 of the Exchange
Notes). Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
SECTION 3.09. ASSET SALE OFFER AND PURCHASE OFFER.
(a) In the event that, pursuant to Sections 4.10 or 4.13 hereof, the
Company shall commence an offer to all Holders of the Notes to purchase Notes
(the "Asset Sale Offer" or "Purchase Offer"), the Company shall follow the
procedures in this Section 3.09.
(b) The Asset Sale Offer or the Purchase Offer, as the case may be, shall
remain open for a period specified by the Company which shall be no less than 30
calendar days and no more than 40 calendar days following its commencement (the
"Commencement Date") (as determined in accordance with Section 4.10 or 4.13
hereof, as the case may be), except to the extent that a longer period is
required by applicable law (the "Tender Period"). Upon the expiration of the
Tender Period (the "Purchase
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Date"), the Company shall purchase the Accreted Value or principal amount of
Notes required to be purchased pursuant to Section 4.10 or 4.13 hereof (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Asset Sale Offer or the Purchase Offer, as the case
may be.
(c) If the Purchase Date is on or after an interest payment record date and
on or before the related interest payment date, any accrued interest shall be
paid to the Person in whose name a Note is registered at the close of business
on such record date, and no additional interest will be payable to Holders who
tender Notes pursuant to the Asset Sale Offer or the Purchase Offer, as the case
may be.
(d) The Company shall provide the Trustee with notice of the Asset Sale
Offer or the Purchase Offer, as the case may be, at least 10 days before the
Commencement Date.
(e) On or before the Commencement Date, the Company or the Trustee (at the
expense of the Company) shall send, by first class mail, a notice to each of the
Holders, which shall govern the terms of the Asset Sale Offer or the Purchase
Offer and shall state:
(i) that the Asset Sale Offer or the Purchase Offer is being made
pursuant to this Section 3.09 and, as applicable, Section 4.10 or 4.13
hereof and the length of time the Asset Sale Offer or the Purchase Offer
will remain open;
(ii) Offer Amount, the purchase price (as determined in accordance
with Section 4.10 or 4.13 hereof) and the Purchase Date, and in the case of
a Purchase Offer made pursuant to Section 4.13 hereof, that all Notes
tendered will be accepted for payment;
(iii) that any Note or portion thereof not tendered or accepted for
payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the purchase
price, any Note or portion thereof accepted for payment pursuant to the
Asset Sale Offer or the Purchase Offer will cease to accrue interest after
the Purchase Date;
(v) that Holders electing to have a Note or portion thereof purchased
pursuant to any Asset Sale Offer or Purchase Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the close of business on the second Business Day preceding the
Purchase Date, or such longer period as may be required by law, a letter or
a telegram, telex or facsimile transmission (receipt of which is confirmed
and promptly followed by a letter) setting forth the name of the
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Holder, the principal amount of the Note or portion thereof the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have the Note or portion thereof purchased;
(vii) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount (as defined in Section 4.10 hereof), the
Trustee will select the Notes to be purchased pro rata or by a method that
complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of $1,000, or integral multiples thereof, shall be
purchased; and
(viii) that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
In addition, the notice shall, to the extent permitted by applicable law,
be accompanied by a copy of the information regarding the Company and its
Subsidiaries which is required to be contained in the most recent Quarterly
Report on Form 10-Q or Annual Report on Form 10-K (including any financial
statements or other information required to be included or incorporated by
reference therein) and any Reports on Form 8-K filed since the date of such
Quarterly Report or Annual Report (or would have been required to file if the
Company remained a company incorporated in the United States), as the case may
be, which the Company has filed (or would have been required to file if it
remained a company incorporated in the United States) with the SEC on or prior
to the date of the notice. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Asset
Sale Offer or the Purchase Offer, as the case may be.
(f) At least one Business Day prior to the Purchase Date, the Company shall
irrevocably deposit with the Trustee or a Paying Agent in immediately available
funds an amount equal to the Offer Amount to be held for payment in accordance
with the terms of this Section. On the Purchase Date, the Company shall, to the
extent lawful, (i) accept for payment the Notes or portions thereof tendered
pursuant to the Asset Sale Offer or the Purchase Offer, (ii) deliver or cause
the depositary or Paying Agent to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating such Notes or
portions thereof have been accepted for payment by the Company in accordance
with the terms of this Section 3.09. The depositary, the Paying Agent or the
Company, as the case may be, shall promptly (but in any case not later than ten
(10) calendar days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so
accepted shall be promptly mailed or delivered by or on behalf of the Company to
the Holder thereof. The Company will publicly announce in a newspaper of general
circulation the results of the Asset Sale Offer or the Purchase Offer on the
Purchase Date.
(g) For the purposes of calculating the allocation of available Excess
Proceeds to the Notes and each issue of Other Qualified Notes on a pro rata
basis according to accreted value or principal
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amount, as the case may be, the relevant Accreted Value or principal amount of
the Notes and the relevant principal amount or the accreted value, as the case
may be, of any Other Qualified Notes denominated in a currency other than United
States dollars will be notionally converted into United States dollars from the
currency such Other Qualified Notes are denominated in (the "Base Currency");
(i) in the case of determining the maximum principal amount or
Accreted Value of Notes and Other Qualified Notes that may be
purchased out of the Excess Proceeds, if any, remaining after the
consummation of an Asset Sale Offer to holders of Applicable
Notes, at the noon buying rate in the City of New York as
certified for customs purposes by the Federal Reserve Bank of New
York for cable transfers in the Base Currency (the "Noon Buying
Rate") on the Business Day which is 10 Business Days prior to the
Commencement Date; and
(ii) in the case of determining the allocation of the remaining Excess
Proceeds if the aggregate principal amount or accreted value, as
the case may be, of Notes and Other Qualified Notes surrendered
by holders in the Asset Sale Offer exceeds the remaining amount
of Excess Proceeds, at the Noon Buying Rate on the second
Business Day preceding the Purchase Date.
(h) The Asset Sale Offer or the Purchase Offer shall be made by the Company
in compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials necessary to enable such Holders to tender their
Notes.
ARTICLE IV.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of, premium, if any, and interest on,
the Notes on the dates and in the manner provided in the Notes. Principal,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent (other than the Company or an Affiliate of the Company) holds on
that date money designated for and sufficient to pay all principal and interest
then due. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i) the
overdue Accreted Value of the Notes, if prior to April 1, 2003, or the overdue
principal and premium, if any, if on or after April 1, 2003, at the rate borne
by the Notes, compounded semiannually; and (ii) overdue installments of interest
(without regard to any applicable grace period) at the same rate, compounded
semiannually.
SECTION 4.02. REPORTS.
Whether or not required by the rules and regulations of the SEC, so long as
any Notes are outstanding, the Company shall file with the SEC and furnish to
the Trustee and to the Holders of Notes,
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all quarterly and annual financial information required to be contained in a
filing with the SEC on Forms 10-Q and 10-K (or the equivalent thereof under the
Exchange Act for foreign private issuers in the event the Company becomes a
corporation organized under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands), including a "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and,
with respect to the annual information only, a report thereon by the Company's
certified independent accountants, in each case, in the form required by the
rules and regulations of the SEC as in effect on the Issuance Date. This Section
4.02 will apply notwithstanding that the Company becomes a corporation organized
under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands.
SECTION 4.03. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under, and complied with the covenants and conditions
contained in, this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant, and complied
with the covenants and conditions contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal or
of interest, if any, on the Notes are prohibited.
One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
The Company will so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon becoming aware of any Default or Event of Default an
Officers' Certificate specifying such Default or Event of Default.
Immediately upon the occurrence of any event giving rise to the accrual of
Special Interest (as such term is defined in Exhibit A hereto) or the cessation
of such accrual, the Company shall give the Trustee notice thereof and of the
event giving rise to such accrual or cessation (such notice to be contained in
an Officers' Certificate) and prior to receipt of such Officers' Certificate the
Trustee shall be entitled to assume that no such accrual has commenced or
ceased, as the case may be.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort
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to any such law, 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 4.05. CORPORATE EXISTENCE.
Subject to Article V hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries taken as a
whole and that the loss thereof is not adverse in any material respect to the
Holders. The Company shall notify the Trustee in writing of any subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
SECTION 4.06. TAXES.
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
SECTION 4.07. LIMITATIONS ON LIENS.
Neither the Company nor any of its Restricted Subsidiaries may, directly or
indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except:
(a) Permitted Liens;
(b) Liens securing Indebtedness and related obligations to the extent such
Indebtedness and related obligations are permitted under Sections 4.08(b)(i),
(iii), (iv), (v), (viii), (ix) and (xi) hereof;
(c) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under Section 4.08 hereof; and
(d) Liens securing Refinancing Indebtedness permitted to be incurred under
Section 4.08 hereof; provided that the Refinancing Indebtedness so issued and
secured by such Lien shall not be secured by any property or assets of the
Company or any of its Restricted Subsidiaries other than the property or assets
subject to the Liens securing such Indebtedness being refinanced.
SECTION 4.08. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and the Company shall not
issue any Disqualified Stock and shall not permit any of its Restricted
Subsidiaries to
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issue any shares of preferred stock that is Disqualified Stock; provided,
however, that the Company may incur Indebtedness or issue shares of Disqualified
Stock and any of its Restricted Subsidiaries may issue shares of preferred stock
that is Disqualified Stock if after giving effect to such issuance or incurrence
on a pro forma basis, the sum of (x) Indebtedness of the Company and its
Restricted Subsidiaries, on a consolidated basis, (y) the liquidation value of
outstanding preferred stock of Restricted Subsidiaries and (z) the aggregate
amount payable by the Company and its Restricted Subsidiaries, on a consolidated
basis, upon redemption of Disqualified Stock to the extent such amount is not
included in the preceding clause (y) shall be less than the product of
Annualized Pro Forma EBITDA for the latest fiscal quarter for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued multiplied by 7.0, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred stock had
been issued, as the case may be, at the beginning of such quarter.
(b) The foregoing limitations in Section 4.08(a) shall not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility;
(ii) the issuance by any Restricted Subsidiary of preferred stock
(other than Disqualified Stock) to the Company, any Restricted Subsidiary
of the Company or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) the incurrence of Indebtedness or the issuance of preferred
stock by the Company or any of its Restricted Subsidiaries the proceeds of
which are (or the credit support provided by any such Indebtedness is), in
each case, used to finance the construction, capital expenditure and
working capital needs of a Cable Business (including, without limitation,
payments made pursuant to any License), the acquisition of Cable Assets or
the Capital Stock of a Qualified Subsidiary;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
not to exceed $50 million;
(v) the incurrence by the Company or any Restricted Subsidiary of any
Permitted Acquired Debt;
(vi) the incurrence by the Company or any Subsidiary of Indebtedness
issued in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, or refund the Notes, the Company's 10-3/4%
Senior Deferred Coupon Notes Due 2008, the Company's 9-1/2% Senior Notes
Due 2008, Existing Indebtedness or Indebtedness referred to in clauses (i),
(ii), (iii), (iv) or (v) above or Indebtedness incurred pursuant to Section
4.08(a) hereof (the "Refinancing Indebtedness"); provided, however, that
(1) the principal amount of, and any premium payable in respect of, such
Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness so extended,
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refinanced, renewed, replaced or refunded (plus the amount of reasonable
expenses incurred in connection therewith); (2) the Refinancing
Indebtedness shall have (A) a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, and (B) a stated
maturity no earlier than the stated maturity of, the Indebtedness being
extended, refinanced, renewed, replaced or refunded; and (3) the
Refinancing Indebtedness shall be subordinated in right of payment to the
Notes as and to the extent of the Indebtedness being extended, refinanced,
renewed, replaced or refunded;
(vii) the issuance of the Preferred Stock in lieu of payment of cash
interest on the Subordinated Debentures or the incurrence by the Company of
Indebtedness represented by the Subordinated Debentures upon the exchange
of the Preferred Stock in accordance with the Certificate of Designations
therefor;
(viii) Indebtedness under Exchange Rate Contracts, provided that such
Exchange Rate Contracts are related to payment obligations under Existing
Indebtedness or Indebtedness incurred under Section 4.08(a) or (b) hereof
that are being hedged thereby, and not for speculation and that the
aggregate notional amount under each such Exchange Rate Contract does not
exceed the aggregate payment obligations under such Indebtedness;
(ix) Indebtedness under Interest Rate Agreements, provided that the
obligations under such agreements are related to payment obligations on
Existing Indebtedness or Indebtedness otherwise incurred pursuant to
Section 4.08(a) or (b) hereof, and not for speculation;
(x) the incurrence of Indebtedness between the Company and any
Restricted Subsidiary, between or among Restricted Subsidiaries and between
any Restricted Subsidiary and other holders of Equity Interests of such
Restricted Subsidiary (or other Persons providing funding on their behalf)
on a pro rata basis and on substantially identical principal financial
terms; provided, however, that if any such Restricted Subsidiary that is
the payee of any such Indebtedness ceases to be a Restricted Subsidiary or
transfers such Indebtedness (other than to the Company or a Restricted
Subsidiary of the Company), such events shall be deemed, in each case, to
constitute the incurrence of such Indebtedness by the Company or by a
Restricted Subsidiary, as the case may be, at the time of such event; and
(xi) Indebtedness of the Company and/or any Restricted Subsidiary in
respect of performance bonds of the Company or any Subsidiary or surety
bonds provided by the Company or any Restricted Subsidiary received in the
ordinary course of business in connection with the construction or
operation of a Cable Business.
(c) Any redesignation of a Non-Restricted Subsidiary as a Restricted
Subsidiary shall be deemed for purposes of this Section 4.08 to be an incurrence
of Indebtedness by the Company and its Restricted Subsidiaries of the
Indebtedness of such Non-Restricted Subsidiary as of the time of such
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redesignation to the extent such Indebtedness does not already constitute
Indebtedness of the Company or one of its Restricted Subsidiaries.
SECTION 4.09. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
the Company's or any of its Restricted Subsidiaries' Equity Interests
(other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted
Subsidiary or (y) dividends or distributions payable to the Company or any
Wholly Owned Subsidiary of the Company, or (z) pro rata dividends or pro
rata distributions payable by a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company (other than any such Equity Interests owned
by the Company or any Wholly Owned Subsidiary of the Company);
(iii) voluntarily purchase, redeem or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (ii) through (ix) of Section 4.09(b)), is less
than the sum of (x) the difference between Cumulative EBITDA and 1.5
times Cumulative Interest Expense plus (y) Capital Stock Sale Proceeds
plus (z) cash received by the Company or a Restricted Subsidiary from
a Non-Restricted Subsidiary (other than cash which is or is required
to be repaid or returned to such Non-Restricted Subsidiary); provided,
however, that to the extent that any Restricted Investment that was
made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the amount credited pursuant to this
clause (z) shall be the lesser of (A) the cash received with respect
to such sale, liquidation or repayment of such Restricted Investment
(less the cost of such sale, liquidation or repayment, if any) and (B)
the initial amount of such Restricted Investment, in each case as
determined in good faith by the Company's Board of Directors.
(b) The foregoing provisions in Section 4.09(a) shall not prohibit:
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(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) (x) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company or any Restricted Subsidiary or (y)
an Investment in any Person, in each case, in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of other Equity Interests (other than any
Disqualified Stock) of the Company, provided that the Company delivers to
the Trustee:
(1) with respect to any transaction involving in excess of $1
million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such transaction is approved by
a majority of the directors on the Board of Directors; and
(2) with respect to any transaction involving in excess of $25
million, an opinion as to the fairness to the Company or such
Subsidiary from a financial point of view issued by an investment
banking firm of national standing with high yield experience, together
with an Officers' Certificate to the effect that such opinion complies
with this clause (2), provided that the amount of such proceeds from
the sale of such Equity Interests shall be excluded in each case from
Capital Stock Sale Proceeds for purposes of clause (a)(iv)(2)(y),
above;
(iii) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which (A) has no Indebtedness on a consolidated
basis other than Indebtedness incurred to finance the purchase of equipment
used in a Cable Business, (B) has no restrictions (other than restrictions
imposed or permitted by this Indenture or the indentures governing the
Other Qualified Notes or the Applicable Notes or any other instrument
governing unsecured indebtedness of the Company which is pari passu with
the Notes) on its ability to pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries, (C) is or will be a
Cable Business and (D) uses the proceeds of such Investment for
constructing a Cable Business or the working capital needs of a Cable
Business;
(iv) the redemption, purchase, defeasance, acquisition or retirement
of Indebtedness that is subordinated to the Notes (including premium, if
any, and accrued and unpaid interest) made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of (A) Equity Interests of the Company, provided
that the amount of such proceeds from the sale of such Equity Interests
shall be excluded in each case from Capital Stock Sale Proceeds for
purposes of clause (a)(iv)(2)(y) above or (B) Refinancing Indebtedness
permitted to be incurred under Section 4.08 hereof;
(v) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which is or will be a Cable Business in an amount
not to exceed
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$80 million in the aggregate plus the sum of (x) cash received by the
Company or a Restricted Subsidiary from a Non-Restricted Subsidiary (other
than cash which s or is required to be repaid or returned to such
Non-Restricted Subsidiary) and (y) Capital Stock Sale Proceeds (excluding
the aggregate net sale proceeds to be received upon conversion of the
Convertible Subordinated Notes), provided that the amount of such proceeds
from the sale of such Equity Interests shall be excluded in each case from
the Capital Stock Sale Proceeds for purposes of clause (a)(iv)(2)(y) above;
(vi) Investments by the Company or any Restricted Subsidiary in
Permitted Non-Controlled Assets;
(vii) the extension by the Company or any Restricted Subsidiary of
trade credit to a Non-Restricted Subsidiary extended on usual and customary
terms in the ordinary course of business, provided that the aggregate
amount of such trade credit shall not exceed $25 million at any one time;
(viii) the payment of cash dividends on the Preferred Stock accruing
on or after February 15, 2004 or any mandatory redemption or repurchase of
the Preferred Stock, in each case, in accordance with the Certificate of
Designations therefor; and
(ix) the exchange of all of the outstanding shares of Preferred Stock
for Subordinated Debentures in accordance with the Certificate of
Designations for the Preferred Stock.
(c) Any Investment in a Subsidiary (other than the issuance, transfer or
other conveyance of Equity Interests (other than Disqualified Stock) of the
Company (or any Capital Stock Sale Proceeds therefrom)) that is designated by
the Board of Directors as a Non-Restricted Subsidiary shall become a Restricted
Payment made on the date of such designation in the amount of the greater of (x)
the book value of such Subsidiary on the date such Subsidiary becomes a
Non-Restricted Subsidiary and (y) the fair market value of such Subsidiary on
such date as determined (A) in good faith by the Board of Directors of such
Subsidiary if such fair market value is determined to be less than $25 million
and (B) by an investment banking firm of national standing with high yield
underwriting expertise if such fair market value is determined to be in excess
of $25 million.
(d) Not later than the fifth Business Day after making any Restricted
Payment (other than those referred to in sub-clause (vii) of Section 4.09(b)),
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.10. ASSET SALES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to cause, make or suffer to exist any Asset Sale, unless:
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(i) no Default exists or is continuing immediately prior to and after
giving effect to such Asset Sale;
(ii) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced for purposes of this Section 4.10 by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets sold or otherwise disposed of; and
(iii) at least 80% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of (w) Cash
Equivalents, (x) Replacement Assets, (y) publicly traded Equity Interests
of a Person who is, directly or indirectly, engaged primarily in one or
more Cable Businesses; provided, however, that the Company or such
Restricted Subsidiary shall Monetize such Equity Interests by sale to one
or more Persons (other than to the Company or a Subsidiary thereof) at a
price not less than the fair market value thereof within 180 days of the
consummation of such Asset Sale, or (z) any combination of the foregoing
clauses (w) through (y); provided, however, that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such
assets and (y) any notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are within five
Business Days converted by the Company or such Restricted Subsidiary into
cash, shall be deemed to be Cash Equivalents (to the extent of the Cash
Equivalents received in such conversion) for purposes of this clause (iii).
(b) Within 360 days after any Asset Sale, the Company (or the Restricted
Subsidiary, as the case may be) shall cause the Net Proceeds from such Asset
Sale:
(i) to be used to permanently reduce Indebtedness of a Restricted
Subsidiary; or
(ii) to be invested or reinvested in Replacement Assets.
Pending final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture or the
indentures for the Applicable Notes or the Other Qualified Notes.
Any Net Proceeds from any Asset Sale that are not used or reinvested as
provided in the preceding sentence constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15 million, the Company shall make
an offer (an "Asset Sale Offer") to all holders of Notes and Other Qualified
Notes to purchase the maximum principal amount of Notes and Other Qualified
Notes (determined on a pro rata basis according to the accreted value or
principal amount, as the case may be, of the Notes and the Other Qualified Notes
and in accordance with Section 3.09(g)(i); provided,
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however, that the Asset Sale Offer must be made first to the holders of the
Applicable Notes) that may be purchased out of the Excess Proceeds, if any,
remaining after the consummation of the aforementioned Asset Sale Offer to the
holders of the Applicable Notes (x) with respect to the Other Qualified Notes,
based on the terms set forth in the indenture related to each issue of the Other
Qualified Notes and (y) with respect to the Notes, at an offer price in cash in
an amount equal to 100% of the Accreted Value on the date fixed for closing of
such offer (if such date is prior to April 1, 2003), or 100% of the outstanding
principal amount thereof plus accrued and unpaid interest, if any, to the date
fixed for the closing of such offer (if such date is on or after April 1, 2003),
in accordance with the procedures set forth in Section 3.09 hereof. To the
extent that the aggregate principal amount or accreted value, as the case may
be, of Notes and Other Qualified Notes tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, if any, remaining after the consummation of
the aforementioned Asset Sale Offer to the holders of the Applicable Notes, the
Company may use such deficiency for general corporate purposes. If the aggregate
principal amount or accreted value, as the case may be, of Notes and Other
Qualified Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds, if any, remaining after the consummation of the aforementioned Asset
Sale Offer to the holders of the Applicable Notes, then such remaining Excess
Proceeds shall be allocated pro rata according to accreted value or principal
amount, as the case may be, to the Notes and each issue of the Other Qualified
Notes and in accordance with Section 3.09(g)(ii), and the Trustee shall select
the Notes to be purchased from the amount allocated to the Notes on the basis
set forth in Section 3.09(e) hereof. Upon completion of such offers to purchase
each of the Applicable Notes and the Notes and the Other Qualified Notes, the
amount of Excess Proceeds will be reset at zero. No such Asset Sale Offer to
purchase the Notes and Other Qualified Notes shall be required to be made by the
Company pursuant to the foregoing provisions if there are no Excess Proceeds
remaining after the consummation of the Asset Sale Offer made to holders of the
Applicable Notes.
(c) Notwithstanding the provisions of Sections 4.10(a) and (b): the Company
and its Subsidiaries may:
(i) sell, lease, transfer, convey or otherwise dispose of assets or
property acquired after October 14, 1993, by the Company or any Subsidiary
in a sale-and-leaseback transaction so long as the proceeds of such sale
are applied within five Business Days to permanently reduce Indebtedness of
a Restricted Subsidiary or if there is no such Indebtedness or such
proceeds exceed the amount of such Indebtedness then such proceeds or
excess proceeds are reinvested in a Replacement Assets within 360 days
after such sale, lease, transfer, conveyance or disposition;
(ii) (x) swap or exchange assets or property with a Cable Controlled
Subsidiary or (y) issue, sell, lease, transfer, convey or otherwise dispose
of equity securities of any of the Company's Subsidiaries to a Cable
Controlled Subsidiary, in each of cases (x) and (y) so long as (A) the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company after
such transaction is equal to or less than the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma
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EBITDA of the Company may be 0.5 greater than such ratio immediately
preceding such transaction and (B) either (I) the assets so contributed
consist solely of a license to operate a Cable Business and the Net
Households covered by all of the licenses to operate cable and telephone
systems held by the Company and its Restricted Subsidiaries immediately
after and giving effect to such transaction equals or exceeds the number of
Net Households covered by all of the licenses to operate cable and
telephone systems held by the Company and its Restricted Subsidiaries
immediately prior to such transaction or (II) the assets so contributed
consist solely of Cable Assets and the value of the Capital Stock received,
immediately after and giving effect to such transaction, as determined by
an investment banking firm of recognized standing with knowledge of the
Cable Business, equals or exceeds the value of Cable Assets exchanged for
such Capital Stock;
(iii) sell, transfer or otherwise dispose of Long Distance/Microwave
Assets; or
(iv) issue, sell, lease, transfer, convey or otherwise dispose of
Equity Interests (other than Disqualified Stock) of the Company (or any
Capital Stock Sale Proceeds therefrom) to any Person (including
Non-Restricted Subsidiaries).
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or amend any contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(a) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that could have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and
(b) the Company delivers to the Trustee:
(i) with respect to any Affiliate Transaction involving aggregate
payments in excess of $1 million or any series of Affiliate Transactions
with an Affiliate involving aggregate payments in excess of $1 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with Section 4.11 (a)
and such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors; and
(ii) with respect to any Affiliate Transaction involving aggregate
payments in excess of $25 million or any series of Affiliate Transactions
with an Affiliate involving aggregate payments in excess of $25 million, an
opinion as to the fairness to the Company or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing with high yield experience together with an Officers'
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Certificate to the effect that such opinion complies with this clause (ii);
provided, however, that notwithstanding the foregoing provisions, the
following shall not be deemed to be Affiliate Transactions:
(1) any employment agreement entered into by the Company or any
of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or its predecessor or such
Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions permitted by the provisions of Section 4.09
hereof;
(4) Liens permitted under Section 4.07 hereof which are granted
by the Company or any of its Subsidiaries to an unrelated Person for
the benefit of the Company or any other Subsidiary of the Company;
(5) any transaction pursuant to an agreement in effect on the
Issuance Date;
(6) the incurrence of Indebtedness by a Restricted Subsidiary
where such Indebtedness is owed to the holders of the Equity Interests
of such Restricted Subsidiary on a pro rata basis and on substantially
identical principal financial terms;
(7) management, operating, service or interconnect agreements
entered into in the ordinary course of business with any Cable
Business in which the Company or any Restricted Subsidiary has an
Investment and which is not a Cable Controlled Subsidiary (and of
which no Affiliate of the Company is an Affiliate other than as a
result of such Investment); and
(8) any tax sharing agreement.
SECTION 4.12. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
indebtedness owed to the Company or any of its Subsidiaries, or
(b) make loans or advances to the Company or any of its Subsidiaries, or
(c) transfer any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of:
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(i) Existing Indebtedness as in effect on the Issuance Date;
(ii) this Indenture and the Notes;
(iii) any agreement covering or relating to Indebtedness permitted to
be incurred under Section 4.08(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof (but only, in the case of Section 4.08(b)(viii) or (ix), to the
extent contemplated by the then-existing Credit Facility), provided that
the provisions of such agreement permit any action referred to in clause
(a) above in aggregate amounts sufficient to enable the payment of interest
and principal and mandatory repurchases pursuant to the terms of this
Indenture and the Notes, but provided further that: (x) any such agreement
may nevertheless encumber, prohibit or restrict any action referred to in
clause (a) above if an event of default under such agreement has occurred
and is continuing or would occur as a result of any such action; and (y)
any such agreement may nevertheless contain (I) restrictions limiting the
payment of dividends or the making of any other distributions to all or a
portion of excess cash-flow (or any similar formulation thereof) and (II)
subordination provisions governing Indebtedness owed to the Company or any
Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired;
provided that the EBITDA of such Person is not taken into account in
determining whether such acquisition was permitted by the terms of this
Indenture;
(vi) customary nonassignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(vii) provisions of joint venture or stockholder agreements, so long
as such provisions are determined by a resolution of the Board of Directors
to be, at the time of such determination, customary for such agreements;
(viii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business or the provisions
of any agreement with respect to any Asset Sale (or transaction which, but
for its size, would be an Asset Sale), solely with respect to the assets
being sold; or
(ix) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are determined by a resolution of the Board of Directors to be
no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
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SECTION 4.13. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control Triggering Event, each
Holder of Notes shall have the right to require the Company to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described in Section 3.09 hereof (the "Purchase
Offer") at a purchase price equal to 101% of the Accreted Value thereof on any
purchase date prior to April 1, 2003, or 101% of the principal amount thereof
plus accrued and unpaid interest thereon, if any, to the date of purchase on any
purchase date on or after April 1, 2003, if any (the "Change of Control
Payment").
(b) Within 40 days following any Change of Control Triggering Event, the
Company shall mail to each Holder the notice provided by Section 3.09(e).
SECTION 4.14. PAYMENT OF ADDITIONAL AMOUNTS.
At least 10 days prior to the first date on which payment of principal and
any premium or interest on the Notes is to be made, and at least 10 days prior
to any subsequent such date if there has been any change with respect to the
matters set forth in the Officers' Certificate described in this Section 4.14,
the Company shall furnish the Trustee and the Paying Agent, if other than the
Trustee, with an Officers' Certificate instructing the Trustee and the Paying
Agent whether the Company is obligated to pay Additional Amounts (as defined in
Section 3 of the Initial Notes or Section 2 of the Exchange Notes) with respect
to such payment of principal, or of any premium or interest on the Notes. If the
Company will be obligated to pay Additional Amounts with respect to such
payment, then such Officers' Certificate shall specify by country the amount, if
any, required to be withheld on such payments to such Holders and the Company
will pay to the Trustee or the Paying Agent such Additional Amounts. The Company
shall indemnify the Trustee and the Paying Agent for, and hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with actions taken or
omitted by any of them in reliance on any Officers' Certificate furnished to
them pursuant to this Section 4.14.
Whenever in this Indenture there is mentioned, in any context, the payment
of principal (and premium, if any), Offer Amount, interest or any other amount
payable under or with respect to any Note such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange
Notes) to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange Notes) and
express mention of the payment of Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made (if applicable).
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ARTICLE V.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless:
(a) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands or of the United States, any state thereof or the
District of Columbia;
(b) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
assumes all the Obligations (including the due and punctual payment of
Additional Amounts if the surviving corporation is a corporation organized or
existing under the laws of the United Kingdom, the Netherlands, the Netherlands
Antilles, Bermuda or the Cayman Islands) of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and this Indenture;
(c) immediately after such transaction no Default or Event of Default
exists;
(d) the Company or any entity or Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made will have a ratio of
Indebtedness to Annualized Pro Forma EBITDA equal to or less than the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company immediately preceding
the transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized Pro
Forma EBITDA of the Company may be 0.5 greater than such ratio immediately
preceding such transaction; and
(e) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for and may exercise every right and power
of, the Company under this
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Indenture with the same effect as if such successor Person has been named as the
Company herein; provided, however, that the predecessor Company in the case of a
sale, assignment, transfer, lease, conveyance or other disposition shall not be
released from the obligation to pay the principal of and interest on the Notes.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest (and Additional
Amounts, if applicable) on any Note when the same becomes due and payable and
the Default continues for a period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the principal of any Note when
the same becomes due and payable at maturity, upon redemption or otherwise;
(c) the Company fails to observe or perform any covenant or agreement
contained in Section 4.08, 4.09, or 4.13 hereof;
(d) the Company fails to observe or perform any other covenant or agreement
contained in this Indenture or the Notes, required by any of them to be
performed and the Default continues for a period of 60 days after notice from
the Trustee to the Company or from the Holders of 25% in aggregate principal
amount of the then outstanding Notes to the Company and the Trustee stating that
such notice is a "Notice of Default";
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary), whether such
Indebtedness or guarantee now exists or is created after the Issuance Date,
which default:
(i) is caused by a failure to pay when due principal of or interest on
such Indebtedness within the grace period provided for in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default"); or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more;
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(f) a final judgment or final judgments (other than any judgment as to
which a reputable insurance company has accepted full liability) for the payment
of money are entered by a court or courts of competent jurisdiction against the
Company or any Restricted Subsidiary of the Company which remains undischarged
for a period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such judgments exceeds $5 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) generally is unable to pay its debts as the same become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Material Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any Material Subsidiary or
for all or substantially all of its property; or
(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 60
days; and
(i) the revocation of a Material License. The term "Bankruptcy Law" means
Title 11, U.S. Code or any similar Federal, state or foreign law for the relief
of debtors or the protection of creditors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in clauses
(g) and (h) of Section 6.01 hereof) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Notes by notice to the Company and the Trustee, may declare all
the Notes to be due and payable. Upon such declaration, the Accreted Value of
(if prior to April 1, 2003) or the principal of, premium, if any, and interest
on (if on or after April 1, 2003), the
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Notes shall be due and payable immediately. If an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof occurs, such an amount shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. The Holders of a majority in principal
amount of the then outstanding Notes by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration. In the case of any Event of Default pursuant to the
provisions of Section 6.01 occurring by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to Section 7 of the
Initial Notes (Section 6 in the case of the Exchange Notes), an equivalent
premium shall, upon demand of the Holders of at least 25% in principal amount of
the then outstanding Notes delivered to the Company and the Trustee, also become
and be immediately due and payable to the extent permitted by law, anything in
this Indenture or in the Notes contained to the contrary notwithstanding. If an
Event of Default occurs prior to April 1, 2003, by reason of any willful action
(or inaction) taken (or not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Notes prior to April
1, 2003, pursuant to Section 7 of the Initial Notes (Section 6 in the case of
the Exchange Notes), then the premium payable for purposes of this paragraph for
each of the years beginning on April 1 of the years (March 13 in the case of
1998) set forth below shall, subject to the foregoing demand, be as set forth in
the following table expressed as a percentage of the amount that would otherwise
be due pursuant to this Section 6.02 hereof but for the provisions of this
sentence.
Year Percentage
1998............................ 109.750%
1999............................ 108.775%
2000............................ 107.800%
2001............................ 106.825%
2002............................ 105.850%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder 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. All remedies are cumulative to the
extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the then outstanding Notes
by notice to the Trustee may waive an existing Default or Event of Default and
its consequences except a continuing Default or Event of Default in the payment
of the principal of or interest on any Note. When a Default or Event of Default
is waived, it is cured and ceases; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding Notes
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
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, is unduly prejudicial to the rights of other Holders, or
would involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Holder gives to the Trustee notice of a continuing Event of
Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder made pursuant to this
Section.
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SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Notes and interest on overdue principal and
interest and such further amount as shall be sufficient to cover the costs and,
to the extent lawful, 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 and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property. Nothing contained herein shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Notes for principal
and interest (and Additional Amounts, if applicable), ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders made pursuant to this Section.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
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ARTICLE VII.
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 circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture and to confirm the
correctness of all mathematical computations.
(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: (i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01; (ii) 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 and (iii) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
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(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be charged with knowledge of any Event of Default
under subsection (c), (d), (e), (f) or (i) (and subsection (a) or (b) if the
Trustee does not act as Paying Agent) of Section 6.01 or of the identity of any
Material Subsidiary referred to in clause (ii) of the definition thereof unless
either (1) a Trust Officer of the Trustee assigned to its Corporate Trustee
Administration Department shall have actual knowledge thereof, or (2) the
Trustee shall have received notice thereof in accordance with Section 10.02
hereof from the Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is 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 Notes, it shall not be accountable for the Company's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Company in the Indenture or any statement in the Notes other than its
authentication or for compliance by the Company with the Registration Rights
Agreement.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment on any Note, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after the reporting date stated in Section 10.10, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA (Section) 313(a) if and to the extent required by such
(Section) 313(a). The Trustee also shall comply with TIA (Section) 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA (Section)
313(c).
A copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange on which the Notes are listed. The Company
shall notify the Trustee when the Notes are listed on any stock exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it. Such disbursements and expenses
may include the reasonable disbursements, compensation and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees, disbursements and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee, except money or property held in trust to pay principal and
interest on particular Notes.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
All amounts owing to the Trustee under this Section shall be payable by the
Company in United States dollars.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (Section) 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (Section) 310(b), any
Holder who has been a bona fide Holder of a Note for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08 hereof,
the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring trustee with respect to expenses and liabilities
incurred by it prior to such replacement.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (Section) 310(a)(1) and (5). The Trustee shall always have a combined
capital and surplus as stated in Section 10.10 hereof. The Trustee is subject to
TIA (Section) 310(b). The following indentures shall be deemed to be
specifically described herein for the purposes of clause (i) of the first
proviso contained in TIA (Section) 310(b): (a) indenture, dated as of October
14, 1993, between the Company and The Chase Manhattan Bank (formerly known as
Chemical Bank), as trustee, relating to the Applicable Notes, as amended, (b)
indenture, dated as of April 20, 1995, between the Company and The Chase
Manhattan Bank, as trustee, relating to the 12-3/4% Notes, as amended, (c)
indenture, dated as of January 30, 1996, between the Company and The Chase
Manhattan Bank, as trustee, relating to the 11-1/2% Notes, (d) indenture, dated
as February 12, 1997, between the Company and The Chase Manhattan Bank, as
trustee, relating to the 10% Notes, (e) indenture, dated as of March 13, 1998,
between the Company and The Chase Manhattan Bank,
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as trustee, relating to the Company's 9-1/2% Senior Notes Due 2008 and (f)
indenture, dated as of March 13, 1998, between the Company and The Chase
Manhattan Bank, as trustee, relating to Company's the 10-3/4% Senior Deferred
Coupon Notes Due 2008.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (Section) 311(a), excluding any creditor
relationship listed in TIA (Section) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (Section) 311(a) to the extent indicated
therein.
ARTICLE VIII.
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 7.07 and 8.03 hereof shall survive) when
all outstanding Notes theretofore authenticated and issued have been delivered
to the Trustee for cancellation and the Company has paid all sums payable
hereunder.
SECTION 8.02. OPTION TO EFFECT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
this Section 8.02 be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Section. Upon the Company's election to have
this Section 8.02 apply to all the outstanding Notes, the Company shall, subject
to the satisfaction of the conditions set forth in the next paragraph, be deemed
to have been discharged from its obligations with respect to all outstanding
Notes on the date such conditions are satisfied (hereinafter, "Defeasance"). For
this purpose, Defeasance means that the Company shall be deemed to have paid and
discharged the entire Obligations represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.03 hereof and the other Sections of this Indenture referred to in clauses (a)
and (b) below, and to have satisfied all its other obligations under such Notes
and this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in the following paragraph, payments in
respect of the principal of (or, if applicable, payments in respect of Accreted
Value), premium, if any, and interest on such Notes when such payments are due;
(ii) the Company's obligations with respect to such Notes under Article II
hereof; (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith; and (iv) this
Article VIII.
In order to exercise Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, pursuant to an irrevocable trust and
security agreement in form satisfactory to the
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Trustee, money in U.S. dollars sufficient or U.S. Government Obligations
the principal of and interest on which will be sufficient or a combination
thereof sufficient in the opinion of a nationally recognized firm of
independent public accountants, expressed in a written certification
thereof (in form satisfactory to the Trustee) to pay the principal of (or,
if applicable, payments in respect of Accreted Value), premium, if any, and
interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be, of such principal or
installment of principal of, premium, if any, and interest on the
outstanding Notes;
(b) the Company shall have delivered to the Trustee, an Opinion of
Counsel (which counsel may be an employee of the Company) reasonably
acceptable to the Trustee confirming that: (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the Issuance Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such 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;
(c) no Event of Default shall have occurred and be continuing on the
date of such Defeasance (other than an Event of Default resulting from or
related to the incurrence of Indebtedness, the proceeds of which are to be
applied to such deposit) or, insofar as Sections 6.01(g) and (h) hereof are
concerned, at any time in the period ending on the 91st day after the date
of deposit (or greater period of time in which any such deposit of trust
funds may remain subject to the effect of any Bankruptcy Law insofar as
those apply to the deposit by the Company);
(d) such Defeasance shall not result in a breach or violation of, or
constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;
(e) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit (or
such greater period referred to in (c) above), the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over any other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others;
(g) the deposit shall not result in the Company, the Trustee or the
trust fund established pursuant to (a) above being subject to regulation
under the Investment Company Act of 1940, as amended;
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(h) Holders of the Notes will have a valid, perfected and unavoidable
(under applicable Bankruptcy Law), subject to the passage of time referred
to clause (e) above, first priority security interest in the trust funds;
and
(i) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (subject to customary exceptions),
each stating that all conditions precedent provided for or relating to the
Defeasance have been complied with.
"U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged. In order to have money available on a payment date
to pay principal or interest (including Additional Amounts, if applicable) on
the Notes, the U.S. Government Obligations shall be payable as to principal or
interest on or before such payment date in such amounts as will provide the
necessary money. U.S. Government Obligations shall not be callable at the
issuer's option.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.02 hereof. It shall apply the deposited
money and the money from U.S. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of principal and interest
on the Notes.
SECTION 8.04. REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after the date upon which such payment shall have become
due; provided, however, that the Company shall have first caused notice of such
payment to the Company to be mailed to each Holder entitled thereto no less than
30 days prior to such payment. After payment to the Company, the Trustee and the
Paying Agent shall have no further liability with respect to such money and
Holders entitled to the money must look to the Company for payment as general
creditors unless any applicable abandoned property law designates another
Person.
SECTION 8.05. REINSTATEMENT.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.03 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application and (ii) the Holders of at least a majority in principal amount
of the then outstanding Notes so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 hereof
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 8.03 hereof or such request is revoked by such
Holders; provided,
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however, that if the Company makes any payment of interest on or principal of
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 5.01 hereof;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(d) to make any change that does not adversely affect the interests
hereunder of any Holder; or
(e) to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07 hereof, the Company and the Trustee may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in principal
amount of the Notes then outstanding may also waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment, supplement
or waiver under this Section may not:
(a) reduce the amount of Notes whose Holders must consent to an amendment,
supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note, alter
the manner of calculating Accreted Value or alter the provisions of Sections 7
and 8 of the Initial Note and Sections 6 and 7 of the Exchange Note (other than
provisions relating to the covenants described under Sections 4.10 and 4.13);
(c) reduce the rate of or change the time for payment of interest on any
Note;
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(d) waive a default in the payment of the principal of, or interest on, any
Note (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Note;
(f) make any change in Section 6.04 or 6.07 hereof;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in the foregoing amendment and waiver provisions of
this Article 9.
To secure a consent of the Holders under this Section 9.02, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Holders a notice briefly describing the
amendment or waiver.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Notes shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of a Note if the Trustee receives the notice of revocation
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented to the amendment, supplement or waiver.
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
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
principal amount of Notes required hereunder for such amendment or waiver to be
effective shall have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Holder, unless it is of the type described in any of clauses (a) through
(h) of Section 9.02 hereof. In such case, the
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amendment or waiver shall bind each Holder who has consented to it and every
subsequent Holder that evidences the same debt as the consenting Holder's Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment or waiver
on any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall authenticate new Notes that reflect the amendment or
waiver.
Failure to make such notation on a Note or to issue a new Note as aforesaid
shall not affect the validity and effect of such amendment or waiver.
SECTION 9.06. TRUSTEE PROTECTED.
The Trustee shall sign all supplemental indentures, except that the Trustee
may, but need not, sign any supplemental indenture that adversely affects its
rights.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
This Indenture is subject to the provisions of the TIA that are required to
be incorporated into this Indenture (or, prior to the registration of the Notes
pursuant to the Registration Rights Agreement, would be required to be
incorporated into this Indenture if it were qualified under the TIA), and shall,
to the extent applicable, be governed by such provisions. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required (or would be so required) to be incorporated in this Indenture by the
TIA, the incorporated provision shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in Person or mailed by first class mail
to the other's address stated in Section 10.10 hereof. 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 to a Holder shall be mailed by first class mail
to his address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
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All other notices or communications shall be in writing.
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 the
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 10.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA (Section) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
(Section) 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate 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
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 4.03)
shall include:
(a) a statement that the Person signing such certificate or rendering such
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has made
such examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by, or a meeting of,
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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SECTION 10.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of New York are not required to be open. 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. If any other operative date for purposes of
this Indenture shall occur on a Legal Holiday then for all purposes the next
succeeding day that is not a Legal Holiday shall be such operative date.
SECTION 10.08. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
SECTION 10.09. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Indenture may be executed by manual or facsimile signature in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 10.10. VARIABLE PROVISIONS.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
The first certificate pursuant to Section 4.03 hereof shall be for the
fiscal year ended on December 31, 1998.
The reporting date for Section 7.06 hereof is March 15, of each year. The
first reporting date is March 15, 1998.
The Trustee shall always have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch, Esq.
General Counsel
The Trustee's address is:
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The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trustee
Administration Department
SECTION 10.11. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND
THE NOTES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 10.12. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or an Affiliate. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.13. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 10.14. SEVERABILITY
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.15. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
NTL INCORPORATED, as Company
By: /s/ Richard J. Lubasch
------------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Andrew M. Deck
------------------------------------------
Name: Andrew M. Deck
Title: Vice President
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EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
[Restricted Notes Legend]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
<PAGE>
REVERSE OF THIS NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
TRANSFERORS PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN
THE MEANING OF RULE 903(c)(2) OF REGULATION S UNDER THE SECURITIES ACT), A
CERTIFICATE THAT MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY
THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (4) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM.
[Original Issue Discount Legend]
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING THE
UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES TO THIS SENIOR
NOTE. THE ISSUE DATE OF THIS SENIOR NOTE IS MARCH 13, 1998. THE ISSUE PRICE OF
THIS SENIOR NOTE IS $617.24 PER $1,000 OF INITIAL PRINCIPAL AMOUNT AT MATURITY.
THIS SENIOR NOTE IS ISSUED WITH $382.76 OF ORIGINAL ISSUE DISCOUNT PER $1,000 OF
INITIAL PRINCIPAL AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS SENIOR NOTE
IS 9.77%.
2
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No. ________
$________
CUSIP No. [ ]/CINS No.[ ]
9-3/4% SENIOR DEFERRED COUPON NOTE DUE 2008
NTL Incorporated, a Delaware corporation (the "Company"), promises to pay
to __________________________ or registered assigns, the principal sum of
____________________ $[____________] [,or such other amount as is indicated on
Schedule A hereof* /,] on April 1, 2008, subject to the further provisions of
this Senior Note set forth on the reverse hereof which further provisions shall
for all purposes have the same effect as if set forth at this place.
Interest Payment Dates: April 1 and October 1, commencing October 1, 2003
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Senior Note to be
signed manually or by facsimile by its duly authorized officers.
Dated:______________________________
NTL INCORPORATED
by:_________________________________
by:_________________________________
__________________________
* Applicable to Global Notes Only
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9-3/4% Senior Deferred
Coupon Notes Due 2008 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:______________________________________
Authorized Officer
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[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
9-3/4% Senior Deferred Coupon Note Due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 9-3/4% Senior Deferred Coupon Notes Due 2008 (the "Senior Notes").
The Senior Notes are being issued at a discount from their principal amount and
will accrete (in accordance with the definition of Accreted Value contained in
the Indenture) at a rate of 9-3/4%, compounded semiannually, to an aggregate
principal amount of $1,300,000,000 by April 1, 2003. The Company promises to pay
interest on the Senior Notes in cash semiannually on each April 1 and October 1,
commencing on October 1, 2003, to Holders of record on the immediately preceding
March 15 and September 15, respectively at the rate of 93/4% per annum. Interest
on the Senior Notes will accrue from the most recent date to which interest has
been paid, or if no interest has been paid, from April 1, 2003. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
will pay interest on overdue principal or overdue Accreted Value at the interest
or accretion rate borne by the Senior Notes, compounded semiannually, and it
shall pay interest on overdue installments of interest (without regard to any
applicable grace period) at the same interest rate compounded semiannually. Any
interest paid on this Senior Note shall be increased to the extent necessary to
pay Additional Amounts as set forth in this Senior Note.
2. Special Interest. The Holder of this Senior Note is entitled to the
benefits of the Registration Rights Agreement relating to the Senior Notes,
dated as of March 13, 1998, between the Company and the Initial Purchasers party
thereto (the "Registration Rights Agreement").
In the event that either (a) the Exchange Offer Registration Statement (as
such term is defined in the Registration Rights Agreement) is not filed with the
SEC on or prior to the 90th day following the date of original issuance of the
Senior Notes, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 270th day following the date of original issuance of the
Senior Notes (as such period may be extended in accordance with the SEC review
delay provisions of the Registration Rights Agreement) or (c) the Registered
Exchange Offer (as such term is defined in the Registration Rights Agreement) is
not consummated or a Shelf Registration Statement (as such term is defined in
the Registration Rights Agreement) is not declared effective on or prior to the
310th day following the date of original issuance of the Senior Notes (as such
period may be extended in accordance with the SEC review delay provisions of the
Registration Rights Agreement) (each such event referred to in clauses (a)
through (c) above, a "Registration Default"), interest will accrue (in addition
to the stated interest on the Senior Notes) from and including the next day
following each of (i) such 90-day period in the case of clause (a) above and
(ii) such 270-day period in the case of clause (b) above and (iii) such 310-day
period in the case of clause (c) above (in each of cases (b) and (c) as such
period is extended, if applicable, in the manner aforesaid) (each such period
referred to in clauses (i)-(iii) above an "Accrual Period"), at a rate per annum
equal to 0.50% of the Accreted Value of the Senior Notes (determined daily). The
amount of such additional interest (the "Special Interest") will increase by an
additional
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<PAGE>
0.50% of the Accreted Value with respect to each subsequent applicable Accrual
Period until all Registration Defaults have been cured, up to a maximum amount
of Special Interest of 1.50% per annum of the Accreted Value (determined daily).
In each case such additional interest will be payable in cash semiannually in
arrears on each April 1 and October 1, commencing October 1, 1998, to Holders of
record on the immediately preceding March 15 and September 15, respectively. In
the event that a Shelf Registration Statement is declared effective pursuant to
the terms of the Registration Rights Agreement, if the Company fails to keep
such Registration Statement continuously effective for the period required by
the Registration Rights Agreement, then from such time as the Shelf Registration
Statement is no longer effective until the earlier of (i) the date that the
Shelf Registration Statement is again deemed effective, (ii) the date that is
the second anniversary of the original issuance of the Senior Notes or (iii) the
date as of which all of the Senior Notes are sold pursuant to the Shelf
Registration Statement, Special Interest shall accrue at a rate per annum equal
to 0.50% of the Accreted Value of the Senior Notes (1.00% thereof if the Shelf
Registration Statement is no longer effective for 30 days or more) and shall be
payable in cash semiannually in arrears on each April 1 and October 1,
commencing October 1, 1998, to the Holders of record on the immediately
preceding March 15 and September 15, respectively.
3. Additional Amounts. This Section 3 shall apply only in the event that
the Company becomes, or a successor to the Company is, a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on this Senior Note shall be made without deduction for or on account
of, any and all present or future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction or withholding of such taxes,
duties, assessments or governmental charges is then required by law. If any
deduction or withholding for or on account of any present or future taxes,
assessments or other governmental charges of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands (or any
political subdivision or taxing authority thereof or therein) shall at any time
be required in respect of any amounts to be paid by the Company under this
Senior Note, the Company shall pay or cause to be paid such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts
received by a Holder of this Senior Note after such deduction or withholding
shall be not less than the amounts specified in this Senior Note to which the
Holder of this Senior Note is entitled; provided, however, that the Company
shall not be required to make any payment of Additional Amounts for or on
account of:
(a) any tax, assessment or other governmental charge to the extent
such tax, assessment or other governmental charge would not have been
imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member
or shareholder of, or possessor of a power over, such Holder, if such
Holder is an estate, nominee, trust, partnership or corporation), other
than the holding of this Senior Note or the receipt of amounts payable in
respect of this Senior Note, and the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident
thereof or being or having been present or engaged in trade or business
therein or having or having had a permanent establishment therein or (ii)
the presentation of this Senior Note (where presentation is required) for
payment on a date more than 30 days after the date on which such payment
became due and payable or the date on which payment thereof is duly
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<PAGE>
provided for, whichever occurs later, except to the extent that the Holder
would have been entitled to Additional Amounts had this Senior Note been
presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note, with a timely request of the Company addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change of Control Payment or interest with
respect to a Senior Note or withholding from the proceeds of a sale or
exchange of a Senior Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount,
redemption amount, Change of Control Payment or interest with respect to a
Senior Note, if such payment can be made, and is in fact made, without such
withholding by any other Paying Agent located inside the United States;
(f) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of a Senior Note to the extent that
the beneficial owner would not have been entitled to the payment of any
such Additional Amounts had the beneficial owner directly held the Senior
Note;
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the Holder of this
Senior Note. All references to principal amount or interest on the Senior Notes
in the Indenture or the Senior Notes shall include any Additional Amounts
payable to the Company pursuant to this Section 3.
4. Method of Payment. The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered Holders of Senior
Notes at the close of business on the record date for the next interest payment
date even though Senior Notes are canceled after the record date and on or
before the interest payment date. Holders must surrender Senior Notes to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium, if any, and interest in money of the United States that at
the time of payment is legal tender for payment of public and private
7
<PAGE>
debts. However, the Company may pay principal, premium, if any, and interest by
check payable in such money. It may mail an interest check to a holder's
registered address. If a Holder so requests, principal, premium, if any, and
interest may be paid by wire transfer of immediately available funds to an
account previously specified in writing by such Holder to the Company and the
Trustee.
5. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York, New York and in London, England. Banque
Internationale a Luxembourg S.A. will act as Paying Agent and Registrar in
Luxembourg as long as the Senior Notes are listed on the Luxembourg Stock
Exchange. The Company may change any Paying Agent or Registrar without prior
notice. The Company or any of its Affiliates may act in any such capacity.
6. Indenture. The Company issued the Senior Notes under an Indenture, dated
as of March 13, 1998 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the Senior Notes include those stated
in the Indenture and those made part of the Indenture by the Trust Indenture Act
of 1939 (15 U.S. Code (Sections) 77aaa-77bbbb) as in effect on the date of the
Indenture. The Senior Notes are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior Notes are
unsecured general obligations of the Company limited to $1,300,000,000 in
aggregate principal amount.
7. Optional Redemption. Except as provided in Section 8 hereof, the Senior
Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount )
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
Year Percentage
2003........................ 104.875%
2004........................ 103.250%
2005........................ 101.625%
2006 and thereafter......... 100.000%
8. Optional Tax Redemption. (a) The Senior Notes may be redeemed at the
option of the Company, in whole but not in part, upon not less than 30 nor more
than 60 days notice, at any time at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest to the date fixed for redemption
(or the Accreted Value thereof at the date of redemption if prior to April 1,
2003) if after the date on which Section 3 of this Senior Note becomes
applicable (the "Relevant Date") there has occurred any change in or amendment
to the laws (or any regulations or official rulings promulgated thereunder) of
the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands (or any political subdivision or taxing authority thereof or
therein), or any change in or amendment to the official application or
interpretation of such laws, regulation or rulings (a "Change in Tax Law") which
becomes effective after the Relevant Date, as a result of which the Company is
or would be so required on the next succeeding Interest Payment Date to pay
Additional Amounts with
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<PAGE>
respect to the Senior Notes as described under Section 3 hereof with respect to
withholding taxes imposed by the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) (a "Withholding Tax") and
such Withholding Tax is imposed at a rate that exceeds the rate (if any) at
which Withholding Tax was imposed on the Relevant Date, provided, however, that
(i) this paragraph shall not apply to the extent that, at the Relevant Date it
was known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after the
Relevant Date, (ii) no such notice of redemption may be given earlier than 90
days prior to the earliest date on which the Company would be obliged to pay
such Additional Amounts were a payment in respect of the Senior Notes then due,
(iii) at the time such notice of redemption is given, such obligation to pay
such Additional Amount remains in effect and (iv) the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Company.
The Senior Notes may also be redeemed, in whole but not in part, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid interest to the date fixed for redemption (or the Accreted Value
thereof at the date fixed for redemption if prior to April 1, 2003) if the
Person formed after the Relevant Date by a consolidation, amalgamation,
reorganization or reconstruction (or other similar arrangement) of the Company
or the Person into which the Company is merged after the Relevant Date or to
which the Company conveys, transfers or leases its properties and assets after
the Relevant Date substantially as an entirety (collectively, a "Subsequent
Consolidation") is required, as a consequence of such Subsequent Consolidation
and as a consequence of a Change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands occurring
after the date of such Subsequent Consolidation to pay Additional Amounts with
respect to Senior Notes with respect to Withholding Tax as described under
Section 3 hereof and such Withholding Tax is imposed at a rate that exceeds the
rate (if any) at which Withholding Tax was or would have been imposed on the
date of such Subsequent Consolidation, provided, however, that this paragraph
shall not apply to the extent that, at the date of such Subsequent Consolidation
it was known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after such
date.
The Company will also pay, or make available for payment, to Holders on the
Redemption Date any Additional Amounts (as described, but subject to the
exceptions referred to, in Section 3 hereof) resulting from the payment of such
Redemption Price.
9. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of the
Senior Notes to be redeemed at his address of record. The Senior Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. In the event of a redemption of less than all of the Senior
Notes, the Senior Notes will be chosen for redemption by the Trustee in
accordance with the Indenture. On and after the redemption date, interest ceases
to accrue on the Senior Notes or portions of them called for redemption.
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If this Senior Note is redeemed subsequent to a record date with respect to
any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest will be paid to the Person in whose name
this Senior Note is registered at the close of business on such record date.
10. Mandatory Redemption. The Company will not be required to make
mandatory redemption or repurchase payments with respect to the Senior Notes.
There are no sinking fund payments with respect to the Senior Notes.
11. Repurchase at Option of Holder. (a) If there is a Change of Control
Triggering Event, the Company shall be required to offer to purchase on the
Purchase Date all outstanding Senior Notes at a purchase price equal to 101% of
the Accreted Value thereof on the date of purchase (if such date is prior to
April 1, 2003), or 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest to the Purchase Date (if on or after April 1, 2003). Holders
of Senior Notes that are subject to an offer to purchase will receive a Change
of Control offer from the Company prior to any related Purchase Date and may
elect to have such Senior Notes or portions thereof in authorized denominations
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
and when the aggregate amount of Excess Proceeds from such Asset Sales exceeds
$15 million, the Company shall be required to make an offer (an "Asset Sale
Offer") to all holders of the Senior Notes and Other Qualified Notes to purchase
the maximum principal amount of Senior Notes and Other Qualified Notes
(determined on a pro rata basis according to the principal amount or accreted
value, as the case may be, of the Senior Notes and the Other Qualified Notes;
provided, however, that the asset sale offer must be made first to the holders
of the Applicable Notes) that may be purchased out of the Excess Proceeds, if
any, remaining after the consummation of an asset sale offer made to the holders
of the Applicable Notes, with respect to the Senior Notes, at an offer price in
cash in an amount equal to 100% of the Accreted Value on the date fixed for the
closing of such offer (if such date is prior to April 1, 2003) or 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer (if such date is on or after
April 1, 2003). To the extent that the aggregate principal amount or accreted
value, as the case may be, of Senior Notes, Applicable Notes and Other Qualified
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use such deficiency for general corporate purposes. If the
aggregate principal amount or accreted value, as the case may be, of Senior
Notes and Other Qualified Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, if any, remaining after the consummation of an asset
sale offer made to holders of the Applicable Notes, then such remaining Excess
Proceeds will be allocated pro rata according to principal amount or accreted
value, as the case may be, to the Senior Notes and each issue of the Other
Qualified Notes and, the Trustee will select the Senior Notes to be purchased in
accordance with Section 3.09(e) of the Indenture. Upon completion of such offer
to purchase, the amount of Excess Proceeds will be reset at zero.
12. Denominations, Transfer, Exchange. The Senior Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The transfer of Senior Notes may be registered, and Senior Notes may be
exchanged, as provided in the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange
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<PAGE>
or register the transfer of any Senior Note or portion of a Senior Note selected
for redemption (except the unredeemed portion of any Senior Note being redeemed
in part). Also, it need not exchange or register the transfer of any Senior Note
for a period of 15 days before a selection of Senior Notes to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 4 of this Senior
Note, the registered Holder of a Senior Note may be treated as its owner for all
purposes.
14. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of Senior
Notes entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
15. Defaults and Remedies. The Senior Notes shall have the Events of
Default set forth in Section 6.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the then outstanding Senior Notes by notice to the Company
and the Trustee may declare all the Senior Notes or Accreted Value to be due and
payable immediately, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all unpaid principal and interest
accrued on the Senior Notes shall become due and payable immediately without
further action or notice. The Holders of a majority in principal amount of the
Senior Notes then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest or Accreted Value that has
become due solely because of the acceleration. Holders may not enforce the
Indenture or the Senior Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Senior Notes issued under the Indenture may direct the Trustee in
its exercise of any trust or power. The Company must furnish annually compliance
certificates to the Trustee. The above description of Events of Default and
remedies is qualified by reference, and subject in its entirety, to the more
complete description thereof contained in the Indenture.
16. Amendments, Supplements and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Senior Notes. Without the consent of any Holder, the Indenture or
the Senior Notes may be amended among other things, to cure any ambiguity,
defect or inconsistency, to provide for assumption of the Company's obligations
to Holders, to make any change that does not adversely affect the rights of any
Holder or to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
17. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other things, engage in
certain transactions with Affiliates, incur
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additional indebtedness and make payments in respect of Capital Stock. The
limitations are subject to a number of important qualifications and exceptions.
18. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity may become the owner or pledgee of the Senior Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not Trustee, subject to certain limitations provided for in
the Indenture and in the TIA. Any Agent may do the same with like rights.
19. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE SENIOR NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
21. Authentication. The Senior Notes shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
22. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (- Custodian), and UGMA (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder of the Senior Notes upon written
request and without charge a copy of the Indenture. Request may be made to:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
General Counsel
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ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
(I) or (we) assign and transfer this Senior Note to
___________________________________________________
(Insert assignee's social security or tax I.D. no.)
___________________________________________________
___________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________ agent to transfer this
Senior Note on the books of the Company. The agent may substitute another to act
for him.
Your Signature: ____________________________________________________________
(Sign exactly as your name appears on the other side of this Senior Note)
Date: __________________
Signature Guarantee: * ____________________________________________
In connection with any transfer of any of the Senior Notes evidenced by
this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Senior Notes and the last
date, if any, on which such Senior Notes were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Senior Notes
are being transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance with Rule 144A under the Securities
Act of 1933; or
(3) |_| pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) |_| pursuant to another available exemption from the registration
requirements of the Securities Act of 1933. Unless one of the boxes is
checked, the Trustee will refuse to register
_____________________________
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
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<PAGE>
any of the Senior Notes evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if
box (2), (3) or (4) is checked, the Trustee may require, prior to
registering any such transfer of the Senior Notes such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
__________________________
Signature
Signature Guarantee*
__________________________
Signature must be guaranteed __________________________
Signature
__________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Senior
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Date: _____________________
__________________________
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
14
<PAGE>
NOTICE: To be executed by an executive officer
15
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note or a portion thereof
repurchased by the Company pursuant to Section 3.09, 4.10 or 4.13 of the
Indenture, check the box: [ ]
If the purchase is in part, indicate the portion (in denominations of
$1,000 or any integral multiple thereof) to be purchased:______________________
Your Signature: ____________________________________________________________
(Sign exactly as your name appears on the other side of this Senior Note)
Date: ________________________
Signature Guarantee:**/
________________________________
**/ Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
16
<PAGE>
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
$__________________. The following increases or decreases in the principal
amount of this Global Note have been made:
================================================================================
Amount of Amount of Principal Signature of Date of
decrease in increase in amount of authorized exchange
principal principal this Global officer of following such
amount of this amount of this Note Trustee or decrease or
Global Note Global Note Notes Custodian increase
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
17
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
[Global Notes Legend, if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
[Original Issue Discount Legend]
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING THE
UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES TO THIS SENIOR
NOTE. THE ISSUE DATE OF THIS SENIOR NOTE IS MARCH 13, 1998. THE ISSUE PRICE OF
THIS SENIOR NOTE IS $617.24 PER $1,000 OF INITIAL PRINCIPAL AMOUNT AT MATURITY.
THIS SENIOR NOTE IS ISSUED WITH $382.76 OF ORIGINAL ISSUE DISCOUNT PER $1,000 OF
INITIAL PRINCIPAL AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS SENIOR NOTE
IS 9.77%.
<PAGE>
No.___________ $__________
CUSIP No. [ ]CINS No. [ ]
9-3/4% SERIES B SENIOR DEFERRED COUPON NOTE DUE 2008
NTL Incorporated, a Delaware corporation (the "Company") promises to pay to
_________________________ or registered assigns, the principal sum of [ ] $[ ]
[or such other amount as is indicated on Schedule A hereof]**** on April 1,
2008, subject to the further provisions of this Senior Note set forth on the
reverse hereof which further provisions shall for all purposes have the same
effect as if set forth at this place.
Interest Payment Dates: April 1 and October 1, commencing October 1, 2003
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Senior Note to be
signed manually or by facsimile by its duly authorized officers.
Dated: ________________
NTL INCORPORATED,
by:____________________________________
by:____________________________________
_________________________
**** Applicable to Global Notes only.
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9-3/4% Series B Senior Deferred Coupon Notes
Due 2008 described in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________________
Authorized Officer
3
<PAGE>
(FORM OF REVERSE OF EXCHANGE NOTE)
NTL INCORPORATED
9-3/4% Series B Senior Deferred Coupon Note Due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 9-3/4% Series B Senior Deferred Coupon Notes Due 2008 (the "Senior
Notes"). The Senior Notes are being issued at a discount from their principal
amount and will accrete (in accordance with the definition of Accreted Value
contained in the Indenture) at a rate of 9-3/4%, compounded semiannually, to an
aggregate principal amount of $1,300,000,000 by April 1, 2003. The Company
promises to pay interest on the Senior Notes in cash semiannually on each April
1 and October 1, commencing on October 1, 2003, to Holders of record on the
immediately preceding March 15 and September 15, respectively, at the rate of
9-3/4% per annum. Interest on the Senior Notes will accrue from the most recent
date to which interest has been paid on the Company's 9-3/4% Senior Notes Due
2008, or the Senior Notes, as the case may be, or if no interest has been paid,
from April 1, 2003. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company will pay interest on overdue principal and
premium, if any, or overdue Accreted Value at the interest or accretion rate
borne by the Senior Notes, compounded semiannually, and it shall pay interest on
overdue installments of interest (without regard to any applicable grace period)
at the same interest rate compounded semiannually. Any interest paid on this
Senior Note shall be increased to the extent necessary to pay Additional Amounts
as set forth in this Senior Note.
2. Additional Amounts. This Section 2 shall apply only in the event that
the Company becomes, or a successor to the Company is, a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on this Senior Note shall be made without deduction for or on account
of, any and all present or future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction of such taxes, duties,
assessments or governmental charges is then required by law. If any deduction or
withholding for or on account of any present or future taxes, assessments or
other governmental charges of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or taxing authority thereof or therein)
shall at any time be required in respect of any amounts to be paid by the
Company under this Senior Note, the Company shall pay or cause to be paid such
additional amounts ("Additional Amounts") as may be necessary in order that the
net amounts received by a Holder of this Senior Note after such deduction or
withholding shall be not less than the amounts specified in this Senior Note to
which the Holder of this Senior Note is entitled; provided, however, that the
Company shall not be required to make any payment of Additional Amounts for or
on account of:
(a) any tax, assessment or other governmental charge to the extent
such tax, assessment or other governmental charge would not have been
imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary,
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<PAGE>
member or shareholder of, or possessor of a power over, such Holder, if
such Holder is an estate, nominee, trust, partnership or corporation),
other than the holding of this Senior Note or the receipt of amounts
payable in respect of this Senior Note, the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or any
political subdivision or taxing authority thereof or therein, including,
without limitation, such Holder (or such fiduciary, settlor, beneficiary,
member, shareholder or possessor) being or having been a citizen or
resident thereof or being or having been present or engaged in trade or
business therein or having or having had a permanent establishment therein
or (ii) the presentation of this Senior Note (where presentation is
required) for payment on a date more than 30 days after the date on which
such payment became due and payable or the date on which payment thereof is
duly provided for, whichever occurs later, except to the extent that the
Holder would have been entitled to Additional Amounts had this Senior Note
been presented on the last day of such period of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note, with a timely request of the Company addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change of Control Payment or interest with
respect to a Senior Note or withholding from the proceeds of a sale or
exchange of a Senior Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount,
redemption amount, Change of Control Payment or interest with respect to a
Senior Note, if such payment can be made, and is in fact made, without such
withholding by any other Paying Agent located inside the United States;
(f) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of a Senior Note to the extent that
the beneficial owner would not have been entitled to the payment of any
such Additional Amounts had the beneficial owner directly held the Senior
Note;
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional
5
<PAGE>
Amounts had such beneficiary or settlor been the Holder of this Senior Note. All
references to principal amount or interest on the Senior Notes in the Indenture
or the Senior Notes shall include any Additional Amounts payable to the Company
pursuant to this Section 2.
3. Method of Payment. The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered Holders of Senior
Notes at the close of business on the record date for the next interest payment
date even though Senior Notes are canceled after the record date and on or
before the interest payment date. Holders must surrender Senior Notes to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium, if any, and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal, premium, if any, and interest by check
payable in such money. It may mail an interest check to a holder's registered
address. If a Holder so requests, principal, premium, if any, and interest may
be paid by wire transfer of immediately available funds to an account previously
specified in writing by such Holder to the Company and the Trustee.
4. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York and in London, England. Banque Internationale
a Luxembourg S.A. will act as Paying Agent and Registrar in Luxembourg as long
as the Senior Notes are listed on the Luxembourg Stock Exchange. The Company may
change any Paying Agent or Registrar without prior notice. The Company or any of
its Affiliates may act in any such capacity.
5. Indenture. The Company issued the Senior Notes under an indenture, dated
as of March 13, 1998 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the Senior Notes include those stated
in the Indenture and those made part of the Indenture by the Trust Indenture Act
of 1939 (15 U.S. Code (Sections) 77aaa-77bbbb) as in effect on the date of the
Indenture. The Senior Notes are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior Notes are
unsecured general obligations of the Company limited to $1,300,000,000 in
aggregate principal amount.
6. Optional Redemption. Except as provided in Section 7 herein, the Senior
Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
Year Percentage
2003 ........................... 104.875%
2004............................ 103.250%
2005............................ 101.625%
2006 and thereafter............. 100.000%
6
<PAGE>
7. Optional Tax Redemption. (a) The Senior Notes may be redeemed at the
option of the Company, in whole but not in part, upon not less than 30 nor more
than 60 days notice, at any time at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest to the date fixed for redemption
(or the Accreted Value thereof at the date of redemption if prior to April 1,
2003) if after the date on which Section 2 of this Senior Note becomes
applicable (the "Relevant Date") there has occurred any change in or amendment
to the laws (or any regulations or official rulings promulgated thereunder) of
the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands (or any political subdivision or taxing authority thereof or
therein), or any change in or amendment to the official application or
interpretation of such laws, regulations or rulings (a "Change in Tax Law")
which becomes effective after the Relevant Date, as a result of which the
Company is or would be so required on the next succeeding Interest Payment Date
to pay Additional Amounts with respect to the Senior Notes as described under
Section 2 hereof with respect to withholding taxes imposed by the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands (or any political subdivision or taxing authority thereof or therein) (a
"Withholding Tax') and such Withholding Tax is imposed at a rate that exceeds
the rate (if any) at which Withholding Tax was imposed on the Relevant Date,
provided, however, that (i) this paragraph shall not apply to the extent that,
at the Relevant Date it was known or would have been known had professional
advice of a nationally recognized accounting firm in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands, as the
case may be, been sought, that a change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands was to
occur after the Relevant Date, (ii) no such notice of redemption may be given
earlier than 90 days prior to the earliest date on which the Company would be
obliged to pay such Additional Amounts were a payment in respect of the Senior
Notes then due, (iii) at the time such notice of redemption is given, such
obligation to pay such Additional Amount remains in effect and (iv) the payment
of such Additional Amounts cannot be avoided by the use of any reasonable
measures available to the Company.
(b) The Senior Notes may also be redeemed, in whole but not in part, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid interest to the date fixed for redemption (or the Accreted Value
thereof at the date fixed for redemption if prior to April 1, 2003) if the
Person formed after the Relevant Date by a consolidation, amalgamation,
reorganization or reconstruction (or other similar arrangement) of the Company
or the Person into which the Company is merged after the Relevant Date or to
which the Company conveys, transfers or leases its properties and assets after
the Relevant Date substantially as an entirety (collectively, a "Subsequent
Consolidation") is required, as a consequence of such Subsequent Consolidation
and as a consequence of a Change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands occurring
after the date of such Subsequent Consolidation to pay Additional Amounts with
respect to Senior Notes with respect to Withholding Tax as described under
Section 2 hereof and such Withholding Tax is imposed at a rate that exceeds the
rate (if any) at which Withholding Tax was or would have been imposed on the
date of such Subsequent Consolidation, provided, however, that this paragraph
shall not apply to the extent that, at the date of such Subsequent Consolidation
it was known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after such
date.
7
<PAGE>
The Company will also pay, or make available for payment, to Holders on the
Redemption Date any Additional Amounts (as described, but subject to the
exceptions referred to, in Section 2 hereof) resulting from the payment of such
Redemption Price.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of the
Senior Notes to be redeemed at his address of record. The Senior Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. In the event of a redemption of less than all of the Senior
Notes, the Senior Notes will be chosen for redemption by the Trustee in
accordance with the Indenture. On and after the redemption date, interest ceases
to accrue on the Senior Notes or portions of them called for redemption. If this
Senior Note is redeemed subsequent to a record date with respect to any interest
payment date specified above and on or prior to such interest payment date, then
any accrued interest will be paid to the Person in whose name this Senior Note
is registered at the close of business on such record date.
9. Mandatory Redemption. The Company will not be required to make mandatory
redemption or repurchase payments with respect to the Senior Notes. There are no
sinking fund payments with respect to the Senior Notes.
10. Repurchase at Option of Holder. (a) If there is a Change of Control
Triggering Event, the Company shall be required to offer to purchase on the
Purchase Date all outstanding Senior Notes at a purchase price equal to 101% of
the Accreted Value thereof on the date of purchase (if such date is prior to
April 1, 2003), or 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest to the Purchase Date (if on or after April 1, 2003). Holders
of Senior Notes that are subject to an offer to purchase will receive a Change
of Control offer from the Company prior to any related Purchase Date and may
elect to have such Senior Notes or portions thereof in authorized denominations
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
and when the aggregate amount of Excess Proceeds from such Asset Sales exceeds
$15 million, the Company shall be required to make an offer (an "Asset Sale
Offer") to all holders of the Senior Notes and Other Qualified Notes to purchase
the maximum principal amount of Senior Notes and Other Qualified Notes
(determined on a pro rata basis according to the principal amount or accreted
value, as the case may be, of the Senior Notes and the Other Qualified Notes;
provided, however, that the asset sale offer must be made first to the holders
of the Applicable Notes) that may be purchased out of the Excess Proceeds, if
any, remaining after the consummation of an asset sale offer made to the holders
of the Applicable Notes, with respect to the Senior Notes, at an offer price in
cash in an amount equal to 100% of the Accreted Value on the date fixed for the
closing of such offer (if such date is prior to April 1, 2003) or 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer (if such date is on or after
April 1, 2003). To the extent that the aggregate principal amount or accreted
value, as the case may be, of Senior Notes, Applicable Notes and Other Qualified
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use such deficiency for general corporate purposes. If the
aggregate principal amount or accreted value, as the case may be, of Senior
Notes and Other Qualified Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, if any, remaining after the consummation of an asset
sale offer made to the holders of the Applicable Notes, then any remaining
Excess Proceeds will be
8
<PAGE>
allocated pro rata according to principal amount or accreted value, as the case
may be, to the Senior Notes and each issue of the Other Qualified Notes and, the
Trustee will select the Senior Notes to be purchased in accordance with Section
3.09(e) of the Indenture. Upon completion of such offer to purchase, the amount
of Excess Proceeds will be reset at zero.
11. Denominations, Transfer, Exchange. The Senior Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The transfer of Senior Notes may be registered, and Senior Notes may be
exchanged, as provided in the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Senior Note or
portion of a Senior Note selected for redemption (except the unredeemed portion
of any Senior Note being redeemed in part). Also, it need not exchange or
register the transfer of any Senior Note for a period of 15 days before a
selection of Senior Notes to be redeemed.
12. Persons Deemed Owners. Except as provided in paragraph 3 of this Senior
Note, the registered Holder of a Senior Note may be treated as its owner for all
purposes.
13. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of Senior
Notes entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
14. Defaults and Remedies. The Senior Notes shall have the Events of
Default as set forth in Section 6.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the then outstanding Senior Notes by notice to the Company
and the Trustee may declare all the Senior Notes to be due and payable
immediately, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all unpaid principal and interest accrued on
the Senior Notes or Accreted Value shall become due and payable immediately
without further action or notice. The Holders of a majority in principal amount
of the Senior Notes then outstanding by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest or Accreted
Value that has become due solely because of the acceleration. Holders may not
enforce the Indenture or the Senior Notes as provided in the Indenture. Subject
to certain limitations, Holders of a majority in principal amount of the then
outstanding Senior Notes issued under the Indenture may direct the Trustee in
its exercise of any trust or power. The Company must furnish annually compliance
certificates to the Trustee. The above description of Events of Default and
remedies is qualified by reference, and subject in its entirety, to the more
complete description thereof contained in the Indenture.
15. Amendments, Supplements and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default may be waived with
the
9
<PAGE>
consent of the Holders of a majority in principal amount of the then outstanding
Senior Notes. Without the consent of any Holder, the Indenture or the Senior
Notes may be amended among other things, to cure any ambiguity, defect or
inconsistency, to provide for assumption of the Company's obligations to
Holders, to make any change that does not adversely affect the rights of any
Holder or to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
16. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other things, engage in
certain transactions with Affiliates, incur additional Indebtedness and make
payments in respect of Capital Stock. The limitations are subject to a number of
important qualifications and exceptions.
17. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity may become the owner or pledgee of the Senior Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not Trustee, subject to certain limitations provided for in
the Indenture and in the TIA. Any Agent may do the same with like rights.
18. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE SENIOR NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
20. Authentication. The Senior Notes shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
21. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and UGMA (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder of the Senior Notes upon written
request and without charge a copy of the Indenture. Request may be made to:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
General Counsel
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ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
(I) or (we) assign and transfer this Senior Note to
__________________________ (Insert assignee's social security or tax I.D. no.)
______________________________________
______________________________________
__________________________ (Print or type assignee's name, address and zip code)
and irrevocably appoint __________________________________________ agent to
transfer this Senior Note on the books of the Company. The agent may substitute
another to act for him.
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Senior Note)
Date: __________________
Signature Guarantee: **/ ______________________________
_________________________
**/ Signature must be guaranteed by a commercial Bank, trust company or member
of the New York Stock Exchange.
11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note or a portion thereof
repurchased by the Company pursuant to Section 3.09, 4.10 or 4.13 of the
Indenture, check the box: |_|
If the purchase is in part, indicate the portion (in denominations of
$1,000 or any integral multiple thereof) to be purchased: _____________________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this Senior Note)
Date: ________________________
Signature Guarantee:***
_____________________
*** Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
12
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
$__________________. The following increases or decreases in the principal
amount of this Global Note have been made:
================================================================================
Amount of Amount of Principal Signature of Date of
decrease in increase in amount of authorized exchange
principal principal this Global officer of following such
amount of this amount of this Note Trustee or decrease or
Global Note Global Note Notes Custodian increase
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
13
<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to (Section) 2.06(a)(ii)
of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee.
This letter relates to $[ ] aggregate principal amount of Senior Notes
which are held in the form of the [Rule 144A Global Note (CUSIP No. )] with the
Depositary in the name of [name of transferor] (the "Transferor") to effect the
transfer of the Senior Notes in exchange for an equivalent beneficial interest
in the Regulation S Global Notes.
In connection with such request, the Transferor does hereby certify that
such transfer has been effected in accordance with the transfer restrictions set
forth in the Senior Notes and (i) with respect to transfers made in reliance on
Regulation S, does hereby certify that:
(1) the offer of the Senior Notes was not made to a Person in the
United States;
(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor any
Person acting on its behalf knows that the transaction was pre-arranged
with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933, as
amended (the "Securities Act");
and (ii) with respect to transfers made in reliance on Rule 144 does hereby
certify that the Senior Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act; and (iii) with respect to transfers made
in reliance on Rule 144A, does hereby certify that such Senior Notes are being
transferred in accordance with Rule 144A under the Securities Act to a
transferee that the Transferor reasonably believes is purchasing the Senior
Notes for its own account or an account with respect to
<PAGE>
which the transferee exercises sole investment discretion and the transferee and
any such account is a "qualified institutional buyer" within the meaning of Rule
144A, in a transaction meeting the requirements of Rule 144A and in accordance
with applicable securities laws of any state of the United States or any other
jurisdiction.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the
case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Capitalized terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S.
[Name of Transferor]
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
2
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to (Section) 2.06(a)(iii)
of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to $[ ] aggregate principal amount of Senior Notes
which are held in the form of the Regulation S Global Note (CINS No. [ ]) with
the Depositary in the name of [name of transferor] (the "Transferor") to effect
the transfer of the Senior Notes in exchange for an equivalent beneficial
interest in the Rule 144A Global Note.
In connection with such request, and in respect of such Senior Notes the
Transferor does hereby certify that such Senior Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Senior Notes and
(ii) Rule 144A under the United States Securities Act of 1933, as amended, to a
transferee that the Transferor reasonably believes is purchasing the Senior
Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion and the transferee and any such account is
a "qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
[Name of Transferor],
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to (Section) 2.06(a)(iv)
or (Section) 2.06(a)(v) of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to $[ ] aggregate principal amount of Senior Notes
which are held [in the form of the [Rule 144A/Regulation S] [Global]
[Restricted] Note (CUSIP No. [ ] CINS No. [ ]) with the Depositary in the name
of [name of transferor] (the "Transferor") to effect the transfer of the Senior
Notes.
In connection with such request, and in respect of such Senior Notes, the
Transferor does hereby certify that such Senior Notes are being transferred (i)
in accordance with the transfer restrictions set forth in the Senior Notes and
(ii) in accordance with applicable securities laws of any state of the United
States or any other jurisdiction.
*Insert, if appropriate.
[Name of Transferor],
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
<PAGE>
EXHIBIT F
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13,1998 (the
"Indenture), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to $[ ] aggregate principal amount of Senior Notes
which are held [in the form of the [Rule 144/Regulation S] [Restricted] [Global]
Note (CUSIP No. [ ] CINS No. [ ]) with the Depositary * * in the name of [name
of transferor] (the "Transferor") to effect the transfer of the Senior Notes to
the undersigned.
In connection with such request, and in respect of such Senior Notes we
confirm that:
1. We understand that the Senior Notes were originally offered in a
transaction not involving any public offering in the United States within the
meaning of the United States Securities Act of 1933, as amended (the "Securities
Act"), that the Senior Notes have not been registered under the Securities Act
and that (A) the Senior Notes may be offered, resold, pledged or otherwise
transferred only (i) to a Person who the seller reasonably believes is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, in a transaction
meeting the requirements of Rule 144 under the Securities Act, to a Person who
the seller reasonably believes is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act), outside the United States in a transaction meeting the requirements of
Rule 903 or 904 of Regulation S under the Securities Act or in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (ii) to the
Company, (iii) pursuant to any other available exemption from registration or
(iv) pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction and (B) the purchaser will, and each
subsequent Holder is required to, notify any subsequent purchaser from it of the
resale restrictions set forth in (A) above.
_________________________
* Insert and modify if appropriate
<PAGE>
2. We are a corporation, partnership or other entity having such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Senior Notes, and we are (or any
account for which we are purchasing under paragraph 4 below is) an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, able to bear the economic risk of our proposed investment in the
Notes.
3. We are acquiring the Senior Notes for our own account (or for accounts
as to which we exercise sole investment discretion and have authority to make,
and do make, the statements contained in this letter) and not with a view to any
distribution of the Senior Notes, subject, nevertheless, to the understanding
that the disposition of our property shall at all times be and remain within our
control.
4. We are, and each account (if any) for which we are purchasing Senior
Notes is, purchasing Senior Notes having an aggregate [Accreted Value]
[principal amount at maturity] of not less than $100,000.
5. We understand that (a) the Senior Notes will be delivered to us in
registered form only and that the certificate delivered to us in respect of the
Senior Notes will bear a legend substantially to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS PRIOR TO
THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE
903(c)(2) OF REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE THAT MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, (4) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
2
<PAGE>
STATES, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (4) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM.
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
6. We agree that in the event that at some future time we wish to dispose
of any of the Senior Notes, we will not do so unless:
(a) the Senior Notes are sold to the Company;
(b) the Senior Notes are sold to a qualified institutional buyer in
compliance with Rule 144A under the Securities Act;
(c) the Senior Notes are sold outside the United States in compliance with
Rule 903 or Rule 904 under the Securities Act;
(d) the Senior Notes are sold pursuant to an effective registration
statement under the Securities Act; or
(e) the Senior Notes are sold pursuant to any other available exemption
from registration, subject to the requirements of the legend set forth above.
Very truly yours,
[PURCHASER]
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
3
<PAGE>
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S GLOBAL NOTE FOR
RESTRICTED NOTES
(Transfers pursuant to (Section) 2.06(a)(viii))
(Transferor)
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 9-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This certificate relates to $[ ] aggregate principal amount of Senior Notes
which are held in the form of the Regulation S Global Note (CINS No. [ ]) with
the Depositary in the name of [name of transferor] (the "Transferor") to effect
the transfer of the beneficial interest in such Regulation S Global Note for a
beneficial interest in an equivalent aggregate principal amount of Restricted
Securities.
In connection with such request, and in respect of such Senior Notes, we
confirm that:
We are either not a U.S. Person (as defined below) or we have purchased our
beneficial interest in the above referenced Regulation S Global Note in a
transaction that is exempt from the registration requirements under the
Securities Act.
We are delivering this certificate in connection with obtaining a
beneficial interest in Restricted Securities in exchange for our beneficial
interest in the Regulation S Global Note.
For purposes of this certificate, "U.S. Person" means (i) any individual
resident in the United States, (ii) any partnership or corporation organized or
incorporated under the laws of the United States, (iii) any estate of which an
executor or administrator is a U.S. Person (other than an estate governed by
foreign law and of which at least one executor or administrator is a non-U.S.
Person who has sole or shared investment discretion with respect to its assets),
(iv) any trust of which any trustee is a U.S. Person (other than a trust of
which at least one trustee is a non-U.S. Person who has sole or shared
investment discretion with respect to its assets and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. Person), (v) any agency or
branch of a foreign entity located in the United States, (vi) any non-
discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a U.S. Person, (vii) any
discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated or (if an individual) resident
in the
<PAGE>
United States (other than such an account held for the benefit or account of a
non-U.S. Person), (viii) any partnership or corporation organized or
incorporated under the laws of a foreign jurisdiction and formed by a U.S.
Person principally for the purpose of investing in securities not registered
under the Securities Act (unless it is organized or incorporated, and owned, by
accredited investors within the meaning of Rule 501(a) under the Securities Act
who are not natural Persons, estates or trusts); provided, however, that the
term "U.S. Person" shall not include (A) a branch or agency of a U.S. Person
that is located and operating outside the United States for valid business
purposes as a locally regulated branch or agency engaged in the banking or
insurance business, (B) any employee benefit plan established and administered
in accordance with the law, customary practices and documentation of a foreign
country and (C) the international organizations set forth in Section 902(o)(7)
of Regulation S under the Securities Act and any other similar international
organizations, and their agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a copy hereof
to any interested party in any administrative or other proceedings with respect
to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:___________________________
Name:
Title:
Dated: To be completed by the account
Holder as, or as agent for, the
beneficial owner(s) of the Senior
Notes to which this certificate
relates.
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
2
EXHIBIT 4.12
EXECUTION COPY
================================================================================
NTL INCORPORATED
300,000,000 POUNDS STERLING
10-3/4% SENIOR DEFERRED COUPON NOTES DUE 2008
-----------------------------------
INDENTURE
Dated as of March 13, 1998
-----------------------------------
------------------------
The Chase Manhattan Bank
Trustee
------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I......................................................................1
Section 1.01. Definitions...................................................1
Section 1.02. Other Definitions............................................14
Section 1.03. Incorporation by Reference of Trust Indenture Act............15
Section 1.04. Rules of Construction........................................15
ARTICLE II. THE NOTES.........................................................16
Section 2.01. Form and Dating..............................................16
Section 2.02. Execution and Authentication.................................18
Section 2.03. Registrar and Paying Agent...................................19
Section 2.04. Paying Agent to Hold Money in Trust..........................19
Section 2.05. Holder Lists.................................................19
Section 2.06. Transfer and Exchange........................................19
Section 2.07. Replacement Notes............................................24
Section 2.08. Outstanding Notes............................................24
Section 2.09. Treasury Notes...............................................24
Section 2.10. Temporary Notes; Global Notes................................25
Section 2.11. Cancellation.................................................25
Section 2.12. Defaulted Interest...........................................26
ARTICLE III. REDEMPTION.......................................................26
Section 3.01. Notices to Trustee...........................................26
Section 3.02. Selection of Notes to Be Redeemed............................26
Section 3.03. Notice of Redemption.........................................26
Section 3.04. Effect of Notice of Redemption...............................27
Section 3.05. Deposit of Redemption Price..................................27
Section 3.06. Notes Redeemed in Part.......................................27
Section 3.07. Optional Redemption and Optional Tax Redemption..............27
Section 3.08. Mandatory Redemption.........................................28
Section 3.09. Asset Sale Offer and Purchase Offer..........................28
ARTICLE IV. COVENANTS.........................................................31
Section 4.01. Payment of Notes.............................................31
Section 4.02. Reports......................................................31
Section 4.03. Compliance Certificate.......................................31
Section 4.04. Stay, Extension and Usury Laws...............................32
Section 4.05. Corporate Existence..........................................32
Section 4.06. Taxes........................................................32
Section 4.07. Limitations on Liens.........................................32
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock...33
Section 4.09. Restricted Payments..........................................35
Section 4.10. Asset Sales..................................................38
i
<PAGE>
Section 4.11. Transactions with Affiliates.................................40
Section 4.12. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.....................................42
Section 4.13. Change of Control............................................43
Section 4.14. Payment of Additional Amounts................................43
ARTICLE V. SUCCESSORS.........................................................44
Section 5.01. Merger, Consolidation or Sale of Assets......................44
Section 5.02. Successor Corporation Substituted............................45
ARTICLE VI. DEFAULTS AND REMEDIES.............................................45
Section 6.01. Events of Default............................................45
Section 6.02. Acceleration.................................................47
Section 6.03. Other Remedies...............................................48
Section 6.04. Waiver of Past Defaults......................................48
Section 6.05. Control by majority..........................................48
Section 6.06. Limitation on Suits..........................................48
Section 6.07. Rights of Holders to Receive Payment.........................49
Section 6.08. Collection Suit by Trustee...................................49
Section 6.09. Trustee May File Proofs of Claim.............................49
Section 6.10. Priorities...................................................49
Section 6.11. Undertaking for Costs........................................50
ARTICLE VII. TRUSTEE..........................................................50
Section 7.01. Duties of Trustee............................................50
Section 7.02. Rights of Trustee............................................51
Section 7.03. Individual Rights of Trustee.................................51
Section 7.04. Trustee's Disclaimer.........................................51
Section 7.05. Notice of Defaults...........................................51
Section 7.06. Reports by Trustee to Holders................................52
Section 7.07. Compensation and Indemnity...................................52
Section 7.08. Replacement of Trustee.......................................52
Section 7.09. Successor Trustee by Merger, Etc.............................53
Section 7.10. Eligibility; Disqualification................................54
Section 7.11. Preferential Collection of Claims Against Company............54
ARTICLE VIII. DISCHARGE OF INDENTURE..........................................54
Section 8.01. Termination of Company's Obligations.........................54
Section 8.02. Option to Effect Defeasance..................................54
Section 8.03. Application of Trust Money...................................56
Section 8.04. Repayment to Company.........................................57
Section 8.05. Reinstatement................................................57
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS...............................57
Section 9.01. Without Consent of Holders...................................57
Section 9.02. With Consent of Holders......................................58
Section 9.03. Compliance with Trust Indenture Act..........................58
Section 9.04. Revocation and Effect of Consents............................59
Section 9.05. Notation on or Exchange of Notes.............................59
Section 9.06. Trustee Protected............................................59
ARTICLE X. MISCELLANEOUS......................................................60
ii
<PAGE>
Section 10.01. Trust Indenture Act Controls...............................60
Section 10.02. Notices....................................................60
Section 10.03. Communication by Holders with Other Holders................60
Section 10.04. Certificate and Opinion as to Conditions Precedent.........60
Section 10.05. Statements Required in Certificate or Opinion..............61
Section 10.06. Rules by Trustee and Agents................................61
Section 10.07. Conversion of Currency.....................................61
Section 10.08. Legal Holidays.............................................63
Section 10.09. No Recourse Against Others.................................63
Section 10.10. Counterparts and Facsimile Signatures......................63
Section 10.11. Variable Provisions........................................63
Section 10.12. Governing Law..............................................64
Section 10.13. No Adverse Interpretation of Other Agreements..............64
Section 10.14. Successors.................................................64
Section 10.15. Severability...............................................64
Section 10.16. Table of Contents, Headings, Etc...........................64
iii
<PAGE>
CROSS-REFERENCE TABLE*
(a) Trust Indenture
Act Section Indenture Section
310 (a)(1)...............................................................7.10
(a)(2) ..................................................................7.10
(a)(3)...................................................................N.A.
(a)(4)...................................................................N.A.
(a)(5)...................................................................7.10
(b)......................................................................7.08,
7.10
(c)......................................................................N.A.
311(a)...................................................................7.11
(b)......................................................................7.11
(c)......................................................................N.A.
312 (a)..................................................................2.05
(b)......................................................................10.03
(c)......................................................................10.03
313(a)...................................................................7.06
(b)(1)...................................................................N.A.
(b)(2)...................................................................7.06
(c)......................................................................7.06
(d)......................................................................7.06
314(a)...................................................................4.02
4.03,
(b)......................................................................N.A.
(c)(1)...................................................................10.04
(c)(2)...................................................................10.04
(c)(3)...................................................................N.A.
(d)......................................................................N.A.
(e)......................................................................N.A.
(f)......................................................................N.A.
315(a)...................................................................7.01(b)
(b)......................................................................7.05
(c) .....................................................................7.01(a)
(d)......................................................................7.01(c)
(e)......................................................................6.11
316 (a)(last sentence)...................................................2.09
(a)(1)(A)................................................................6.05
(a)(1)(B)................................................................6.04
(a)(2)...................................................................N.A.
(b)......................................................................6.07
(c)......................................................................9.04
iv
<PAGE>
317 (a)(1)...............................................................6.08
(a)(2)...................................................................6.09
(b)......................................................................2.04
318 (a)..................................................................N.A.
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
v
<PAGE>
INDENTURE, dated as of March 13, 1998, between NTL Incorporated, a Delaware
corporation (the "Company"), and The Chase Manhattan Bank, a New York
corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders (as defined in Section 1.01) of the
Company's 10-3/4% Senior Deferred Coupon Notes Due 2008 (the "Initial Notes")
and, if and when issued in exchange for Initial Notes, the Company's 10-3/4%
Series B Senior Deferred Coupon Notes Due 2008 (the "Exchange Notes" and,
together with the Initial Notes, the "Notes"):
ARTICLE I.
SECTION 1.01. DEFINITIONS.
"10% Notes" means the Company's 10% Series B Senior Notes Due 2007.
"11-1/2% Notes" means the Company's 11-1/2% Series B Senior Deferred Coupon
Notes Due 2006.
"12-3/4% Notes" means the Company's 12-3/4% Series A Senior Deferred Coupon
Notes Due 2005.
"Accreted Value" means, as of any date of determination prior to April 1,
2003, with respect to any Note, the sum of (a) the initial offering price (which
is 586.20 pounds sterling per 1000 pounds sterling principal amount at maturity
of the Notes) of such Note and (b) the portion of the excess of the principal
amount of such Note over such initial offering price which shall have been
accreted thereon through such date, such amount to be so accreted on a daily
basis at a rate of 10.75% per annum of the initial offering price of a Note,
compounded semiannually on each April 1 and October 1 from the date of issuance
of the Notes through the date of determination, computed on the basis of a
360-day year of twelve 30-day months.
"Acquired Debt" means, with respect to any specified Person, Indebtedness
of any other Person (the "Acquired Person") existing at the time such Acquired
Person merged with or into or became a Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
Acquired Person merging with or into or becoming a Subsidiary of such specified
Person.
"Acquired Person" has the meaning specified in the definition of Acquired
Debt.
"Adjusted Total Assets" means the total amount of assets of the Company and
its Restricted Subsidiaries (including the amount of any Investment in any
Non-Restricted Subsidiary), except to the extent resulting from write-ups of
assets (other than write-ups in connection with accounting for acquisitions in
conformity with GAAP), after deducting therefrom (i) all current liabilities of
the Company and its Restricted Subsidiaries, and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as calculated in conformity with GAAP. For purposes of this
Adjusted Total Assets definition, (a) assets shall be calculated less applicable
accumulated depreciation, accumulated amortization and other valuation reserves,
and (b) all calculations shall exclude all intercompany items.
"Adjusted Total Controlled Assets" means the total amount of assets of the
Company and its Cable Controlled Subsidiaries, except to the extent resulting
from write-ups of assets (other than write-
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ups in connection with accounting for acquisitions in conformity with GAAP),
after deducting therefrom (i) all current liabilities of the Company and such
Cable Controlled Subsidiaries; and (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles of the
Company and such Restricted Subsidiaries, all as calculated in conformity with
GAAP; provided that Adjusted Total Controlled Assets shall be reduced (to the
extent not otherwise reduced in accordance with GAAP) by an amount equal to the
aggregate amount of all Investments of the Company or any such Cable Controlled
Subsidiaries in any Person other than a Cable Controlled Subsidiary, except Cash
Equivalents. For purposes of this Adjusted Total Controlled Assets definition,
(a) assets shall be calculated less applicable accumulated depreciation,
accumulated amortization and other valuation reserves, and (b) all calculations
shall exclude all intercompany items.
"Affiliate" of any specified Person means any other Person directly
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar or Paying Agent.
"Annualized Pro Forma EBITDA" means, with respect to any Person, such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"Applicable Notes" means the Company's 10 7/8% Senior Deferred Coupon Notes
Due 2003.
"Asset Sale" means (i) any sale, lease, transfer, conveyance or other
disposition of any assets (including by way of a sale-and-leaseback) other than
the sale or transfer of inventory or goods held for sale in the ordinary course
of business (provided that the sale, lease, transfer, conveyance or other
disposition of all or substantially all of the assets of the Company shall be
governed by Section 4.13 or 5.01 hereof) or (ii) any issuance, sale, lease,
transfer, conveyance or other disposition of any Equity Interests of any of the
Company's Restricted Subsidiaries to any Person; in either case other than (A)
to (w) the Company, (x) any Wholly Owned Subsidiary, or (y) any Subsidiary which
is a Subsidiary of the Company on the Issuance Date provided that at the time of
and after giving effect to such issuance, sale, lease, transfer, conveyance or
other disposition to such Subsidiary, the Company's ownership percentage in such
Subsidiary is equal to or greater than such percentage on the Issuance Date or
(B) the issuance, sale, transfer, conveyance or other disposition of Equity
Interests of a Subsidiary in exchange for capital contributions made on a pro
rata basis by the holders of the Equity Interests of such Subsidiary.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Business Day" means any day that is not a Legal Holiday.
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"Cable Assets" means tangible or intangible assets, licenses (including,
without limitation, Licenses) and computer software used in connection with a
Cable Business.
"Cable Business" means (i) any Person directly or indirectly operating, or
owning a license to operate, a cable and/or television and/or telephone and/or
telecommunications system or service principally within the United Kingdom
and/or the Republic of Ireland and (ii) any Cable Related Business.
"Cable Controlled Property" means a Cable Controlled Subsidiary or a Cable
Asset held by a Cable Controlled Subsidiary.
"Cable Controlled Subsidiary" means any Restricted Subsidiary that is
primarily engaged, directly or indirectly, in one or more Cable Businesses.
"Cable Related Business" means a Person which directly or indirectly owns
or provides a service or product used in a Cable Business, including, without
limitation, any television programming, production and/or licensing business or
any programming guide or telephone directory business or content or software
related thereto.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock, including, without
limitation, partnership interests.
"Capital Stock Sale Proceeds" means the aggregate net sale proceeds
(including from the sale of any property received for the Capital Stock or the
fair market value of such property, as determined by an independent appraisal
firm) received by the Company or any Subsidiary of the Company from the issue or
sale (other than to a Subsidiary) by the Company of any class of its Capital
Stock after October 14, 1993 (including Capital Stock of the Company issued
after October 14, 1993 upon conversion of or in exchange for other securities of
the Company).
"Cash Equivalents" means (i) Permitted Currency, (ii) securities issued or
directly and fully guaranteed or insured by the United States government, a
European Union member government or any agency or instrumentality thereof having
maturities of not more than six months and one day from the date of acquisition,
(iii) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any commercial bank(s) domiciled in the United States, the United Kingdom,
the Republic of Ireland or any other European Union member having capital and
surplus in excess of $500 million, (iv) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated P-1
or the equivalent thereof by Moody's or A-1 or the equivalent thereof by S & P
and in each case maturing within six months and one day after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i)-(v) of this
definition.
"Change of Control" means (i) the sale, lease or transfer of all or
substantially all of the assets of the Company to any "Person" or "group"
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the
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Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act) (other
than any Permitted Holder), (ii) the approval by the requisite stockholders of
the Company of a plan of liquidation or dissolution of the Company, (iii) any
"Person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Exchange Act or any successor provision to either of the foregoing, including
any group acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d- 5(b)(1) under the Exchange Act),
other than any Permitted Holder, becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of
all classes of the voting stock of the Company and/or warrants or options to
acquire such voting stock, calculated on a fully diluted basis, unless, as a
result of such transaction, the ultimate direct or indirect ownership of the
Company is substantially the same immediately after such transaction as it was
immediately prior to such transaction, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Company's Board of Directors (together with any new directors whose election
or appointment by such board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Company's Board
of Directors then in office.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Ratings Decline.
"Company" means the party named as such above until a successor replaces it
in accordance with Article V and thereafter means the successor.
"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, Restricted Subsidiary
Preferred Stock Dividends and the interest component of rentals in respect of
any capital lease obligation paid, in each case whether accrued or scheduled to
be paid or accrued by such Person and its Subsidiaries (other than
Non-Restricted Subsidiaries) during such period to the extent such amounts were
deducted in computing Consolidated Net Income, determined on a consolidated
basis in accordance with GAAP. For purposes of this definition, interest on a
capital lease obligation shall be deemed to accrue at an interest rate
reasonably determined by such Person to be the rate of interest implicit in such
capital lease obligation in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
(other than Non-Restricted Subsidiaries) for such period, on a consolidated
basis, determined in accordance with GAAP; provided that (i) the Net Income of
any Person that is not a Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid to the referent Person or a Wholly Owned
Subsidiary, (ii) the Net Income of any Person that is a Subsidiary (other than a
Subsidiary of which at least 80% of the Capital Stock having ordinary voting
power for the election of
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directors or other governing body of such Subsidiary is owned by the referent
Person directly or indirectly through one or more Subsidiaries) shall be
included only to the extent of the amount of dividends or distributions paid to
the referent Person or a Wholly Owned Subsidiary, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iv) the cumulative effect of
a change in accounting principles shall be excluded.
"Convertible Subordinated Notes" means the Company's 7-1/4% Convertible
Subordinated Notes issued pursuant to an indenture dated as of April 20, 1995,
between the Company and The Chase Manhattan Bank (formerly known as Chemical
Bank), as trustee, and the Company's 7% Convertible Subordinated Notes issued
pursuant to an indenture dated as of June 12, 1996, between the Company and The
Chase Manhattan Bank (formerly known as Chemical Bank), as trustee.
"Credit Facility" means the Facilities Agreement, dated October 17, 1997,
between NTL (UK) Group Inc., as principal guarantor, Chase Manhattan plc, as
arranger, Chase Manhattan International Limited, as agent and security trustee
and the Chase Manhattan Bank as issuer, as such Facilities Agreement may be
supplemented, amended, restated, modified, renewed, refunded, replaced or
refinanced, in whole or in part, from time to time in an aggregate outstanding
principal amount not to exceed the greater of (i) 555 million pounds sterling
and (ii) the amount of the aggregate commitments thereunder as the same may be
increased after the date of the Indenture as contemplated by the Facilities
Agreement as amended or supplemented to the date of the Indenture, but in no
event greater than 875 million pounds sterling, less in each case, the aggregate
amount of all Net Proceeds of Asset Sales that have been applied to permanently
reduce Indebtedness under the Credit Facility pursuant Section 4.10 hereof.
Indebtedness that may otherwise be incurred under this Indenture may, but need
not, be incurred under the Credit Facility without regard to the limit set forth
in the preceding sentence. Indebtedness outstanding under the Credit Facility on
the date hereof shall be deemed to have been incurred on such date in reliance
on the exception provided by Section 4.08(b)(i).
"Cumulative EBITDA" means the cumulative EBITDA of the Company from and
after the Issuance Date 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; provided, however, that EBITDA of Non-Restricted Subsidiaries
shall not be included.
"Cumulative Interest Expense" means the aggregate amount of Consolidated
Interest Expense paid, accrued or scheduled to be paid or accrued by the Company
from the Issuance Date 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 that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Depositary" shall mean The Depository Trust Company, its nominees and
their respective successors.
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"Disqualified Stock" means 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 the date
on which the Notes mature.
"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 item reducing
Consolidated Net Income for such period (excluding any such non-cash item to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
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.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any Indebtedness that is
convertible into, or exchangeable for Capital Stock).
"European Union member" means any country that is or becomes a member of
the European Union or any successor organization thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Rate Contract" means, with respect to any Person, any currency
swap agreements, forward exchange rate agreements, foreign currency futures or
options, exchange rate collar agreements, exchange rate insurance and other
agreements or arrangements, or combination thereof, the principal purpose of
which is to provide protection against fluctuations in currency exchange rates.
An Exchange Rate Contract may also include an Interest Rate Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the Issuance Date, until such amounts are repaid,
including, without limitation, the Existing Notes.
"Existing Notes" means the Old Notes and the Convertible Subordinated
Notes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the Issuance Date and are applied on a consistent basis.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without
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limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness.
"Holder" means a Person in whose name a Note is registered in the register
referred to in Section 2.03.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases and sale-and-leaseback transactions) or representing any hedging
obligations under an Exchange Rate Contract or an Interest Rate Agreement,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than obligations
under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
and also includes, to the extent not otherwise included, the Guarantee of items
which would be included within this definition. The amount of any Indebtedness
outstanding as of any date shall be the accreted value thereof, in the case of
any Indebtedness issued with original issue discount
"Indenture" means this Indenture, as amended from time to time.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International, Morgan Stanley & Co.
Incorporated, Morgan Stanley & Co. International Limited, BT Alex. Brown
Incorporated, BT Alex. Brown International, Division of Bankers Trust
International PLC, Chase Securities Inc., Salomon Brothers Inc and Salomon
Brothers International Limited.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
similar agreement, the principal purpose of which is to protect the party
indicated therein against fluctuations in interest rates.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's. In the event that the
Company shall be permitted to select any other Rating Agency, the equivalent of
such ratings by such Rating Agency shall be used.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees), advances or capital contributions (excluding commission, travel and
similar advances and loans, joint property ownership and other arrangements, in
each case, made to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Issuance Date" means the date on which the Notes are first authenticated
and issued.
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"License" means any license issued or awarded pursuant to the Broadcasting
Act 1990, the Cable and Broadcasting Act 1984, the Telecommunications Act 1984
or the Wireless Telegraphy Act 1948 (in each case, as such Acts may, from time
to time, be amended, modified or re-enacted) (or equivalent statutes of any
jurisdiction) to operate or own a Cable Business.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent or successor statutes) of any
jurisdiction).
"Long Distance/Microwave Assets" means any assets, tangible or intangible,
choate or inchoate, primarily used in the business conducted by OCOM Corporation
in the United States as of the Issuance Date.
"Material License" means a License held by the Company or any of its
Subsidiaries which License at the time of determination covers a number of Net
Households which equals or exceeds 5% of the aggregate number of Net Households
covered by all of the Licenses held by the Company and its Subsidiaries at such
time.
"Material Subsidiary" means (i) NTL UK Group, Inc. (formerly known as OCOM
Sub II, Inc.), NTL Investment Holdings Limited, NTL Group Limited, CableTel
Surrey Limited, CableTel Cardiff Limited, CableTel Glasgow, CableTel Newport and
CableTel Kirklees and (ii) any other Subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act and the Exchange Act (as such Regulation is in effect on the date
hereof).
"Monetize" means a strategy with respect to Equity Interests that generates
an amount of cash equal to the fair value of such Equity Interests.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Households" means the product of (i) the number of households covered
by a License in the United Kingdom and (ii) the percentage of the entity holding
such License which is owned directly or indirectly by the Company.
"Net Income" means, with respect to any Person for a specific period, the
net income (loss) of such Person during such period, determined in accordance
with GAAP, excluding, however, any gain (but not loss) during such period,
together with any related provision for taxes on such gain (but not loss),
realized during such period in connection with any Asset Sale (including,
without limitation, dispositions pursuant to sale-and-leaseback transactions),
and excluding any extraordinary gain (but not loss) during such period, together
with any related provision for taxes on such extraordinary gain (but not loss).
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"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale, net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets the subject of such Asset Sale and any
reserve for adjustment in respect of the sale price of such asset or assets.
"Non-Controlled Subsidiary" means an entity which is not a Cable Controlled
Subsidiary.
"Non-Recourse Debt" means Indebtedness or that portion of Indebtedness as
to which none of the Company, nor any Restricted Subsidiary: (i) provides credit
support (including any undertaking, agreement or instrument which would
constitute Indebtedness); (ii) is directly or indirectly liable; or (iii)
constitutes the lender.
"Non-Restricted Subsidiary" means (A) a Subsidiary that (a) at the time of
its designation by the Board of Directors as a Non-Restricted Subsidiary has not
acquired any assets (other than as specifically permitted by clause (e) of
"Permitted Investments" or Section 4.09 hereof), at any previous time, directly
or indirectly from the Company or any of its Restricted Subsidiaries, (b) has no
Indebtedness other than Non-Recourse Debt and (c) that at the time of such
designation, after giving pro forma effect to such designation, the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company is equal to or less
than the ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company
immediately preceding such designation, provided, however, that if the ratio of
Indebtedness to Annualized Pro Forma EBITDA of the Company immediately preceding
such designation is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio immediately
preceding such designation; (B) any Subsidiary which (a) has been acquired or
capitalized out of or by Equity Interests (other than Disqualified Stock) of the
Company or Capital Stock Sale Proceeds therefrom, (b) has no Indebtedness other
than Non-Recourse Debt and (c) is designated as a Non-Restricted Subsidiary by
the Board of Directors or is merged, amalgamated or consolidated with or into,
or its assets or capital stock is to be transferred to, a Non-Restricted
Subsidiary; or (C) any Subsidiary of a Non-Restricted Subsidiary.
"Notes" has the meaning set forth in the preamble hereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the Chairman of the Board, the President, the Treasurer or a Vice
President of the Company. See Sections 10.04 and 10.05 hereof.
"Old Notes" means the Applicable Notes, the 12-3/4% Notes, the 11-1/2%
Notes and the 10% Notes.
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"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 10.04 and 10.05 hereof.
"Other Qualified Notes" means any outstanding senior indebtedness of the
Company issued pursuant to an indenture having a provision substantially similar
to Section 4.10 hereof (including, without limitation, the 12-3/4% Notes, the
11-1/2% Notes and the 10% Notes).
"Permitted Acquired Debt" means, with respect to any Acquired Person
(including, for this purpose, any Non-Restricted Subsidiary at the time such
Non-Restricted Subsidiary becomes a Restricted Subsidiary), Acquired Debt of
such Acquired Person and its Subsidiaries in an amount (determined on a
consolidated basis) not exceeding the sum of (x) amount of the gross book value
of property, plant and equipment of the Acquired Person and its Subsidiaries as
set forth on the most recent consolidated balance sheet of the Acquired Person
(which may be unaudited) prior to the date it becomes an Acquired Person and (y)
the aggregate amount of any Cash Equivalents held by such Acquired Person at the
time it becomes an Acquired Person.
"Permitted Currency" means the lawful currency of the United States or a
European Union member.
"Permitted Designee" means (i) a spouse or a child of a Permitted Holder,
(ii) trusts for the benefit of a Permitted Holder or a spouse or child of a
Permitted Holder, (iii) in the event of the death or incompetence of a Permitted
Holder, his estate, heirs, executor, administrator, committee or other personal
representative or (iv) any Person so long as a Permitted Holder owns at least
50% of the voting power of all classes of the voting stock of such Person.
"Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their
Permitted Designees.
"Permitted Investments" means (a) any Investments in the Company or in a
Cable Controlled Property or in a Qualified Subsidiary (including, without
limitation, (i) Guarantees of Indebtedness of the Company, a Cable Controlled
Subsidiary or a Qualified Subsidiary, (ii) Liens securing such Indebtedness or
Guarantees or (iii) the payment of any balance deferred and unpaid of the
purchase price of any Qualified Subsidiary); (b) any Investments in Cash
Equivalents; (c) Investments by the Company in Indebtedness of a counter-party
to an Exchange Rate Contract for hedging a Permitted Currency exchange risk that
are made, for purposes other than speculation, in connection with such contract
to hedge not more than the aggregate principal amount of the Indebtedness being
hedged (or, in the case of Indebtedness issued with original issue discount,
based on the amounts payable after the amortization of such discount); (d)
Investments by the Company or any Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Cable Controlled Subsidiary
or (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Subsidiary of the Company; and (e) any issuance,
transfer or other conveyance of Equity Interests (other than Disqualified Stock)
in the Company (or any Capital Stock Sale Proceeds therefrom) to a Subsidiary of
the Company.
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"Permitted Liens" means (a) Liens in favor of the Company; (b) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided, that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not secure any property or assets of the Company or any of
its Subsidiaries other than the property or assets subject to the Liens prior to
such merger or consolidation; (c) 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 60
days past due or are being contested in good faith and by appropriate
proceedings; (d) Liens existing on the Issuance Date; (e) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor and (f) easements, rights of way, restrictions and other
similar easements, licenses, restrictions on the use of properties or minor
imperfections of title that, in the aggregate, are not material in amount, and
do not in any case materially detract from the properties subject thereto or
interfere with the ordinary conduct of the business of the Company or its
Restricted Subsidiaries.
"Permitted Non-Controlled Assets" means Equity Interests in any Person
primarily engaged, directly or indirectly, in one or more Cable Businesses if
such Equity Interests (x) were acquired by the Company or any of its Restricted
Subsidiaries in connection with any Asset Sale or any Investment otherwise
permitted under the terms of the Indenture and (y) to the extent that, after
giving pro forma effect to the acquisition thereof by the Company or any of its
Restricted Subsidiaries, Adjusted Total Controlled Assets is greater than 80% of
Adjusted Total Assets based on the most recent consolidated balance sheet of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Stock" means the 13% Senior Redeemable Exchangeable Preferred
Stock of the Company with an original aggregate liquidation preference of
$100,000,000.
"Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such
Person as determined on a consolidated basis for such Person and its
Subsidiaries in accordance with GAAP 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 (without giving
effect to clause (iii) of the definition of Consolidated Net Income); 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.
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"Purchase Agreement" means the Purchase Agreement, dated as of March 6,
1998, between the Company and the Initial Purchasers.
"Qualified Subsidiary" means a Wholly Owned Subsidiary, or an entity that
will become a Wholly Owned Subsidiary after giving effect to the transaction
being considered, that at the time of and after giving effect to the
consummation of the transaction under consideration, (i) is a Cable Business or
holds only Cable Assets, (ii) has no Indebtedness (other than Indebtedness being
incurred to consummate such transaction) and (iii) has no encumbrances or
restrictions (other than such encumbrances or restrictions imposed or permitted
by this Indenture, the indentures governing the Old Notes or any other
instrument governing unsecured indebtedness of the Company which is pari passu
with the Notes) on its ability to pay dividends or make any other distributions
to the Company or any of its Subsidiaries.
"Rating Agencies" means (i) S&P, (ii) Moody's and (iii) if S&P or Moody's
or both shall not make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Company, which shall be substituted for S&P or Moody's or both, as the case
may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories) and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining whether
the rating of the Notes has decreased by one or more gradations, gradations
within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the
equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB to BB-, as well as
from BB-to B+, will constitute a decrease of one gradation).
"Rating Date" means that date which is 90 days prior to the earlier of (x)
a Change of Control and (y) public notice of the occurrence of a Change of
Control or of the intention by the Company or any Permitted Holder to effect a
Change of Control.
"Ratings Decline" means the occurrence of any of the following events on,
or within six months after, the date of public notice of the occurrence of a
Change of Control or of the intention of the Company or any Person to effect a
Change of Control (which period shall be extended so long as the rating of any
of the Company's debt securities is under publicly announced consideration for
possible downgrade by any of the Rating Agencies): (a) in the event that any of
the Company's debt securities are rated by both of the Rating Agencies on the
Rating Date as Investment Grade, the rating of such securities by either of the
Rating Agencies shall be below Investment Grade, (b) in the event that any of
the Company's debt securities are rated by either, but not both, of the Rating
Agencies on the Rating Date as Investment Grade, the rating of such securities
by both of the Rating Agencies shall be below Investment Grade, or (c) in the
event any of the Company's debt securities are rated below Investment Grade by
both of the Rating Agencies on the Rating Date, the rating of such securities by
either Rating Agency shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating Categories).
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"Redeemable Dividend" means, for any dividend with regard to Disqualified
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 Disqualified Stock.
"Registered Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Registration Rights Agreement" means the Registration Rights Agreement
relating to the Notes, dated March 13, 1998, between the Company and the Initial
Purchasers party thereto.
"Replacement Assets" means (w) Cable Assets, (x) Equity Interests of any
Person engaged, directly or indirectly, primarily in a Cable Business, which
Person is or will become on the date of acquisition thereof a Restricted
Subsidiary as a result of the Company's acquiring such Equity Interests, (y)
Permitted Non-Controlled Assets or (z) any combination of the foregoing.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary of the Company which is not a
Non-Restricted Subsidiary.
"Restricted Subsidiary Preferred Stock Dividend" means, for any dividend
with regard to preferred stock of a Restricted Subsidiary, 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 preferred stock.
"S&P" means Standard & Poor's Ratings Group and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subordinated Debentures" means the debentures exchangeable by the Company
for the Preferred Stock in accordance with the Certificate of Designations
therefor.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (Sections)
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor.
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"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all
of the Capital Stock of which (except directors' qualifying shares) is at the
time owned directly or indirectly by the Company.
SECTION 1.02. OTHER DEFINITIONS.
Defined
Term in Section
"Additional Amounts" 4.14
"Affiliate Transaction" 4.11
"Agent Member" 2.01
"Asset Sale Offer" 4.10
"Bankruptcy Law" 6.01
"Cedel" 2.01
"Change of Control Payment" 4.13
"Commencement Date" 3.09
"Custodian" 6.01
"Defeasance" 8.02
"Euroclear" 2.01
"Event of Default" 6.01
"Excess Proceeds" 4.10
"Global Note" 2.01
"incur" 4.08
"Judgment Currency" 10.07
"Legal Holiday" 10.08
"Offer Amount" 3.09
"Officer" 10.11
"Paying Agent" 2.03
"Payment Default" 6.01
"Purchase Date" 3.09
"Purchase Offer" 4.13
"QIBs" 2.01
"Rate of Exchange" 10.07
"Refinancing Indebtedness" 4.08
"Regulation S" 2.01
"Regulation S Global Note" 2.01
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"Registrar" 2.03
"Restricted Notes" 2.01
"Restricted Payments" 4.09
"Rule 144A" 2.01
"Rule 144A Global Note" 2.01
"Tender Period" 3.09
"U.K. Government Obligations" 8.02
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP consistently applied;
(c) references to "GAAP" shall mean GAAP in effect as of the time when and
for the period as to which such accounting principles are to be applied;
(d) "or" is not exclusive;
(e) words in the singular include the plural, and in the plural include the
singular;
(f) provisions apply to successive events and transactions;
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(g) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or rules adopted
by the SEC from time to time; and
(h) a reference to "$" or U.S. Dollars is to United States dollars and a
reference to "Pounds Sterling" or pounds sterling is to British pounds sterling.
ARTICLE II.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Initial Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto, which is
hereby incorporated by reference and expressly made a part of this Indenture.
The Exchange Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated by
reference and expressly made a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
The Company shall furnish any such legend not contained in Exhibit A or Exhibit
B to the Trustee in writing. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of 1,000 pounds sterling and
integral multiples thereof. The terms and provisions of the Notes set forth in
Exhibit A and Exhibit B are part of this Indenture and to the extent applicable,
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes. The Initial Notes are being offered and sold by the
Company pursuant to the Purchase Agreement.
Initial Notes offered and sold in reliance on Regulation S under the
Securities Act ("Regulation S"), as provided in the Purchase Agreement, shall be
issued initially in the form of one or more permanent Global Notes in
definitive, fully registered form without interest coupons with the Global Notes
Legend and Restricted Notes Legend set forth in Exhibit A hereto (the
"Regulation S Global Note"), which shall be deposited on behalf of the
purchasers of the Initial Notes represented thereby with the Trustee, at its New
York office, as custodian, for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank,
societe anonyme ("Cedel"), duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of the
Regulation S Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Initial Notes offered and sold to Qualified Institutional Buyers ("QIBs")
in reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in
the Purchase Agreement, shall be issued initially in the form of one or more
permanent Global Notes in definitive, fully registered form
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without interest coupons with the Global Notes Legend and Restricted Notes
Legend set forth in Exhibit A hereto ("Rule 144A Global Note"), which shall be
deposited on behalf of the purchasers of the Initial Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Rule 144A Global Note may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee as hereinafter provided.
Upon consummation of the Registered Exchange Offer, the Exchange Notes may
be issued in the form of one or more permanent Global Notes in definitive, fully
registered form without interest coupons with the Global Notes Legend but not
the Restricted Notes Legend set forth in Exhibit A hereto, registered in the
name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The aggregate
principal amount of such Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 2.01(c) shall apply only to the
Regulation S Global Note, the Rule 144A Global Note and the Exchange Notes
issued in the form of one or more permanent Global Notes (collectively, the
"Global Notes") deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(c), authenticate and deliver initially one or more Global Notes
that (a) shall be registered in the name of the Depositary for such Global Note
or Global Notes or the nominee of such Depositary and (b) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instructions or
held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of an owner of a beneficial
interest in any Global Note.
Without limitation of the preceding paragraph, all payments to Agent
Members in respect of any Global Note held by the Depositary (except for the
account of Euroclear of Cedel) shall, unless notice requesting payment in the
currency in which the Notes are denominated is given by such Agent Members in
accordance with applicable procedures of the Depositary, be made in U.S. Dollars
in accordance with applicable procedures of the Depositary, if and to the extent
such payment is required by such procedures and provided that arrangements for
the conversion of payments by the Company in respect of such Global Note into
U.S. Dollars are in form and substance acceptable to the Paying Agent or other
party to such conversion (which may but need not be an affiliate of the Paying
Agent), including receipt of documentation satisfactory to the Paying Agent or
such other party and payment of any currency
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conversion fee assessed by the Paying Agent or such other party at the expense
of such Agent Members. Nothing in such procedures or arrangements shall affect
the Company's obligation to pay, and any Holder's right to receive, payment in
the currency in which the Notes are denominated, or the right of a Holder of a
beneficial interest in a Global Note to receive a Note in certificated form as
contemplated by Section 2.01(d).
(d) Certificated Notes. In addition to the provisions of Section 2.10,
owners of beneficial interests in Global Notes may, upon request to the Trustee,
receive a certificated Initial Note, which certificated Initial Note shall bear
the Restricted Notes Legend set forth in Exhibit A hereto ("Restricted Notes").
After a transfer of any Initial Notes during the period of the
effectiveness of a Shelf Registration Statement with respect to the Initial
Notes and pursuant thereto, all requirements for Restricted Notes Legends on
such Initial Note will cease to apply, and a certificated Initial Note without a
Restricted Notes Legend will be available to the Holder of such Initial Notes.
Upon the consummation of a Registered Exchange Offer with respect to the Initial
Notes pursuant to which Holders of Initial Notes are offered Exchange Notes in
exchange for their Initial Notes, certificated Initial Notes with the Restricted
Notes Legend set forth in Exhibit A hereto will be available to Holders of such
Initial Notes that do not exchange their Initial Notes, and Exchange Notes in
certificated form without the Restricted Notes Legend set forth in Exhibit A
hereto will be available to Holders that exchange such Initial Notes in such
Registered Exchange Offer.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time the Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of an
authorized officer of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate (1) Initial Notes for original issue up to an aggregate
principal amount stated in paragraph 6 of the Initial Notes and (2) Exchange
Notes for issue only in a Registered Exchange Offer, pursuant to the
Registration Rights Agreement, in exchange for Initial Notes for a like
principal amount. The aggregate principal amount of Notes outstanding at any
time shall not exceed the amount set forth herein, except as provided in Section
2.07.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders, the Company or an Affiliate.
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SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain in the Borough of Manhattan, City of New York,
State of New York and, as long as the Notes are listed on the Luxembourg Stock
Exchange, in Luxembourg, (i) offices or agencies where the Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
offices or agencies where the Notes may be presented for payment ("Paying
Agent"). The Company initially designates the Trustee at its corporate trust
offices in the Borough of Manhattan, City of New York, State of New York to act
as principal Registrar and Paying Agent and Banque Internationale a Luxembourg
S.A. to act as a Registrar and Paying Agent. Until otherwise designated by the
Company, the Company shall also provide a Registrar and Paying Agent in London,
England at the offices of the Trustee maintained for that purpose. The Paying
Agent located at the offices of the Trustee in London, England shall be the
principal Paying Agent. The principal Registrar shall keep a register of the
Notes and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents in such other locations
as it shall determine. 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 prior notice to any Holder. The Company
shall notify the Trustee 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 Affiliates may act as Paying Agent or Registrar.
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
or interest on the Notes, and will notify the Trustee of any default by the
Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee
and to account for any money disbursed by it. 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 an Affiliate
of the Company) shall have no further liability for the money. If the Company or
an Affiliate of the Company 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.
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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or 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 Holders.
SECTION 2.06. TRANSFER AND EXCHANGE.
Where Notes are presented to the Registrar or a co-registrar with a request
to register a transfer or to exchange them for an equal principal amount of
Notes of other denominations, the Registrar shall
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register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall issue and the Trustee shall authenticate Notes at the Registrar's
request. No service charge shall be made for any registration of transfer or
exchange (except as otherwise expressly permitted herein), 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 tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note for a period beginning at the opening of business 15 days
before the day of any selection of Notes to be redeemed under Section 3.02
hereof and ending at the close of business on the day of selection, or (ii) to
register the transfer, or exchange, of any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part.
(a) Notwithstanding any provision to the contrary herein, so long as a
Global Note remains outstanding and is held by or on behalf of the Depositary,
transfers of a Global Note, in whole or in part, or of any beneficial interest
therein, shall only be made in accordance with Section 2.01(b) and this Section
2.06(a); provided, however, that beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the Restricted Notes Legend and under the heading "Notice to
Investors" in the Company's Offering Memorandum dated March 6, 1998.
(i) Except for transfers or exchanges made in accordance with clauses
(ii) through (iv) of this Section 2.06(a), transfers of a Global Note shall
be limited to transfers of such Global Note in whole, but not in part, to
nominees of the Depositary or to a successor of the Depositary or such
successor's nominee.
(ii) Rule 144A Global Note to Regulation S Global Note. If an owner of
a beneficial interest in the Rule 144A Global Note deposited with the
Depositary or the Trustee as custodian for the Depositary wishes at any
time to transfer its interest in such Rule 144A Global Note to a Person who
is required to take delivery thereof in the form of an interest in the
Regulation S Global Note, such owner may, subject to the rules and
procedures of the Depositary, exchange or cause the exchange of such
interest for an equivalent beneficial interest in the Regulation S Global
Notes. Upon receipt by the principal Registrar of (1) instructions given in
accordance with the Depositary's procedures from an Agent Member directing
the principal Registrar to credit or cause to be credited a beneficial
interest in the Regulation S Global Note in an amount equal to the
beneficial interest in the Rule 144A Global Note to be exchanged, (2) a
written order given in accordance with the Depositary's procedures
containing information regarding the participant account of the Depositary
and the Euroclear or Cedel account to be credited with such increase and
(3) a certificate in the form of Exhibit C attached hereto given by the
Holder of such beneficial interest, then the principal Registrar shall
instruct the Depositary to reduce or cause to be reduced the principal
amount of the Rule 144A Global Note and to increase or cause to be
increased the principal amount of the Regulation S Global Note by the
aggregate principal amount of the beneficial interest in
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the Rule 144A Global Note equal to the beneficial interest in the
Regulation S Global Note to be exchanged or transferred, to credit or cause
to be credited to the account of the Person specified in such instructions
a beneficial Interest in the Regulation S Global Note equal to the
reduction in the principal amount of the Rule 144A Global Note and to debit
or cause to be debited from the account of the Person making such exchange
or transfer the beneficial interest in the Rule 144A Global Note that is
being exchanged or transferred.
(iii) Regulation S Global Note to Rule 144A Global Note. If an owner
of a beneficial interest in the Regulation S Global Note deposited with the
Depositary or with the Trustee as custodian for the Depositary wishes at
any time to transfer its interest in such Regulation S Global Note to a
Person who is required to take delivery thereof in the form of an interest
in the Rule 144A Global Note, such Holder may, subject to the rules and
procedures of Euroclear or Cedel, as the case may be, and the Depositary,
exchange or cause the exchange of such interest for an equivalent
beneficial interest in the Rule 144A Global Note. Upon receipt by the
principal Registrar of (1) instructions from Euroclear or Cedel, if
applicable, and the Depositary, directing the principal Registrar to credit
or cause to be credited a beneficial interest in the Rule 144A Global Note
equal to the beneficial interest in the Regulation S Global Note to be
exchanged or transferred, such instructions to contain information
regarding the participant account with the Depositary to be credited with
such increase, (2) a written order given in accordance with the
Depositary's procedures containing information regarding the participant
account of the Depositary and (3) a certificate in the form of Exhibit D
attached hereto given by the owner of such beneficial interest, then
Euroclear or Cedel or the principal Registrar, as the case may be, will
instruct the Depositary to reduce or cause to be reduced the Regulation S
Global Note and to increase or cause to be increased the principal amount
of the Rule 144A Global Note by the aggregate principal amount of the
beneficial interest in the Regulation S Global Note to be exchanged or
transferred, and the principal Registrar shall instruct the Depositary,
concurrently with such reduction, to credit or cause to be credited to the
account of the Person specified in such instructions a beneficial interest
in the Rule 144A Global Note equal to the reduction in the principal amount
of the Regulation S Global Note and to debit or cause to be debited from
the account of the Person making such exchange or transfer the beneficial
interest in the Regulation S Global Note that is being exchanged or
transferred.
(iv) Global Note to Restricted Note. If an owner of a beneficial
interest in a Global Note deposited with the Depositary or with the Trustee
as custodian for the Depositary wishes at any time to transfer its interest
in such Global Note to a Person who is required to take delivery thereof in
the form of a Restricted Note, such owner may, subject to the rules and
procedures of Euroclear or Cedel, if applicable, and the Depositary, cause
the exchange of such interest for one or more Restricted Notes of any
authorized denomination or denominations and of the same aggregate
principal amount. Upon receipt by the principal Registrar of (1)
instructions from Euroclear or Cedel, if applicable, and the Depositary
directing the principal Registrar to authenticate and deliver one or more
Restricted Notes of the same aggregate principal amount as the
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beneficial interest in the Global Note to be exchanged, such instructions
to contain the name or names of the designated transferee or transferees,
the authorized denomination or denominations of the Restricted Notes to be
so issued and appropriate delivery instructions, (2) a certificate in the
form of Exhibit E attached hereto given by the owner of such beneficial
interest to the effect set forth therein, (3) a certificate in the form of
Exhibit F attached hereto given by the Person acquiring the Restricted
Notes for which such interest is being exchanged, to the effect set forth
therein, and (4) such other certifications, legal opinions or other
information as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act, then
Euroclear or Cedel, if applicable, or the principal Registrar, as the case
may be, will instruct the Depositary to reduce or cause to be reduced such
Global Note by the aggregate principal amount of the beneficial interest
therein to be exchanged and to debit or cause to be debited from the
account of the Person making such transfer the beneficial interest in the
Global Note that is being transferred, and concurrently with such reduction
and debit the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Restricted Notes of the same aggregate principal
amount in accordance with the instructions referred to above.
(v) Restricted Note to Restricted Note. If a Holder of a Restricted
Note wishes at any time to transfer such Restricted Note to a Person who is
required to take delivery thereof in the form of a Restricted Note, such
Holder may, subject to the restrictions on transfer set forth herein and in
such Restricted Note, cause the exchange of such Restricted Note for one or
more Restricted Notes of any authorized denomination or denominations and
of the same aggregate principal amount. Upon receipt by the principal
Registrar of (1) such Restricted Note, duly endorsed as provided herein,
(2) instructions from such Holder directing the principal Registrar to
authenticate and deliver one or more Restricted Notes of the same aggregate
principal amount as the Restricted Note to be exchanged, such instructions
to contain the name or authorized denomination or denominations of the
Restricted Notes to be so issued and appropriate delivery instructions, (3)
a certificate from the Holder of the Restricted Note to be exchanged in the
form of Exhibit E attached hereto, (4) a certificate in the form of Exhibit
F attached hereto given by the Person acquiring the Restricted Notes for
which such interest is being exchanged, to the effect set forth therein,
and (5) such other certifications, legal opinions or other information as
the Company may reasonably require to confirm that such transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then the Registrar shall
cancel or cause to be canceled such Restricted Note and concurrently
therewith, the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Restricted Notes of the same aggregate principal
amount, in accordance with the instructions referred to above.
(vi) Other Exchanges. In the event that a beneficial interest in a
Global Note is exchanged for Notes in definitive registered form pursuant
to Section 2.10, prior to the effectiveness of a Shelf Registration
Statement with respect to such Notes, such Notes
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may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of clauses (ii) through (v)
above (including the certification requirements intended to ensure that
such transfers comply with Rule 144A, Rule 144, Regulation S or any other
available exemption from registration, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(vii) Restricted Period. Prior to the termination of the "restricted
period" (as defined in Regulation S) with respect to the issuance of the
Notes, transfers of interests in the Regulation S Global Note to "U.S.
Persons" (as defined in Regulation S) shall be limited to transfers to QIBs
made pursuant to the provisions of Sections 2.06(a)(iii). The Company shall
advise the Trustee as to the termination of the restricted period and the
Trustee may rely conclusively thereon.
(viii) Regulation S Global Note to Certificated Note. Upon proper
presentment to the Trustee of a certificate substantially in the form of
Exhibit G hereto and subject to the rules and procedures of the Depositary
or its direct or indirect participants, including Euroclear and Cedel, an
interest in a Regulation S Global Note may be exchanged for a certificated
Restricted Note. At any time following consummation of the Exchange Offer
pursuant to the Registration Rights Agreement (provided that such
consummation is after the expiration of the 40-day restricted period
provided for in Rule 903 of Regulation S), such exchange may be made
without presentment of the certificate in substantially the form of Exhibit
G by any Holder who certifies to the Trustee that such Holder would have
been able to participate in such Exchange Offer and resell Exchange Notes
without delivery of a prospectus under applicable rules and interpretations
of the Commission, and such certified Note shall be free from any
restriction on transfer (other than such as are solely attributable to such
holder's status).
(b) Except in connection with a Registered Exchange Offer or a Shelf
Registration Statement contemplated by and in accordance with the terms of the
Registration Rights Agreement, if Initial Notes are issued upon the transfer,
exchange or replacement of Initial Notes bearing the Restricted Securities
Legend set forth in Exhibit A hereto, or if a request is made to remove such
Restricted Notes Legend on Initial Notes, the Initial Notes so issued shall bear
the Restricted Notes Legend, or the Restricted Notes Legend shall not be
removed, as the case may be, unless there is delivered to the Company such
satisfactory evidence, which may include an opinion of counsel licensed to
practice law in the State of New York, as may be reasonably required by the
Company, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of Rule 144A, Rule 144, Regulation S or any other available exemption from
registration under the Securities Act or, with respect to Restricted Notes, that
such Notes are not "restricted" within the meaning of Rule 144 under the
Securities Act. Upon provision of such satisfactory evidence, the Trustee, at
the direction of the Company, shall authenticate and deliver Initial Notes that
do not bear the legend.
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(c) Neither the Company nor the Trustee shall have any responsibility for
any actions taken or not taken by the Depositary and the Company shall have no
responsibility for any actions taken or not taken by the Trustee as agent or
custodian of the Depositary.
SECTION 2.07. REPLACEMENT NOTES.
If the Holder of a Note claims that the Note has been lost, destroyed or
wrongfully taken or if such Note is mutilated and is surrendered to the Trustee,
the Company shall issue and the Trustee shall authenticate a replacement Note if
the Trustee's and the Company's requirements are met. If required by the Trustee
or the Company, an indemnity bond must be sufficient in the judgment of both to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, or is about to be purchased by the Company
pursuant to Article III hereof, the Company in its discretion may, instead of
issuing a new Note, pay or purchase such Note, as the case may be.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
and those described in this Section as not outstanding.
If a Note is replaced, paid or purchased pursuant to Section 2.07 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced, paid or purchased Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
Except as set forth in Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or an Affiliate of the Company shall be considered as though they are
not outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that the Trustee knows are so owned shall be so disregarded.
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SECTION 2.10. TEMPORARY NOTES; GLOBAL NOTES.
(a) Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive Notes in
exchange for temporary Notes. Holders of temporary Notes shall be entitled to
all of the benefits of this Indenture.
(b) A Global Note deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.01 shall be transferred to
the beneficial owners thereof in the form of certificated Notes only in
accordance with Section 2.01(d) or if such transfer complies with Section 2.06
and (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Note or if at any time such Depositary
ceases to be a "clearing agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within 90 days of such
notice, or (ii) an Event of Default has occurred and is continuing.
(c) Any Global Note that is transferable to the beneficial owners thereof
in the form of certificated Notes pursuant to Section 2.01(d) or this Section
2.10 shall be surrendered by the Depositary to the Trustee to be so transferred,
in whole or from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Note, an equal aggregate principal amount of Initial Notes of authorized
denominations in the form of certificated Notes. Any portion of a Global Note
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of 1,000 pounds sterling and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any Initial Note in the form of certificated Notes delivered in exchange for an
interest in the Global Notes shall, except as otherwise provided by Section
2.06(b) bear the Restricted Notes Legend set forth in Exhibit A hereto.
(d) The registered Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
(e) In the event of the occurrence of either of the events specified in
Section 2.10(b), the Company will promptly make available to the Trustee a
reasonable supply of certificated Notes in definitive, fully registered form
without interest coupons.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee shall promptly cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Notes as the Company directs. The Company may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company fails to make a payment of interest on the Notes, it shall
pay such defaulted interest plus any interest payable on the defaulted interest,
in any lawful manner. It may pay such defaulted interest, plus any such interest
payable on it, to the Persons who are Holders on a subsequent special record
date. The Company shall fix any such record date and payment date, provided that
no such record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before any such record date, the
Company shall mail to Holders a notice that states the special record date, the
related payment date and amount of such interest to be paid.
ARTICLE III.
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of the Notes and Section 3.07 hereof or pursuant to the Optional Tax
Redemption provision of the Notes (Section 8 of the Initial Notes and Section 7
of the Exchange Notes), it shall notify the Trustee of the redemption date and
the principal amount of Notes to be redeemed, and in connection with an Optional
Tax Redemption as provided in the Notes, such notice shall be accompanied by an
Officers' Certificate to the effect that the conditions to such redemption
contained herein have been complied with. The Company shall give each notice
provided for in this Section 3.01 at least 50 days before the redemption date
(unless a shorter notice period shall be satisfactory to the Trustee).
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes shall be made by the Trustee on a pro rata basis or by lot or by method
that complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate, provided that no
Notes of 1,000 pounds sterling or less shall be redeemed in part. The Trustee
shall make the selection not more than 60 days and not less than 30 days before
the redemption date from Notes outstanding not previously called for redemption.
Notes and portions of Notes selected shall be in amounts of 1,000 pounds
sterling or integral multiples of 1,000 pounds sterling. Provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address. The notice shall
identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
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(c) if any Note is to be redeemed in part only, the portion of the
principal amount thereof redeemed, and that, after the redemption date, upon
surrender of such Note, a new Note in principal amount equal to the unredeemed
portion thereof shall be issued in the name of the Holder thereof upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price plus accrued interest;
(f) that interest on Notes called for redemption ceases to accrue on and
after the redemption date; and
(g) the paragraph of the Notes pursuant to which the Notes called for
redemption are being redeemed.
At the Company's request, the Trustee shall give notice of redemption in
the Company's name and at its expense; provided 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.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become due and payable on the redemption date at the
price set forth in the Note. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall return to the Company any money not required for that
purpose.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and the Trustee shall authenticate for the Holder at the expense of the Company
a new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
SECTION 3.07. OPTIONAL REDEMPTION AND OPTIONAL TAX REDEMPTION.
The Company may redeem all or any portion of the Notes, upon the terms and
at the redemption prices set forth in each of the Notes. The Company may also
redeem all of the Notes in accordance with the Optional Tax Redemption provision
of the Notes (Section 8 of the Initial Notes and Section 7 of the
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Exchange Notes). Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
SECTION 3.09. ASSET SALE OFFER AND PURCHASE OFFER.
(a) In the event that, pursuant to Sections 4.10 or 4.13 hereof, the
Company shall commence an offer to all Holders of the Notes to purchase Notes
(the "Asset Sale Offer" or "Purchase Offer"), the Company shall follow the
procedures in this Section 3.09.
(b) The Asset Sale Offer or the Purchase Offer, as the case may be, shall
remain open for a period specified by the Company which shall be no less than 30
calendar days and no more than 40 calendar days following its commencement (the
"Commencement Date") (as determined in accordance with Section 4.10 or 4.13
hereof, as the case may be), except to the extent that a longer period is
required by applicable law (the "Tender Period"). Upon the expiration of the
Tender Period (the "Purchase Date"), the Company shall purchase the Accreted
Value or principal amount of Notes required to be purchased pursuant to Section
4.10 or 4.13 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale Offer or the
Purchase Offer, as the case may be.
(c) If the Purchase Date is on or after an interest payment record date and
on or before the related interest payment date, any accrued interest shall be
paid to the Person in whose name a Note is registered at the close of business
on such record date, and no additional interest will be payable to Holders who
tender Notes pursuant to the Asset Sale Offer or the Purchase Offer, as the case
may be.
(d) The Company shall provide the Trustee with notice of the Asset Sale
Offer or the Purchase Offer, as the case may be, at least 10 days before the
Commencement Date.
(e) On or before the Commencement Date, the Company or the Trustee (at the
expense of the Company) shall send, by first class mail, a notice to each of the
Holders, which shall govern the terms of the Asset Sale Offer or the Purchase
Offer and shall state:
(i) that the Asset Sale Offer or the Purchase Offer is being made
pursuant to this Section 3.09 and, as applicable, Section 4.10 or 4.13
hereof and the length of time the Asset Sale Offer or the Purchase Offer
will remain open;
(ii) Offer Amount, the purchase price (as determined in accordance
with Section 4.10 or 4.13 hereof) and the Purchase Date, and in the case of
a Purchase Offer made pursuant to Section 4.13 hereof, that all Notes
tendered will be accepted for payment;
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(iii) that any Note or portion thereof not tendered or accepted for
payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the purchase
price, any Note or portion thereof accepted for payment pursuant to the
Asset Sale Offer or the Purchase Offer will cease to accrue interest after
the Purchase Date;
(v) that Holders electing to have a Note or portion thereof purchased
pursuant to any Asset Sale Offer or Purchase Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Purchase Date;
(vi) that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not
later than the close of business on the second Business Day preceding the
Purchase Date, or such longer period as may be required by law, a letter or
a telegram, telex or facsimile transmission (receipt of which is confirmed
and promptly followed by a letter) setting forth the name of the Holder,
the principal amount of the Note or portion thereof the Holder delivered
for purchase and a statement that such Holder is withdrawing his election
to have the Note or portion thereof purchased;
(vii) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount (as defined in Section 4.10 hereof), the
Trustee will select the Notes to be purchased pro rata or by a method that
complies with the requirements of any exchange on which the Notes are
listed and that the Trustee considers fair and appropriate with such
adjustments as may be deemed appropriate by the Company so that only Notes
in denominations of 1,000 pounds sterling, or integral multiples thereof,
shall be purchased; and
(viii) that Holders whose Notes were purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
In addition, the notice shall, to the extent permitted by applicable law,
be accompanied by a copy of the information regarding the Company and its
Subsidiaries which is required to be contained in the most recent Quarterly
Report on Form 10-Q or Annual Report on Form 10-K (including any financial
statements or other information required to be included or incorporated by
reference therein) and any Reports on Form 8-K filed since the date of such
Quarterly Report or Annual Report (or would have been required to file if the
Company remained a company incorporated in the United States), as the case may
be, which the Company has filed (or would have been required to file if it
remained a company incorporated in the United States) with the SEC on or prior
to the date of the notice. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Asset
Sale Offer or the Purchase Offer, as the case may be.
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(f) At least one Business Day prior to the Purchase Date, the Company shall
irrevocably deposit with the Trustee or a Paying Agent in immediately available
funds an amount equal to the Offer Amount to be held for payment in accordance
with the terms of this Section. On the Purchase Date, the Company shall, to the
extent lawful, (i) accept for payment the Notes or portions thereof tendered
pursuant to the Asset Sale Offer or the Purchase Offer, (ii) deliver or cause
the depositary or Paying Agent to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating such Notes or
portions thereof have been accepted for payment by the Company in accordance
with the terms of this Section 3.09. The depositary, the Paying Agent or the
Company, as the case may be, shall promptly (but in any case not later than ten
(10) calendar days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so
accepted shall be promptly mailed or delivered by or on behalf of the Company to
the Holder thereof. The Company will publicly announce in a newspaper of general
circulation the results of the Asset Sale Offer or the Purchase Offer on the
Purchase Date.
(g) For the purposes of calculating the allocation of available Excess
Proceeds to the Notes and each issue of Other Qualified Notes on a pro rata
basis according to accreted value or principal amount, as the case may be, the
relevant Accreted Value or principal amount of the Notes and the relevant
principal amount or the accreted value, as the case may be, of any Other
Qualified Notes denominated in a currency other than United States dollars will
be notionally converted into United States dollars from the currency such Notes
or Other Qualified Notes are denominated in (the "Base Currency");
(i) in the case of determining the maximum Accreted Value or
principal amount of Notes and Other Qualified Notes that may be
purchased out of the Excess Proceeds, if any, remaining after the
consummation of an Asset Sale Offer to holders of Applicable
Notes, at the noon buying rate in the City of New York as
certified for customs purposes by the Federal Reserve Bank of New
York for cable transfers in the Base Currency (the "Noon Buying
Rate") on the Business Day which is 10 Business Days prior to the
Commencement Date; and
(ii) in the case of determining the allocation of the remaining Excess
Proceeds if the aggregate principal amount or accreted value, as
the case may be, of Notes and Other Qualified Notes surrendered
by holders in the Asset Sale Offer exceeds the remaining amount
of Excess Proceeds, at the Noon Buying Rate on the second
Business Day preceding the Purchase Date.
(h) The Asset Sale Offer or the Purchase Offer shall be made by the Company
in compliance with all applicable provisions of the Exchange Act, and all
applicable tender offer rules promulgated thereunder, and shall include all
instructions and materials necessary to enable such Holders to tender their
Notes.
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ARTICLE IV.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of, premium, if any, and interest on,
the Notes on the dates and in the manner provided in the Notes. Principal,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent (other than the Company or an Affiliate of the Company) holds on
that date money designated for and sufficient to pay all principal and interest
then due. To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i) the
overdue Accreted Value of the Notes, if prior to April 1, 2003, or the overdue
principal and premium, if any, if on or after April 1, 2003, at the rate borne
by the Notes, compounded semiannually; and (ii) overdue installments of interest
(without regard to any applicable grace period) at the same rate, compounded
semiannually.
SECTION 4.02. REPORTS.
Whether or not required by the rules and regulations of the SEC, so long as
any Notes are outstanding, the Company shall file with the SEC and furnish to
the Trustee and to the Holders of Notes, all quarterly and annual financial
information required to be contained in a filing with the SEC on Forms 10-Q and
10-K (or the equivalent thereof under the Exchange Act for foreign private
issuers in the event the Company becomes a corporation organized under the laws
of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands), including a "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants, in
each case, in the form required by the rules and regulations of the SEC as in
effect on the Issuance Date. This Section 4.02 will apply notwithstanding that
the Company becomes a corporation organized under the laws of the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands.
SECTION 4.03. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under, and complied with the covenants and conditions
contained in, this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant, and complied
with the covenants and conditions contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he may have
knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal or
of interest, if any, on the Notes are prohibited.
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One of the Officers signing such Officers' Certificate shall be either the
Company's principal executive officer, principal financial officer or principal
accounting officer.
The Company will so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon becoming aware of any Default or Event of Default an
Officers' Certificate specifying such Default or Event of Default.
Immediately upon the occurrence of any event giving rise to the accrual of
Special Interest (as such term is defined in Exhibit A hereto) or the cessation
of such accrual, the Company shall give the Trustee notice thereof and of the
event giving rise to such accrual or cessation (such notice to be contained in
an Officers' Certificate) and prior to receipt of such Officers' Certificate the
Trustee shall be entitled to assume that no such accrual has commenced or
ceased, as the case may be.
SECTION 4.04. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, 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 4.05. CORPORATE EXISTENCE.
Subject to Article V hereof, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
of the Company in accordance with the respective organizational documents of
each subsidiary and the rights (charter and statutory), licenses and franchises
of the Company and its subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any subsidiary, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its subsidiaries taken as a
whole and that the loss thereof is not adverse in any material respect to the
Holders. The Company shall notify the Trustee in writing of any subsidiary which
qualifies as a Material Subsidiary and is not specified in clause (i) of the
definition thereof.
SECTION 4.06. TAXES.
The Company shall, and shall cause each of its subsidiaries to, pay prior
to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
SECTION 4.07. LIMITATIONS ON LIENS.
Neither the Company nor any of its Restricted Subsidiaries may, directly or
indirectly create, incur, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except:
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(a) Permitted Liens;
(b) Liens securing Indebtedness and related obligations to the extent such
Indebtedness and related obligations are permitted under Sections 4.08(b)(i),
(iii), (iv), (v), (viii), (ix) and (xi) hereof;
(c) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under Section 4.08 hereof; and
(d) Liens securing Refinancing Indebtedness permitted to be incurred under
Section 4.08 hereof; provided that the Refinancing Indebtedness so issued and
secured by such Lien shall not be secured by any property or assets of the
Company or any of its Restricted Subsidiaries other than the property or assets
subject to the Liens securing such Indebtedness being refinanced.
SECTION 4.08. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guaranty
or otherwise become directly or indirectly liable with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt) and the Company shall not
issue any Disqualified Stock and shall not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock that is Disqualified Stock;
provided, however, that the Company may incur Indebtedness or issue shares of
Disqualified Stock and any of its Restricted Subsidiaries may issue shares of
preferred stock that is Disqualified Stock if after giving effect to such
issuance or incurrence on a pro forma basis, the sum of (x) Indebtedness of the
Company and its Restricted Subsidiaries, on a consolidated basis, (y) the
liquidation value of outstanding preferred stock of Restricted Subsidiaries and
(z) the aggregate amount payable by the Company and its Restricted Subsidiaries,
on a consolidated basis, upon redemption of Disqualified Stock to the extent
such amount is not included in the preceding clause (y) shall be less than the
product of Annualized Pro Forma EBITDA for the latest fiscal quarter for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock or
preferred stock is issued multiplied by 7.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
quarter.
(b) The foregoing limitations in Section 4.08(a) shall not apply to:
(i) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility;
(ii) the issuance by any Restricted Subsidiary of preferred stock
(other than Disqualified Stock) to the Company, any Restricted Subsidiary
of the Company or the holders of Equity Interests in any Restricted
Subsidiary on a pro rata basis to such holders;
(iii) the incurrence of Indebtedness or the issuance of preferred
stock by the Company or any of its Restricted Subsidiaries the proceeds of
which are (or the credit
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support provided by any such Indebtedness is), in each case, used to
finance the construction, capital expenditure and working capital needs of
a Cable Business (including, without limitation, payments made pursuant to
any License), the acquisition of Cable Assets or the Capital Stock of a
Qualified Subsidiary;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount
not to exceed $50 million;
(v) the incurrence by the Company or any Restricted Subsidiary of any
Permitted Acquired Debt;
(vi) the incurrence by the Company or any Subsidiary of Indebtedness
issued in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, or refund the Notes, the Company's 9-1/2% Senior
Notes Due 2008, the Company's 9-3/4% Senior Deferred Coupon Notes Due 2008,
Existing Indebtedness or Indebtedness referred to in clauses (i), (ii),
(iii), (iv) or (v) above or Indebtedness incurred pursuant to Section
4.08(a) hereof (the "Refinancing Indebtedness"); provided, however, that
(1) the principal amount of, and any premium payable in respect of, such
Refinancing Indebtedness shall not exceed the principal amount of
Indebtedness so extended, refinanced, renewed, replaced or refunded (plus
the amount of reasonable expenses incurred in connection therewith); (2)
the Refinancing Indebtedness shall have (A) a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
and (B) a stated maturity no earlier than the stated maturity of, the
Indebtedness being extended, refinanced, renewed, replaced or refunded; and
(3) the Refinancing Indebtedness shall be subordinated in right of payment
to the Notes as and to the extent of the Indebtedness being extended,
refinanced, renewed, replaced or refunded;
(vii) the issuance of the Preferred Stock in lieu of payment of cash
interest on the Subordinated Debentures or the incurrence by the Company of
Indebtedness represented by the Subordinated Debentures upon the exchange
of the Preferred Stock in accordance with the Certificate of Designations
therefor;
(viii) Indebtedness under Exchange Rate Contracts, provided that such
Exchange Rate Contracts are related to payment obligations under Existing
Indebtedness or Indebtedness incurred under Section 4.08(a) or (b) hereof
that are being hedged thereby, and not for speculation and that the
aggregate notional amount under each such Exchange Rate Contract does not
exceed the aggregate payment obligations under such Indebtedness;
(ix) Indebtedness under Interest Rate Agreements, provided that the
obligations under such agreements are related to payment obligations on
Existing Indebtedness or Indebtedness otherwise incurred pursuant to
Section 4.08(a) or (b) hereof, and not for speculation;
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(x) the incurrence of Indebtedness between the Company and any
Restricted Subsidiary, between or among Restricted Subsidiaries and between
any Restricted Subsidiary and other holders of Equity Interests of such
Restricted Subsidiary (or other Persons providing funding on their behalf)
on a pro rata basis and on substantially identical principal financial
terms; provided, however, that if any such Restricted Subsidiary that is
the payee of any such Indebtedness ceases to be a Restricted Subsidiary or
transfers such Indebtedness (other than to the Company or a Restricted
Subsidiary of the Company), such events shall be deemed, in each case, to
constitute the incurrence of such Indebtedness by the Company or by a
Restricted Subsidiary, as the case may be, at the time of such event; and
(xi) Indebtedness of the Company and/or any Restricted Subsidiary in
respect of performance bonds of the Company or any Subsidiary or surety
bonds provided by the Company or any Restricted Subsidiary received in the
ordinary course of business in connection with the construction or
operation of a Cable Business.
(c) Any redesignation of a Non-Restricted Subsidiary as a Restricted
Subsidiary shall be deemed for purposes of this Section 4.08 to be an incurrence
of Indebtedness by the Company and its Restricted Subsidiaries of the
Indebtedness of such Non-Restricted Subsidiary as of the time of such
redesignation to the extent such Indebtedness does not already constitute
Indebtedness of the Company or one of its Restricted Subsidiaries.
SECTION 4.09. RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
the Company's or any of its Restricted Subsidiaries' Equity Interests
(other than (x) dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such Restricted
Subsidiary or (y) dividends or distributions payable to the Company or any
Wholly Owned Subsidiary of the Company, or (z) pro rata dividends or pro
rata distributions payable by a Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company (other than any such Equity Interests owned
by the Company or any Wholly Owned Subsidiary of the Company);
(iii) voluntarily purchase, redeem or otherwise acquire or retire for
value any Indebtedness that is subordinated to the Notes; or
(iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
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(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (ii) through (ix) of Section 4.09(b)), is less
than the sum of (x) the difference between Cumulative EBITDA and 1.5
times Cumulative Interest Expense plus (y) Capital Stock Sale Proceeds
plus (z) cash received by the Company or a Restricted Subsidiary from
a Non-Restricted Subsidiary (other than cash which is or is required
to be repaid or returned to such Non-Restricted Subsidiary); provided,
however, that to the extent that any Restricted Investment that was
made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the amount credited pursuant to this
clause (z) shall be the lesser of (A) the cash received with respect
to such sale, liquidation or repayment of such Restricted Investment
(less the cost of such sale, liquidation or repayment, if any) and (B)
the initial amount of such Restricted Investment, in each case as
determined in good faith by the Company's Board of Directors.
(b) The foregoing provisions in Section 4.09(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) (x) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company or any Restricted Subsidiary or (y)
an Investment in any Person, in each case, in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of other Equity Interests (other than any
Disqualified Stock) of the Company, provided that the Company delivers to
the Trustee:
(1) with respect to any transaction involving in excess of $1
million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such transaction is approved by
a majority of the directors on the Board of Directors; and
(2) with respect to any transaction involving in excess of $25
million, an opinion as to the fairness to the Company or such
Subsidiary from a financial point of view issued by an investment
banking firm of national standing with high yield experience, together
with an Officers' Certificate to the effect that such opinion complies
with this clause (2), provided that the amount of such proceeds from
the sale of such Equity Interests shall be excluded in each case from
Capital Stock Sale Proceeds for purposes of clause (a)(iv)(2)(y),
above;
(iii) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which (A) has no Indebtedness on a consolidated
basis other than
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Indebtedness incurred to finance the purchase of equipment used in a Cable
Business, (B) has no restrictions (other than restrictions imposed or
permitted by this Indenture or the indentures governing the Other Qualified
Notes or the Applicable Notes or any other instrument governing unsecured
indebtedness of the Company which is pari passu with the Notes) on its
ability to pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries, (C) is or will be a Cable Business and
(D) uses the proceeds of such Investment for constructing a Cable Business
or the working capital needs of a Cable Business;
(iv) the redemption, purchase, defeasance, acquisition or retirement
of Indebtedness that is subordinated to the Notes (including premium, if
any, and accrued and unpaid interest) made by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of (A) Equity Interests of the Company, provided
that the amount of such proceeds from the sale of such Equity Interests
shall be excluded in each case from Capital Stock Sale Proceeds for
purposes of clause (a)(iv)(2)(y) above or (B) Refinancing Indebtedness
permitted to be incurred under Section 4.08 hereof;
(v) Investments by the Company or any Restricted Subsidiary in a
Non-Controlled Subsidiary which is or will be a Cable Business in an amount
not to exceed $80 million in the aggregate plus the sum of (x) cash
received by the Company or a Restricted Subsidiary from a Non-Restricted
Subsidiary (other than cash which s or is required to be repaid or returned
to such Non-Restricted Subsidiary) and (y) Capital Stock Sale Proceeds
(excluding the aggregate net sale proceeds to be received upon conversion
of the Convertible Subordinated Notes), provided that the amount of such
proceeds from the sale of such Equity Interests shall be excluded in each
case from the Capital Stock Sale Proceeds for purposes of clause
(a)(iv)(2)(y) above;
(vi) Investments by the Company or any Restricted Subsidiary in
Permitted Non-Controlled Assets;
(vii) the extension by the Company or any Restricted Subsidiary of
trade credit to a Non-Restricted Subsidiary extended on usual and customary
terms in the ordinary course of business, provided that the aggregate
amount of such trade credit shall not exceed $25 million at any one time;
(viii) the payment of cash dividends on the Preferred Stock accruing
on or after February 15, 2004 or any mandatory redemption or repurchase of
the Preferred Stock, in each case, in accordance with the Certificate of
Designations therefor; and
(ix) the exchange of all of the outstanding shares of Preferred Stock
for Subordinated Debentures in accordance with the Certificate of
Designations for the Preferred Stock.
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(c) Any Investment in a Subsidiary (other than the issuance, transfer or
other conveyance of Equity Interests (other than Disqualified Stock) of the
Company (or any Capital Stock Sale Proceeds therefrom)) that is designated by
the Board of Directors as a Non-Restricted Subsidiary shall become a Restricted
Payment made on the date of such designation in the amount of the greater of (x)
the book value of such Subsidiary on the date such Subsidiary becomes a
Non-Restricted Subsidiary and (y) the fair market value of such Subsidiary on
such date as determined (A) in good faith by the Board of Directors of such
Subsidiary if such fair market value is determined to be less than $25 million
and (B) by an investment banking firm of national standing with high yield
underwriting expertise if such fair market value is determined to be in excess
of $25 million.
(d) Not later than the fifth Business Day after making any Restricted
Payment (other than those referred to in sub-clause (vii) of Section 4.09(b)),
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.10. ASSET SALES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to cause, make or suffer to exist any Asset Sale, unless:
(i) no Default exists or is continuing immediately prior to and after
giving effect to such Asset Sale;
(ii) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced for purposes of this Section 4.10 by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets sold or otherwise disposed of; and
(iii) at least 80% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of (w) Cash
Equivalents, (x) Replacement Assets, (y) publicly traded Equity Interests
of a Person who is, directly or indirectly, engaged primarily in one or
more Cable Businesses; provided, however, that the Company or such
Restricted Subsidiary shall Monetize such Equity Interests by sale to one
or more Persons (other than to the Company or a Subsidiary thereof) at a
price not less than the fair market value thereof within 180 days of the
consummation of such Asset Sale, or (z) any combination of the foregoing
clauses (w) through (y); provided, however, that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any
Restricted Subsidiary (other than liabilities that are by their terms
subordinated to the Notes) that are assumed by the transferee of any such
assets and (y) any notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are within five
Business Days converted by the Company or such Restricted Subsidiary into
cash, shall be deemed to be Cash
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Equivalents (to the extent of the Cash Equivalents received in such
conversion) for purposes of this clause (iii).
(b) Within 360 days after any Asset Sale, the Company (or the Restricted
Subsidiary, as the case may be) shall cause the Net Proceeds from such Asset
Sale:
(i) to be used to permanently reduce Indebtedness of a Restricted
Subsidiary; or
(ii) to be invested or reinvested in Replacement Assets.
Pending final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture or the
indentures for the Applicable Notes or the Other Qualified Notes.
Any Net Proceeds from any Asset Sale that are not used or reinvested as
provided in the preceding sentence constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15 million, the Company shall make
an offer (an "Asset Sale Offer") to all holders of Notes and Other Qualified
Notes to purchase the maximum principal amount of Notes and Other Qualified
Notes (determined on a pro rata basis according to the accreted value or
principal amount, as the case may be, of the Notes and the Other Qualified Notes
and in accordance with Section 3.09(g)(i); provided, however, that the Asset
Sale Offer must be made first to the holders of the Applicable Notes) that may
be purchased out of the Excess Proceeds, if any, remaining after the
consummation of the aforementioned Asset Sale Offer to the holders of the
Applicable Notes (x) with respect to the Other Qualified Notes, based on the
terms set forth in the indenture related to each issue of the Other Qualified
Notes and (y) with respect to the Notes, at an offer price in cash in an amount
equal to 100% of the Accreted Value on the date fixed for closing of such offer
(if such date is prior to April 1, 2003), or 100% of the outstanding principal
amount thereof plus accrued and unpaid interest, if any, to the date fixed for
the closing of such offer (if such date is on or after April 1, 2003), in
accordance with the procedures set forth in Section 3.09 hereof. To the extent
that the aggregate principal amount or accreted value, as the case may be, of
Notes and Other Qualified Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, if any, remaining after the consummation of the
aforementioned Asset Sale Offer to the holders of the Applicable Notes, the
Company may use such deficiency for general corporate purposes. If the aggregate
principal amount or accreted value, as the case may be, of Notes and Other
Qualified Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds, if any, remaining after the consummation of the aforementioned Asset
Sale Offer to the holders of the Applicable Notes, then such remaining Excess
Proceeds shall be allocated pro rata according to accreted value or principal
amount, as the case may be, to the Notes and each issue of the Other Qualified
Notes and in accordance with Section 3.09(g)(ii), and the Trustee shall select
the Notes to be purchased from the amount allocated to the Notes on the basis
set forth in Section 3.09(e) hereof. Upon completion of such offers to purchase
each of the Applicable Notes and the Notes and the Other Qualified Notes, the
amount of Excess Proceeds will be reset at zero. No such Asset Sale Offer to
purchase the Notes and Other Qualified Notes shall be required to be made by the
Company pursuant to the foregoing provisions if there are no Excess Proceeds
remaining after the consummation of the Asset Sale Offer made to holders of the
Applicable Notes.
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(c) Notwithstanding the provisions of Sections 4.10(a) and (b): the Company
and its Subsidiaries may:
(i) sell, lease, transfer, convey or otherwise dispose of assets or
property acquired after October 14, 1993, by the Company or any Subsidiary
in a sale-and-leaseback transaction so long as the proceeds of such sale
are applied within five Business Days to permanently reduce Indebtedness of
a Restricted Subsidiary or if there is no such Indebtedness or such
proceeds exceed the amount of such Indebtedness then such proceeds or
excess proceeds are reinvested in a Replacement Assets within 360 days
after such sale, lease, transfer, conveyance or disposition;
(ii) (x) swap or exchange assets or property with a Cable Controlled
Subsidiary or (y) issue, sell, lease, transfer, convey or otherwise dispose
of equity securities of any of the Company's Subsidiaries to a Cable
Controlled Subsidiary, in each of cases (x) and (y) so long as (A) the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company after
such transaction is equal to or less than the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction; provided, however, that if the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company immediately preceding such
transaction is 6:1 or less, then the ratio of Indebtedness to Annualized
Pro Forma EBITDA of the Company may be 0.5 greater than such ratio
immediately preceding such transaction and (B) either (I) the assets so
contributed consist solely of a license to operate a Cable Business and the
Net Households covered by all of the licenses to operate cable and
telephone systems held by the Company and its Restricted Subsidiaries
immediately after and giving effect to such transaction equals or exceeds
the number of Net Households covered by all of the licenses to operate
cable and telephone systems held by the Company and its Restricted
Subsidiaries immediately prior to such transaction or (II) the assets so
contributed consist solely of Cable Assets and the value of the Capital
Stock received, immediately after and giving effect to such transaction, as
determined by an investment banking firm of recognized standing with
knowledge of the Cable Business, equals or exceeds the value of Cable
Assets exchanged for such Capital Stock;
(iii) sell, transfer or otherwise dispose of Long Distance/Microwave
Assets; or
(iv) issue, sell, lease, transfer, convey or otherwise dispose of
Equity Interests (other than Disqualified Stock) of the Company (or any
Capital Stock Sale Proceeds therefrom) to any Person (including
Non-Restricted Subsidiaries).
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from,
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or enter into or amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless:
(a) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Subsidiary than those that could have been obtained
in a comparable transaction by the Company or such Subsidiary with an unrelated
Person and
(b) the Company delivers to the Trustee:
(i) with respect to any Affiliate Transaction involving aggregate
payments in excess of $1 million or any series of Affiliate Transactions
with an Affiliate involving aggregate payments in excess of $1 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with Section 4.11 (a)
and such Affiliate Transaction is approved by a majority of the
disinterested directors on the Board of Directors; and
(ii) with respect to any Affiliate Transaction involving aggregate
payments in excess of $25 million or any series of Affiliate Transactions
with an Affiliate involving aggregate payments in excess of $25 million, an
opinion as to the fairness to the Company or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing with high yield experience together with an Officers' Certificate
to the effect that such opinion complies with this clause (ii); provided,
however, that notwithstanding the foregoing provisions, the following shall
not be deemed to be Affiliate Transactions:
(1) any employment agreement entered into by the Company or any
of its Subsidiaries in the ordinary course of business and consistent
with the past practice of the Company or its predecessor or such
Subsidiary;
(2) transactions between or among the Company and/or its
Restricted Subsidiaries;
(3) transactions permitted by the provisions of Section 4.09
hereof;
(4) Liens permitted under Section 4.07 hereof which are granted
by the Company or any of its Subsidiaries to an unrelated Person for
the benefit of the Company or any other Subsidiary of the Company;
(5) any transaction pursuant to an agreement in effect on the
Issuance Date;
(6) the incurrence of Indebtedness by a Restricted Subsidiary
where such Indebtedness is owed to the holders of the Equity Interests
of such Restricted Subsidiary on a pro rata basis and on substantially
identical principal financial terms;
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(7) management, operating, service or interconnect agreements
entered into in the ordinary course of business with any Cable
Business in which the Company or any Restricted Subsidiary has an
Investment and which is not a Cable Controlled Subsidiary (and of
which no Affiliate of the Company is an Affiliate other than as a
result of such Investment); and
(8) any tax sharing agreement.
SECTION 4.12. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (A) on its Capital Stock or (B) with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
indebtedness owed to the Company or any of its Subsidiaries, or
(b) make loans or advances to the Company or any of its Subsidiaries, or
(c) transfer any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of:
(i) Existing Indebtedness as in effect on the Issuance Date;
(ii) this Indenture and the Notes;
(iii) any agreement covering or relating to Indebtedness permitted to
be incurred under Section 4.08(b)(i), (ii), (iii), (iv), (v), (viii) or
(ix) hereof (but only, in the case of Section 4.08(b)(viii) or (ix), to the
extent contemplated by the then-existing Credit Facility), provided that
the provisions of such agreement permit any action referred to in clause
(a) above in aggregate amounts sufficient to enable the payment of interest
and principal and mandatory repurchases pursuant to the terms of this
Indenture and the Notes, but provided further that: (x) any such agreement
may nevertheless encumber, prohibit or restrict any action referred to in
clause (a) above if an event of default under such agreement has occurred
and is continuing or would occur as a result of any such action; and (y)
any such agreement may nevertheless contain (I) restrictions limiting the
payment of dividends or the making of any other distributions to all or a
portion of excess cash-flow (or any similar formulation thereof) and (II)
subordination provisions governing Indebtedness owed to the Company or any
Restricted Subsidiary;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Subsidiaries as in effect at the time
of such acquisition (except to the extent such Indebtedness was incurred in
connection with such
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acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired; provided that the
EBITDA of such Person is not taken into account in determining whether such
acquisition was permitted by the terms of this Indenture;
(vi) customary nonassignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(vii) provisions of joint venture or stockholder agreements, so long
as such provisions are determined by a resolution of the Board of Directors
to be, at the time of such determination, customary for such agreements;
(viii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business or the provisions
of any agreement with respect to any Asset Sale (or transaction which, but
for its size, would be an Asset Sale), solely with respect to the assets
being sold; or
(ix) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Refinancing
Indebtedness are determined by a resolution of the Board of Directors to be
no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced.
SECTION 4.13. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control Triggering Event, each
Holder of Notes shall have the right to require the Company to repurchase all or
any part (equal to 1,000 pounds sterling or an integral multiple thereof) of
such Holder's Notes pursuant to the offer described in Section 3.09 hereof (the
"Purchase Offer") at a purchase price equal to 101% of the Accreted Value
thereof on any purchase date prior to April 1, 2003, or 101% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of
purchase on any purchase date on or after April 1, 2003, if any (the "Change of
Control Payment").
(b) Within 40 days following any Change of Control Triggering Event, the
Company shall mail to each Holder the notice provided by Section 3.09(e).
SECTION 4.14. PAYMENT OF ADDITIONAL AMOUNTS.
At least 10 days prior to the first date on which payment of principal and
any premium or interest on the Notes is to be made, and at least 10 days prior
to any subsequent such date if there has been any change with respect to the
matters set forth in the Officers' Certificate described in this Section 4.14,
the Company shall furnish the Trustee and the Paying Agent, if other than the
Trustee, with an Officers' Certificate instructing the Trustee and the Paying
Agent whether the Company is obligated to pay Additional Amounts (as defined in
Section 3 of the Initial Notes or Section 2 of the Exchange Notes) with respect
to such payment of principal, or of any premium or interest on the Notes. If the
Company will be obligated to pay Additional Amounts with respect to such
payment, then such Officers'
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Certificate shall specify by country the amount, if any, required to be withheld
on such payments to such Holders and the Company will pay to the Trustee or the
Paying Agent such Additional Amounts. The Company shall indemnify the Trustee
and the Paying Agent for, and hold them harmless against, any loss, liability or
expense reasonably incurred without negligence or bad faith on their part
arising out of or in connection with actions taken or omitted by any of them in
reliance on any Officers' Certificate furnished to them pursuant to this Section
4.14.
Whenever in this Indenture there is mentioned, in any context, the payment
of principal (and premium, if any), Offer Amount, interest or any other amount
payable under or with respect to any Note such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in this
Section 4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange
Notes) to the extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof pursuant to the provisions of this Section
4.14 and Section 3 of the Initial Notes (or Section 2 of the Exchange Notes) and
express mention of the payment of Additional Amounts (if applicable) in any
provisions hereof shall not be construed as excluding Additional Amounts in
those provisions hereof where such express mention is not made (if applicable).
ARTICLE V.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions to, another corporation, Person or entity
unless:
(a) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands or of the United States, any state thereof or the
District of Columbia;
(b) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition will have been made
assumes all the Obligations (including the due and punctual payment of
Additional Amounts if the surviving corporation is a corporation organized or
existing under the laws of the United Kingdom, the Netherlands, the Netherlands
Antilles, Bermuda or the Cayman Islands) of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and this Indenture;
(c) immediately after such transaction no Default or Event of Default
exists;
(d) the Company or any entity or Person formed by or surviving any such
consolidation or merger, or to which such sale, assignment, transfer, lease,
conveyance or other disposition will have been
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made will have a ratio of Indebtedness to Annualized Pro Forma EBITDA equal to
or less than the ratio of Indebtedness to Annualized Pro Forma EBITDA of the
Company immediately preceding the transaction; provided, however, that if the
ratio of Indebtedness to Annualized Pro Forma EBITDA of the Company immediately
preceding such transaction is 6:1 or less, then the ratio of Indebtedness to
Annualized Pro Forma EBITDA of the Company may be 0.5 greater than such ratio
immediately preceding such transaction; and
(e) such transaction would not result in the loss of any material
authorization or Material License of the Company or its Subsidiaries.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
Person has been named as the Company herein; provided, however, that the
predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Notes.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest (and Additional
Amounts, if applicable) on any Note when the same becomes due and payable and
the Default continues for a period of 30 days after the date due and payable;
(b) the Company defaults in the payment of the principal of any Note when
the same becomes due and payable at maturity, upon redemption or otherwise;
(c) the Company fails to observe or perform any covenant or agreement
contained in Section 4.08, 4.09, or 4.13 hereof;
(d) the Company fails to observe or perform any other covenant or agreement
contained in this Indenture or the Notes, required by any of them to be
performed and the Default continues for a period of 60 days after notice from
the Trustee to the Company or from the Holders of 25% in aggregate principal
amount of the then outstanding Notes to the Company and the Trustee stating that
such notice is a "Notice of Default";
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(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary), whether such
Indebtedness or guarantee now exists or is created after the Issuance Date,
which default:
(i) is caused by a failure to pay when due principal of or interest on
such Indebtedness within the grace period provided for in such Indebtedness
(which failure continues beyond any applicable grace period) (a "Payment
Default"); or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there is a
Payment Default or the maturity of which has been so accelerated, aggregates $10
million or more;
(f) a final judgment or final judgments (other than any judgment as to
which a reputable insurance company has accepted full liability) for the payment
of money are entered by a court or courts of competent jurisdiction against the
Company or any Restricted Subsidiary of the Company which remains undischarged
for a period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such judgments exceeds $5 million;
(g) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in an
involuntary case in which it is the debtor;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors; or
(v) generally is unable to pay its debts as the same become due;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Material Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any Material Subsidiary or
for all or substantially all of its property; or
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(iii) orders the liquidation of the Company or any Material
Subsidiary, and the order or decree remains unstayed and in effect for 60
days; and
(i) the revocation of a Material License.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors or the protection of creditors.
The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in clauses
(g) and (h) of Section 6.01 hereof) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Notes by notice to the Company and the Trustee, may declare all
the Notes to be due and payable. Upon such declaration, the Accreted Value of
(if prior to April 1, 2003) or the principal of, premium, if any, and interest
on (if on or after April 1, 2003), the Notes shall be due and payable
immediately. If an Event of Default specified in clause (g) or (h) of Section
6.01 hereof occurs, such an amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder. The Holders of a majority in principal amount of the then
outstanding Notes by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration. In the case of any Event of Default pursuant to the provisions of
Section 6.01 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding payment
of the premium that the Company would have had to pay if the Company then had
elected to redeem the Notes pursuant to Section 7 of the Initial Notes (Section
6 in the case of the Exchange Notes), an equivalent premium shall, upon demand
of the Holders of at least 25% in principal amount of the then outstanding Notes
delivered to the Company and the Trustee, also become and be immediately due and
payable to the extent permitted by law, anything in this Indenture or in the
Notes contained to the contrary notwithstanding. If an Event of Default occurs
prior to April 1, 2003, by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to April 1, 2003, pursuant to
Section 7 of the Initial Notes (Section 6 in the case of the Exchange Notes),
then the premium payable for purposes of this paragraph for each of the years
beginning on April 1 of the years (March 13 in the case of 1998) set forth below
shall, subject to the foregoing demand, be as set forth in the following table
expressed as a percentage of the amount that would otherwise be due pursuant to
this Section 6.02 hereof but for the provisions of this sentence.
Year Percentage
1998............................ 110.750%
1999............................ 109.675%
2000............................ 108.600%
2001............................ 107.525%
2002............................ 106.450%
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SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder 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. All remedies are cumulative to the
extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the then outstanding Notes
by notice to the Trustee may waive an existing Default or Event of Default and
its consequences except a continuing Default or Event of Default in the payment
of the principal of or interest on any Note. When a Default or Event of Default
is waived, it is cured and ceases; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the then outstanding Notes
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
it. However, the Trustee may refuse to follow any direction that conflicts with
law or this Indenture, is unduly prejudicial to the rights of other Holders, or
would involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the Notes
only if:
(a) the Holder gives to the Trustee notice of a continuing Event of
Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
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A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal and interest on the Note, on or
after the respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of the Holder made pursuant to this
Section.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Notes and interest on overdue principal and
interest and such further amount as shall be sufficient to cover the costs and,
to the extent lawful, 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 and the
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property. Nothing contained herein shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 7.07 hereof;
Second: to Holders for amounts due and unpaid on the Notes for principal
and interest (and Additional Amounts, if applicable), ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal and interest, respectively; and
Third: to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders made pursuant to this Section.
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SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
ARTICLE VII.
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 circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default: (i) the Trustee
need perform only those duties that are specifically set forth in this Indenture
and no others and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture and to confirm the
correctness of all mathematical computations.
(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: (i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01; (ii) 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 and (iii) the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05 hereof.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be charged with knowledge of any Event of Default
under subsection (c), (d), (e), (f) or (i) (and subsection (a) or (b) if the
Trustee does not act as Paying Agent) of Section 6.01 or of the identity of any
Material Subsidiary referred to in clause (ii) of the definition thereof unless
either (1) a Trust Officer of the Trustee assigned to its Corporate Trustee
Administration Department shall have actual knowledge thereof, or (2) the
Trustee shall have received notice thereof in accordance with Section 10.02
hereof from the Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or an Affiliate with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee is 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 Notes, it shall not be accountable for the Company's use of the
proceeds from the Notes, and it shall not be responsible for any statement of
the Company in the Indenture or any statement in the Notes other than its
authentication or for compliance by the Company with the Registration Rights
Agreement.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders a notice of the Default
or Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment on any Note, the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after the reporting date stated in Section 10.11, the
Trustee shall mail to Holders a brief report dated as of such reporting date
that complies with TIA (Section) 313(a) if and to the extent required by such
(Section) 313(a). The Trustee also shall comply with TIA (Section) 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA (Section)
313(c).
A copy of each report at the time of its mailing to Holders shall be filed
with the SEC and each stock exchange on which the Notes are listed. The Company
shall notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it. Such disbursements and expenses
may include the reasonable disbursements, compensation and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees, disbursements and expenses of such counsel. The Company need not pay for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee, except money or property held in trust to pay principal and
interest on particular Notes.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
All amounts owing to the Trustee under this Section shall be payable by the
Company in United States dollars.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
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The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (Section) 310(b);
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, unless the
Trustee's duty to resign is stayed as provided in TIA (Section) 310(b), any
Holder who has been a bona fide Holder of a Note for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08 hereof,
the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring trustee with respect to expenses and liabilities
incurred by it prior to such replacement.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
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SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (Section) 310(a)(1) and (5). The Trustee shall always have a combined
capital and surplus as stated in Section 10.11 hereof. The Trustee is subject to
TIA (Section) 310(b). The following indentures shall be deemed to be
specifically described herein for the purposes of clause (i) of the first
proviso contained in TIA (Section) 310(b): (a) indenture, dated as of October
14, 1993, between the Company and The Chase Manhattan Bank (formerly known as
Chemical Bank), as trustee, relating to the Applicable Notes, as amended, (b)
indenture, dated as of April 20, 1995, between the Company and The Chase
Manhattan Bank, as trustee, relating to the 12-3/4% Notes, as amended, (c)
indenture, dated as of January 30, 1996, between the Company and The Chase
Manhattan Bank, as trustee, relating to the 11-1/2% Notes, (d) indenture, dated
as February 12, 1997, between the Company and The Chase Manhattan Bank, as
trustee, relating to the 10% Notes, (e) indenture, dated as of March 13, 1998,
between the Company and The Chase Manhattan Bank, as trustee, relating to the
Company's 9-1/2% Senior Notes Due 2008 and (f) indenture, dated as of March 13,
1998, between the Company and The Chase Manhattan Bank, as trustee, relating to
Company's the 9-3/4% Senior Deferred Coupon Notes Due 2008.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (Section) 311(a), excluding any creditor
relationship listed in TIA (Section) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (Section) 311(a) to the extent indicated
therein.
ARTICLE VIII.
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Sections 7.07 and 8.03 hereof shall survive) when
all outstanding Notes theretofore authenticated and issued have been delivered
to the Trustee for cancellation and the Company has paid all sums payable
hereunder.
SECTION 8.02. OPTION TO EFFECT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
this Section 8.02 be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Section. Upon the Company's election to have
this Section 8.02 apply to all the outstanding Notes, the Company shall, subject
to the satisfaction of the conditions set forth in the next paragraph, be deemed
to have been discharged from its obligations with respect to all outstanding
Notes on the date such conditions are satisfied (hereinafter, "Defeasance"). For
this purpose, Defeasance means that the Company shall be deemed to have paid and
discharged the entire Obligations represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.03 hereof and the other Sections of this Indenture referred to in clauses (a)
and (b) below, and to have satisfied all its other obligations under
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such Notes and this Indenture (and the Trustee, on demand of and at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following provisions which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in the following paragraph, payments in
respect of the principal of (or, if applicable, payments in respect of Accreted
Value), premium, if any, and interest on such Notes when such payments are due;
(ii) the Company's obligations with respect to such Notes under Article II
hereof; (iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith; and (iv) this
Article VIII.
In order to exercise Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, pursuant to an irrevocable trust and
security agreement in form satisfactory to the Trustee, money in pounds
sterling sufficient or U.K. Government Obligations the principal of and
interest on which will be sufficient or a combination thereof sufficient in
the opinion of a nationally recognized firm of independent public
accountants, expressed in a written certification thereof (in form
satisfactory to the Trustee) to pay the principal of (or, if applicable,
payments in respect of Accreted Value), premium, if any, and interest on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or
installment of principal of, premium, if any, and interest on the
outstanding Notes;
(b) the Company shall have delivered to the Trustee, an Opinion of
Counsel (which counsel may be an employee of the Company) reasonably
acceptable to the Trustee confirming that: (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the Issuance Date, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such 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;
(c) no Event of Default shall have occurred and be continuing on the
date of such Defeasance (other than an Event of Default resulting from or
related to the incurrence of Indebtedness, the proceeds of which are to be
applied to such deposit) or, insofar as Sections 6.01(g) and (h) hereof are
concerned, at any time in the period ending on the 91st day after the date
of deposit (or greater period of time in which any such deposit of trust
funds may remain subject to the effect of any Bankruptcy Law insofar as
those apply to the deposit by the Company);
(d) such Defeasance shall not result in a breach or violation of, or
constitute a default under, any material agreement or instrument (other
than this Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound;
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(e) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit (or
such greater period referred to in (c) above), the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over any other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others;
(g) the deposit shall not result in the Company, the Trustee or the
trust fund established pursuant to (a) above being subject to regulation
under the Investment Company Act of 1940, as amended;
(h) Holders of the Notes will have a valid, perfected and unavoidable
(under applicable Bankruptcy Law), subject to the passage of time referred
to clause (e) above, first priority security interest in the trust funds;
and
(i) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (subject to customary exceptions),
each stating that all conditions precedent provided for or relating to the
Defeasance have been complied with.
"U.K. Government Obligations" means (i) direct obligations of the United
Kingdom that are issued by the Lords Commissioners of Her Majesty's Treasury or
(ii) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United Kingdom the payment of which is unconditionally
guaranteed by the Lords Commissioners of Her Majesty's Treasury, and also
includes a depository receipt issued by a bank or trust company as custodian
with respect to any such U.K. Government Obligation or a specific payment of
interest on or principal of any such U.K. Government Obligation held by such
custodian for the account of the holder of a 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.K. Government
Obligation or the specific payment of interest on or principal of the U.K.
Government Obligation evidenced by such depository receipt. In order to have
money available on a payment date to pay principal or interest (including
Additional Amounts, if applicable) on the Notes, the U.K. Government Obligations
shall be payable as to principal or interest on or before such payment date in
such amounts as will provide the necessary money. U.K. Government Obligations
shall not be callable at the issuer's option.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.K. Government Obligations
deposited with it pursuant to Section 8.02 hereof. It shall apply the deposited
money and the money from U.K. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of principal and interest
on the Notes.
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SECTION 8.04. REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that remains
unclaimed for two years after the date upon which such payment shall have become
due; provided, however, that the Company shall have first caused notice of such
payment to the Company to be mailed to each Holder entitled thereto no less than
30 days prior to such payment. After payment to the Company, the Trustee and the
Paying Agent shall have no further liability with respect to such money and
Holders entitled to the money must look to the Company for payment as general
creditors unless any applicable abandoned property law designates another
Person.
SECTION 8.05. REINSTATEMENT.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.03 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application and (ii) the Holders of at least a majority in principal amount
of the then outstanding Notes so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 hereof
until such time as the Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 8.03 hereof or such request is revoked by such
Holders; provided, however, that if the Company makes any payment of interest on
or principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee may amend or supplement this Indenture or the
Notes without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 5.01 hereof;
(c) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(d) to make any change that does not adversely affect the interests
hereunder of any Holder; or
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(e) to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07 hereof, the Company and the Trustee may amend or
supplement this Indenture or the Notes with the written consent of the Holders
of at least a majority in principal amount of the then outstanding Notes.
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in principal
amount of the Notes then outstanding may also waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment, supplement
or waiver under this Section may not:
(a) reduce the amount of Notes whose Holders must consent to an amendment,
supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note, alter
the manner of calculating Accreted Value or alter the provisions of Sections 7
and 8 of the Initial Note and Sections 6 and 7 of the Exchange Note (other than
provisions relating to the covenants described under Sections 4.10 and 4.13);
(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a default in the payment of the principal of, or interest on, any
Note (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(e) except as contemplated by Section 10.07(e), make any Note payable in
money other than that stated in the Note;
(f) make any change in Section 6.04 or 6.07 hereof;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in the foregoing amendment and waiver provisions of
this Article 9.
To secure a consent of the Holders under this Section 9.02, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Holders a notice briefly describing the
amendment or waiver.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Notes shall be set forth in a
supplemental indenture that complies with the TIA as then in effect.
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SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of a Note if the Trustee receives the notice of revocation
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Notes have
consented to the amendment, supplement or waiver.
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
provisions of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No consent shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
principal amount of Notes required hereunder for such amendment or waiver to be
effective shall have also been given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall bind
every Holder, unless it is of the type described in any of clauses (a) through
(h) of Section 9.02 hereof. In such case, the amendment or waiver shall bind
each Holder who has consented to it and every subsequent Holder that evidences
the same debt as the consenting Holder's Note.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment or waiver
on any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall authenticate new Notes that reflect the amendment or
waiver.
Failure to make such notation on a Note or to issue a new Note as aforesaid
shall not affect the validity and effect of such amendment or waiver.
SECTION 9.06. TRUSTEE PROTECTED.
The Trustee shall sign all supplemental indentures, except that the Trustee
may, but need not, sign any supplemental indenture that adversely affects its
rights.
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ARTICLE X.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
This Indenture is subject to the provisions of the TIA that are required to
be incorporated into this Indenture (or, prior to the registration of the Notes
pursuant to the Registration Rights Agreement, would be required to be
incorporated into this Indenture if it were qualified under the TIA), and shall,
to the extent applicable, be governed by such provisions. If any provision of
this Indenture limits, qualifies, or conflicts with another provision which is
required (or would be so required) to be incorporated in this Indenture by the
TIA, the incorporated provision shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the other is
duly given if in writing and delivered in Person or mailed by first class mail
to the other's address stated in Section 10.11 hereof. 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 to a Holder shall be mailed by first class mail
to his address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
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 the
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 10.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA (Section) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA
(Section) 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
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(a) an Officers' Certificate 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
(b) an Opinion of Counsel stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 4.03)
shall include:
(a) a statement that the Person signing such certificate or rendering such
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, such Person has made
such examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by, or a meeting of,
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. CONVERSION OF CURRENCY.
The Company covenants and agrees that the following provisions shall apply
to conversion of currency in the case of the Notes and this Indenture:
(a) (i) If for the purposes of obtaining judgment in, or enforcing the
judgment of, any court in any country, it becomes necessary to convert into any
other currency (the "Judgment Currency") an amount due in British pounds
sterling, then the conversion shall be made at the Rate of Exchange prevailing
on the Business Day before the day on which the judgment is given or the order
of enforcement is made, as the case may be (unless a court shall otherwise
determine).
(ii) If there is a change in the Rate of Exchange prevailing between
the Business Day before the day on which the judgment is given or an order
of enforcement is made, as the case may be (or such other date as a court
shall determine), and the date of receipt of the amount due, the Company
shall pay such additional (or, as the case may be, such lesser) amount, if
any, as may be necessary so that the
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amount paid in the Judgment Currency when converted at the Rate of Exchange
prevailing on the date of receipt will produce the amount in British pounds
sterling originally due.
(b) In the event of the winding-up of the Company at any time while any
amount or damages owing under the Notes and this Indenture, or any judgment or
order rendered in respect thereof, remains outstanding, the Company shall
indemnify and hold the Holders of Notes and the Trustee harmless against any
deficiency arising or resulting from any variation in rates of exchange between
(1) the date as of which the equivalent of the amount in British pounds sterling
due or contingently due under the Notes and this Indenture (other than under
this paragraph (b)) is calculated for the purposes of such winding-up and (2)
the final date for the filing of proofs of claim in the winding-up of the
Company, which is the date fixed by the liquidator or otherwise in accordance
with the relevant provisions of applicable law as being the latest practicable
date as at which liabilities of the Company may be ascertained for such
winding-up prior to payment by the liquidator or otherwise in respect thereto.
(c) The obligations contained in paragraphs (a)(ii) and (b) of this Section
10.07 shall:
(i) constitute separate and independent obligations of the Company
from its other obligations under the Notes and this Indenture;
(ii) give rise to separate and independent causes of action against
the Company;
(iii) apply irrespective of any waiver or extension granted by any
Holder or the Trustee from time to time; and
(iv) continue in full force and effect notwithstanding any judgment or
order or the filing of any proof of claim in the winding-up of the Company
for a liquidated sum in respect of amounts due hereunder (other than under
paragraph (b) above) or under any such judgment or order.
Any such deficiency as aforesaid shall be deemed to constitute a loss
suffered by the Holders or the Trustee, as the case may be, and no proof or
evidence of any actual loss shall be required by the Company or its liquidators.
In the case of paragraph (b) above, the amount of such deficiency shall not be
deemed to be reduced by any variation in rates of exchange occurring between the
said final date and the date of any liquidating distribution.
(d) "Rate of Exchange" means the noon buying rate in the City of New
York as certified for customs purposes by the Federal Reserve Bank of New
York on the relevant date for cable transfers in the Judgment Currency other
than British pounds sterling referred to in paragraphs (a) and (b) above and
shall include any premiums and costs of exchange payable.
(e) If the United Kingdom adopts the Euro, the regulations of the European
Commission relating to the Euro shall apply to the Notes and this Indenture. The
circumstances and consequences described in this paragraph entitle neither the
Company nor any Holder to early redemption, rescission,
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notice, repudiation, adjustment or renegotiation of the terms and conditions of
the Notes or this Indenture or to raise other defenses or to request any
compensation claim, nor will they affect any of the other obligations of the
Company under the Notes and this Indenture.
SECTION 10.08. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of New York are not required to be open. 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. If any other operative date for purposes of
this Indenture shall occur on a Legal Holiday then for all purposes the next
succeeding day that is not a Legal Holiday shall be such operative date.
SECTION 10.09. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
SECTION 10.10. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Indenture may be executed by manual or facsimile signatures in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
SECTION 10.11. VARIABLE PROVISIONS.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
The first certificate pursuant to Section 4.03 hereof shall be for the
fiscal year ended on December 31, 1998.
The reporting date for Section 7.06 hereof is March 15, of each year. The
first reporting date is March 15, 1998.
The Trustee shall always have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition.
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The Company's address is:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention: Richard J. Lubasch, Esq.
General Counsel
The Trustee's address is:
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trustee
Administration Department
SECTION 10.12. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND
THE NOTES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
SECTION 10.13. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or an Affiliate. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.14. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall bind
its successor. All agreements of the Trustee in this Indenture shall bind its
successor.
SECTION 10.15. SEVERABILITY
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.16. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
NTL INCORPORATED, as Company
By: /s/ Richard J. Lubasch
---------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Andrew M. Deck
---------------------------------------
Name: Andrew M. Deck
Title: Vice President
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EXHIBIT A
[FORM OF FACE OF INITIAL NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
[Restricted Notes Legend]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY
<PAGE>
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE
OF THIS NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS
PRIOR TO THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF
RULE 903(c)(2) OF REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE THAT MAY
BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO
THE COMPANY AND THE TRUSTEE, (4) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (4) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM.
[Original Issue Discount Legend]
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING THE
UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES TO THIS SENIOR
NOTE. THE ISSUE DATE OF THIS SENIOR NOTE IS MARCH 13, 1998. THE ISSUE PRICE OF
THIS SENIOR NOTE IS 586.20 POUNDS STERLING PER 1,000 POUNDS STERLING OF INITIAL
PRINCIPAL AMOUNT AT MATURITY. THIS SENIOR NOTE IS ISSUED WITH 413.80 POUNDS
STERLING OF ORIGINAL ISSUE DISCOUNT PER 1,000 POUNDS STERLING OF INITIAL
PRINCIPAL AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS SENIOR NOTE IS
10.8%.
2
<PAGE>
No. ________
_______________Pounds Sterling
CUSIP No. [ ]/CINS No. [ ]
10-3/4% SENIOR DEFERRED COUPON NOTE DUE 2008
NTL Incorporated, a Delaware corporation (the "Company"), promises to pay
to __________________________ or registered assigns, the principal sum of
____________________ [____________] Pounds Sterling [,or such other amount as is
indicated on Schedule A hereof* /,] on April 1, 2008, subject to the further
provisions of this Senior Note set forth on the reverse hereof which further
provisions shall for all purposes have the same effect as if set forth at this
place.
Interest Payment Dates: April 1 and October 1, commencing October 1, 2003
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Senior Note to be
signed manually or by facsimile by its duly authorized officers.
Dated:______________________________
NTL INCORPORATED
by:_________________________________
by:_________________________________
_________________________________
* Applicable to Global Notes Only
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10-3/4% Senior Deferred
Coupon Notes Due 2008 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:______________________________________
Authorized Officer
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[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
10-3/4% Senior Deferred Coupon Note Due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 10-3/4% Senior Deferred Coupon Notes Due 2008 (the "Senior
Notes"). The Senior Notes are being issued at a discount from their principal
amount and will accrete (in accordance with the definition of Accreted Value
contained in the Indenture) at a rate of 10-3/4%, compounded semiannually, to an
aggregate principal amount of 300,000,000 Pounds Sterling by April 1, 2003. The
Company promises to pay interest on the Senior Notes in cash semiannually on
each April 1 and October 1, commencing on October 1, 2003, to Holders of record
on the immediately preceding March 15 and September 15, respectively at the rate
of 103/4% per annum. Interest on the Senior Notes will accrue from the most
recent date to which interest has been paid, or if no interest has been paid,
from April 1, 2003. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company will pay interest on overdue principal or
overdue Accreted Value at the interest or accretion rate borne by the Senior
Notes, compounded semiannually, and it shall pay interest on overdue
installments of interest (without regard to any applicable grace period) at the
same interest rate compounded semiannually. Any interest paid on this Senior
Note shall be increased to the extent necessary to pay Additional Amounts as set
forth in this Senior Note.
2. Special Interest. The Holder of this Senior Note is entitled to the
benefits of the Registration Rights Agreement relating to the Senior Notes,
dated as of March 13, 1998, between the Company and the Initial Purchasers party
thereto (the "Registration Rights Agreement").
In the event that either (a) the Exchange Offer Registration Statement (as
such term is defined in the Registration Rights Agreement) is not filed with the
SEC on or prior to the 90th day following the date of original issuance of the
Senior Notes, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 270th day following the date of original issuance of the
Senior Notes (as such period may be extended in accordance with the SEC review
delay provisions of the Registration Rights Agreement) or (c) the Registered
Exchange Offer (as such term is defined in the Registration Rights Agreement) is
not consummated or a Shelf Registration Statement (as such term is defined in
the Registration Rights Agreement) is not declared effective on or prior to the
310th day following the date of original issuance of the Senior Notes (as such
period may be extended in accordance with the SEC review delay provisions of the
Registration Rights Agreement) (each such event referred to in clauses (a)
through (c) above, a "Registration Default"), interest will accrue (in addition
to the stated interest on the Senior Notes) from and including the next day
following each of (i) such 90-day period in the case of clause (a) above and
(ii) such 270-day period in the case of clause (b) above and (iii) such 310-day
period in the case of clause (c) above (in each of cases (b) and (c) as such
period is extended, if applicable, in the manner aforesaid) (each such period
referred to in clauses (i)-(iii) above an "Accrual
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Period"), at a rate per annum equal to 0.50% of the Accreted Value of the Senior
Notes (determined daily). The amount of such additional interest (the "Special
Interest") will increase by an additional 0.50% of the Accreted Value with
respect to each subsequent applicable Accrual Period until all Registration
Defaults have been cured, up to a maximum amount of Special Interest of 1.50%
per annum of the Accreted Value (determined daily). In each case such additional
interest will be payable in cash semiannually in arrears on each April 1 and
October 1, commencing October 1, 1998, to Holders of record on the immediately
preceding March 15 and September 15, respectively. In the event that a Shelf
Registration Statement is declared effective pursuant to the terms of the
Registration Rights Agreement, if the Company fails to keep such Registration
Statement continuously effective for the period required by the Registration
Rights Agreement, then from such time as the Shelf Registration Statement is no
longer effective until the earlier of (i) the date that the Shelf Registration
Statement is again deemed effective, (ii) the date that is the second
anniversary of the original issuance of the Senior Notes or (iii) the date as of
which all of the Senior Notes are sold pursuant to the Shelf Registration
Statement, Special Interest shall accrue at a rate per annum equal to 0.50% of
the Accreted Value of the Senior Notes (1.00% thereof if the Shelf Registration
Statement is no longer effective for 30 days or more) and shall be payable in
cash semiannually in arrears on each April 1 and October 1, commencing October
1, 1998, to the Holders of record on the immediately preceding March 15 and
September 15, respectively.
3. Additional Amounts. This Section 3 shall apply only in the event that
the Company becomes, or a successor to the Company is, a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on this Senior Note shall be made without deduction for or on account
of, any and all present or future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction or withholding of such taxes,
duties, assessments or governmental charges is then required by law. If any
deduction or withholding for or on account of any present or future taxes,
assessments or other governmental charges of the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands (or any
political subdivision or taxing authority thereof or therein) shall at any time
be required in respect of any amounts to be paid by the Company under this
Senior Note, the Company shall pay or cause to be paid such additional amounts
("Additional Amounts") as may be necessary in order that the net amounts
received by a Holder of this Senior Note after such deduction or withholding
shall be not less than the amounts specified in this Senior Note to which the
Holder of this Senior Note is entitled; provided, however, that the Company
shall not be required to make any payment of Additional Amounts for or on
account of:
(a) any tax, assessment or other governmental charge to the extent
such tax, assessment or other governmental charge would not have been
imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member
or shareholder of, or possessor of a power over, such Holder, if such
Holder is an estate, nominee, trust, partnership or corporation), other
than the holding of this Senior Note or the receipt of amounts payable in
respect of this Senior Note, and the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or therein) including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, member,
shareholder or possessor) being or having been a citizen or resident
thereof or being or having been present or engaged in trade or business
therein or having or having had a permanent establishment therein or (ii)
the presentation of this Senior
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Note (where presentation is required) for payment on a date more than 30
days after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for, whichever occurs later,
except to the extent that the Holder would have been entitled to Additional
Amounts had this Senior Note been presented on the last day of such period
of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note, with a timely request of the Company addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change of Control Payment or interest with
respect to a Senior Note or withholding from the proceeds of a sale or
exchange of a Senior Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount,
redemption amount, Change of Control Payment or interest with respect to a
Senior Note, if such payment can be made, and is in fact made, without such
withholding by any other Paying Agent located inside the United States;
(f) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of a Senior Note to the extent that
the beneficial owner would not have been entitled to the payment of any
such Additional Amounts had the beneficial owner directly held the Senior
Note;
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the Holder of this
Senior Note. All references to principal amount or interest on the Senior Notes
in the Indenture or the Senior Notes shall include any Additional Amounts
payable to the Company pursuant to this Section 3.
4. Method of Payment. The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered Holders of Senior
Notes at the close of business on the record date for the next interest payment
date even though Senior Notes are canceled after the record date and
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<PAGE>
on or before the interest payment date. Holders must surrender Senior Notes to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium, if any, and interest in money of the United Kingdom that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal, premium, if any, and interest by check
payable in such money. It may mail an interest check to a holder's registered
address. If a Holder so requests, principal, premium, if any, and interest may
be paid by wire transfer of immediately available funds to an account previously
specified in writing by such Holder to the Company and the Trustee.
5. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York, New York and in London, England. Banque
Internationale a Luxembourg S.A. will act as Paying Agent and Registrar in
Luxembourg as long as the Senior Notes are listed on the Luxembourg Stock
Exchange. The Company may change any Paying Agent or Registrar without prior
notice. The Company or any of its Affiliates may act in any such capacity.
6. Indenture. The Company issued the Senior Notes under an Indenture, dated
as of March 13, 1998 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the Senior Notes include those stated
in the Indenture and those made part of the Indenture by the Trust Indenture Act
of 1939 (15 U.S. Code (Sections) 77aaa-77bbbb) as in effect on the date of the
Indenture. The Senior Notes are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior Notes are
unsecured general obligations of the Company limited to 300,000,000 pounds
sterling in aggregate principal amount.
7. Optional Redemption. Except as provided in Section 8 hereof, the Senior
Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount )
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
Year Percentage
2003........................ 105.375%
2004........................ 103.583%
2005........................ 101.792%
2006 and thereafter......... 100.000%
8. Optional Tax Redemption. (a) The Senior Notes may be redeemed at the
option of the Company, in whole but not in part, upon not less than 30 nor more
than 60 days notice, at any time at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest to the date fixed for redemption
(or the Accreted Value thereof at the date of redemption if prior to April 1,
2003) if after the date on which Section 3 of this Senior Note becomes
applicable (the "Relevant Date") there has occurred any change in or amendment
to the laws (or any regulations or official rulings promulgated thereunder) of
the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands (or any political subdivision or taxing authority thereof or
therein), or any change in or
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<PAGE>
amendment to the official application or interpretation of such laws, regulation
or rulings (a "Change in Tax Law") which becomes effective after the Relevant
Date, as a result of which the Company is or would be so required on the next
succeeding Interest Payment Date to pay Additional Amounts with respect to the
Senior Notes as described under Section 3 hereof with respect to withholding
taxes imposed by the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands (or any political subdivision or taxing authority
thereof or therein) (a "Withholding Tax") and such Withholding Tax is imposed at
a rate that exceeds the rate (if any) at which Withholding Tax was imposed on
the Relevant Date, provided, however, that (i) this paragraph shall not apply to
the extent that, at the Relevant Date it was known or would have been known had
professional advice of a nationally recognized accounting firm in the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands, as the case may be, been sought, that a Change in Tax Law in the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands was to occur after the Relevant Date, (ii) no such notice of redemption
may be given earlier than 90 days prior to the earliest date on which the
Company would be obliged to pay such Additional Amounts were a payment in
respect of the Senior Notes then due, (iii) at the time such notice of
redemption is given, such obligation to pay such Additional Amount remains in
effect and (iv) the payment of such Additional Amounts cannot be avoided by the
use of any reasonable measures available to the Company.
The Senior Notes may also be redeemed, in whole but not in part, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid interest to the date fixed for redemption (or the Accreted Value
thereof at the date fixed for redemption if prior to April 1, 2003) if the
Person formed after the Relevant Date by a consolidation, amalgamation,
reorganization or reconstruction (or other similar arrangement) of the Company
or the Person into which the Company is merged after the Relevant Date or to
which the Company conveys, transfers or leases its properties and assets after
the Relevant Date substantially as an entirety (collectively, a "Subsequent
Consolidation") is required, as a consequence of such Subsequent Consolidation
and as a consequence of a Change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands occurring
after the date of such Subsequent Consolidation to pay Additional Amounts with
respect to Senior Notes with respect to Withholding Tax as described under
Section 3 hereof and such Withholding Tax is imposed at a rate that exceeds the
rate (if any) at which Withholding Tax was or would have been imposed on the
date of such Subsequent Consolidation, provided, however, that this paragraph
shall not apply to the extent that, at the date of such Subsequent Consolidation
it was known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after such
date.
The Company will also pay, or make available for payment, to Holders on the
Redemption Date any Additional Amounts (as described, but subject to the
exceptions referred to, in Section 3 hereof) resulting from the payment of such
Redemption Price.
9. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of the
Senior Notes to be redeemed at his address of record. The Senior Notes in
denominations larger than 1,000 pounds sterling may be redeemed in part but only
in integral multiples of 1,000 pounds sterling. In the event of a redemption of
less than all of the Senior Notes, the Senior Notes
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will be chosen for redemption by the Trustee in accordance with the Indenture.
On and after the redemption date, interest ceases to accrue on the Senior Notes
or portions of them called for redemption.
If this Senior Note is redeemed subsequent to a record date with respect to
any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest will be paid to the Person in whose name
this Senior Note is registered at the close of business on such record date.
10. Mandatory Redemption. The Company will not be required to make
mandatory redemption or repurchase payments with respect to the Senior Notes.
There are no sinking fund payments with respect to the Senior Notes.
11. Repurchase at Option of Holder. (a) If there is a Change of Control
Triggering Event, the Company shall be required to offer to purchase on the
Purchase Date all outstanding Senior Notes at a purchase price equal to 101% of
the Accreted Value thereof on the date of purchase (if such date is prior to
April 1, 2003), or 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest to the Purchase Date (if on or after April 1, 2003). Holders
of Senior Notes that are subject to an offer to purchase will receive a Change
of Control offer from the Company prior to any related Purchase Date and may
elect to have such Senior Notes or portions thereof in authorized denominations
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
and when the aggregate amount of Excess Proceeds from such Asset Sales exceeds
$15 million, the Company shall be required to make an offer (an "Asset Sale
Offer") to all holders of the Senior Notes and Other Qualified Notes to purchase
the maximum principal amount of Senior Notes and Other Qualified Notes
(determined on a pro rata basis according to the principal amount or accreted
value, as the case may be, of the Senior Notes and the Other Qualified Notes;
provided, however, that the asset sale offer must be made first to the holders
of the Applicable Notes) that may be purchased out of the Excess Proceeds, if
any, remaining after the consummation of an asset sale offer made to the holders
of the Applicable Notes, with respect to the Senior Notes, at an offer price in
cash in an amount equal to 100% of the Accreted Value on the date fixed for the
closing of such offer (if such date is prior to April 1, 2003) or 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer (if such date is on or after
April 1, 2003). To the extent that the aggregate principal amount or accreted
value, as the case may be, of Senior Notes, Applicable Notes and Other Qualified
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use such deficiency for general corporate purposes. If the
aggregate principal amount or accreted value, as the case may be, of Senior
Notes and Other Qualified Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, if any, remaining after the consummation of an asset
sale offer made to holders of the Applicable Notes, then such remaining Excess
Proceeds will be allocated pro rata according to principal amount or accreted
value, as the case may be, to the Senior Notes and each issue of the Other
Qualified Notes and, the Trustee will select the Senior Notes to be purchased in
accordance with Section 3.09(e) of the Indenture. Upon completion of such offer
to purchase, the amount of Excess Proceeds will be reset at zero.
12. Denominations, Transfer, Exchange. The Senior Notes are in registered
form, without coupons, in denominations of 1,000 pounds sterling and integral
multiples of 1,000 pounds sterling. The transfer of Senior Notes may
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<PAGE>
be registered, and Senior Notes may be exchanged, as provided in the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Senior Note or portion of a Senior Note selected for
redemption (except the unredeemed portion of any Senior Note being redeemed in
part). Also, it need not exchange or register the transfer of any Senior Note
for a period of 15 days before a selection of Senior Notes to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 4 of this Senior
Note, the registered Holder of a Senior Note may be treated as its owner for all
purposes.
14. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of Senior
Notes entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
15. Defaults and Remedies. The Senior Notes shall have the Events of
Default set forth in Section 6.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the then outstanding Senior Notes by notice to the Company
and the Trustee may declare all the Senior Notes to be due and payable
immediately, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all unpaid principal and interest accrued on
the Senior Notes or Accreted Value shall become due and payable immediately
without further action or notice. The Holders of a majority in principal amount
of the Senior Notes then outstanding by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest or Accreted
Value that has become due solely because of the acceleration. Holders may not
enforce the Indenture or the Senior Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Senior Notes issued under the Indenture may direct the Trustee
in its exercise of any trust or power. The Company must furnish annually
compliance certificates to the Trustee. The above description of Events of
Default and remedies is qualified by reference, and subject in its entirety, to
the more complete description thereof contained in the Indenture.
16. Amendments, Supplements and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Senior Notes. Without the consent of any Holder, the Indenture or
the Senior Notes may be amended among other things, to cure any ambiguity,
defect or inconsistency, to provide for assumption of the Company's obligations
to Holders, to make any change that does not adversely affect the rights of any
Holder or to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
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17. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other things, engage in
certain transactions with Affiliates, incur additional indebtedness and make
payments in respect of Capital Stock. The limitations are subject to a number of
important qualifications and exceptions.
18. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity may become the owner or pledgee of the Senior Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not Trustee, subject to certain limitations provided for in
the Indenture and in the TIA. Any Agent may do the same with like rights.
19. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE SENIOR NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
21. Authentication. The Senior Notes shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
22. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (- Custodian), and UGMA (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder of the Senior Notes upon written
request and without charge a copy of the Indenture. Request may be made to:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
General Counsel
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ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
(I) or (we) assign and transfer this Senior Note to
__________________________________________
(Insert assignee's social security or tax I.D. no.)
__________________________________________
__________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________ agent to transfer this
Senior Note on the books of the Company. The agent may substitute another to act
for him.
Your Signature: ______________________________________________
(Sign exactly as your name appears on the other side of this Senior Note)
Date: __________________
Signature Guarantee: * ____________________________________________
In connection with any transfer of any of the Senior Notes evidenced by
this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Senior Notes and the last
date, if any, on which such Senior Notes were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Senior Notes
are being transferred:
CHECK ONE BOX BELOW
(1) |_| to the Company; or
(2) |_| pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) |_| pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) |_| pursuant to another available exemption from the
registration requirements of the Securities Act of 1933. Unless one
of the boxes is checked, the Trustee will refuse to register
__________________________
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange
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any of the Senior Notes evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that if
box (2), (3) or (4) is checked, the Trustee may require, prior to
registering any such transfer of the Senior Notes such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
__________________________
Signature
Signature Guarantee*
__________________________
Signature must be guaranteed __________________________
Signature
__________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Senior
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Date: _____________________
__________________________
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
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NOTICE: To be executed by an executive officer
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note or a portion thereof
repurchased by the Company pursuant to Section 3.09, 4.10 or 4.13 of the
Indenture, check the box: [ ]
If the purchase is in part, indicate the portion (in denominations of 1,000
pounds sterling or any integral multiple thereof) to be
purchased:______________________
Your Signature: ______________________________________________________
(Sign exactly as your name appears on the other side of
this Senior Note)
Date: ________________________
Signature Guarantee:**/
____________________________
**/ Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
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[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
__________________ Pounds Sterling. The following increases or decreases in the
principal amount of this Global Note have been made:
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Amount of Amount of Principal Signature of Date of
decrease in increase in amount of authorized exchange
principal principal this Global officer of following such
amount of this amount of this Note Trustee or decrease or
Global Note Global Note Notes Custodian increase
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17
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EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
[Global Notes Legend, if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
[Original Issue Discount Legend]
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING THE
UNITED STATES FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT RULES TO THIS SENIOR
NOTE. THE ISSUE DATE OF THIS SENIOR NOTE IS MARCH 13, 1998. THE ISSUE PRICE OF
THIS SENIOR NOTE IS 586.20 POUNDS STERLING PER 1,000 POUNDS STERLING OF INITIAL
PRINCIPAL AMOUNT AT MATURITY. THIS SENIOR NOTE IS ISSUED WITH 413.80 POUNDS
STERLING OF ORIGINAL ISSUE DISCOUNT PER 1,000 POUNDS STERLING OF INITIAL
PRINCIPAL AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS SENIOR NOTE IS
10.8%.
<PAGE>
No.___________ __________Pounds Sterling
CUSIP No. [ ]CINS No. [ ]
10-3/4% SERIES B SENIOR DEFERRED COUPON NOTE DUE 2008
NTL Incorporated, a Delaware corporation (the "Company") promises to pay to
_________________________ or registered assigns, the principal sum of [ ] [ ]
Pounds Sterling [or such other amount as is indicated on Schedule A hereof]****
on April 1, 2008, subject to the further provisions of this Senior Note set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Interest Payment Dates: April 1 and October 1, commencing October 1, 2003
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Senior Note to be
signed manually or by facsimile by its duly authorized officers.
Dated: ________________
NTL INCORPORATED,
by:____________________________________
by:____________________________________
______________________________
**** Applicable to Global Notes only.
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10-3/4% Series B Senior Deferred Coupon Notes Due 2008
described in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________________
Authorized Officer
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(FORM OF REVERSE OF EXCHANGE NOTE)
NTL INCORPORATED
10-3/4% Series B Senior Deferred Coupon Note Due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "Company"), is
the issuer of 10-3/4% Series B Senior Deferred Coupon Notes Due 2008 (the
"Senior Notes"). The Senior Notes are being issued at a discount from their
principal amount and will accrete (in accordance with the definition of Accreted
Value contained in the Indenture) at a rate of 10-3/4%, compounded semiannually,
to an aggregate principal amount of 300,000,000 pounds sterling by April 1,
2003. The Company promises to pay interest on the Senior Notes in cash
semiannually on each April 1 and October 1, commencing on October 1, 2003, to
Holders of record on the immediately preceding March 15 and September 15,
respectively, at the rate of 10-3/4% per annum. Interest on the Senior Notes
will accrue from the most recent date to which interest has been paid on the
Company's 10-3/4% Senior Notes Due 2008, or if no interest has been paid, from
April 1, 2003. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company will pay interest on overdue principal and
premium, if any, or overdue Accreted Value at the interest or accretion rate
borne by the Senior Notes, compounded semiannually, and it shall pay interest on
overdue installments of interest (without regard to any applicable grace period)
at the same interest rate compounded semiannually. Any interest paid on this
Senior Note shall be increased to the extent necessary to pay Additional Amounts
as set forth in this Senior Note.
2. Additional Amounts. This Section 2 shall apply only in the event that
the Company becomes, or a successor to the Company is, a corporation organized
or existing under the laws of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by the
Company on this Senior Note shall be made without deduction for or on account
of, any and all present or future taxes, duties, assessments, or governmental
charges of whatever nature unless the deduction of such taxes, duties,
assessments or governmental charges is then required by law. If any deduction or
withholding for or on account of any present or future taxes, assessments or
other governmental charges of the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands (or any political
subdivision or taxing authority thereof or taxing authority thereof or therein)
shall at any time be required in respect of any amounts to be paid by the
Company under this Senior Note, the Company shall pay or cause to be paid such
additional amounts ("Additional Amounts") as may be necessary in order that the
net amounts received by a Holder of this Senior Note after such deduction or
withholding shall be not less than the amounts specified in this Senior Note to
which the Holder of this Senior Note is entitled; provided, however, that the
Company shall not be required to make any payment of Additional Amounts for or
on account of:
(a) any tax, assessment or other governmental charge to the extent
such tax, assessment or other governmental charge would not have been
imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor, beneficiary, member
or shareholder of, or possessor of a power over, such Holder, if such
Holder is an estate,
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nominee, trust, partnership or corporation), other than the holding of this
Senior Note or the receipt of amounts payable in respect of this Senior
Note, the United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands or any political subdivision or taxing
authority thereof or therein, including, without limitation, such Holder
(or such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident thereof or being or having been
present or engaged in trade or business therein or having or having had a
permanent establishment therein or (ii) the presentation of this Senior
Note (where presentation is required) for payment on a date more than 30
days after the date on which such payment became due and payable or the
date on which payment thereof is duly provided for, whichever occurs later,
except to the extent that the Holder would have been entitled to Additional
Amounts had this Senior Note been presented on the last day of such period
of 30 days;
(b) any tax, assessment or other governmental charge that is imposed
or withheld by reason of the failure to comply by the Holder of this Senior
Note or, if different, the beneficial owner of the interest payable on this
Senior Note, with a timely request of the Company addressed to such Holder
or beneficial owner to provide information, documents or other evidence
concerning the nationality, residence, identity or connection with the
taxing jurisdiction of such Holder or beneficial owner which is required or
imposed by a statute, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such tax,
assessment or governmental charge;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or other governmental charge;
(d) any tax, assessment or other governmental charge which is
collectible otherwise than by withholding from payments of principal
amount, redemption amount, Change of Control Payment or interest with
respect to a Senior Note or withholding from the proceeds of a sale or
exchange of a Senior Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal amount,
redemption amount, Change of Control Payment or interest with respect to a
Senior Note, if such payment can be made, and is in fact made, without such
withholding by any other Paying Agent located inside the United States;
(f) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of a Senior Note to the extent that
the beneficial owner would not have been entitled to the payment of any
such Additional Amounts had the beneficial owner directly held the Senior
Note;
(g) any combination of items (a), (b), (c), (d), (e) and (f) above;
nor shall Additional Amounts be paid with respect to any payment of the
principal of, or any interest on, this Senior Note to any Holder who is a
fiduciary or partnership or other than the sole beneficial owner of such payment
to the extent that a beneficiary or settlor would not have been entitled to any
Additional Amounts had such beneficiary or settlor been the Holder of this
Senior Note. All references to principal
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amount or interest on the Senior Notes in the Indenture or the Senior Notes
shall include any Additional Amounts payable to the Company pursuant to this
Section 2.
3. Method of Payment. The Company will pay interest on the Senior Notes
(except defaulted interest) to the Persons who are registered Holders of Senior
Notes at the close of business on the record date for the next interest payment
date even though Senior Notes are canceled after the record date and on or
before the interest payment date. Holders must surrender Senior Notes to a
Paying Agent to collect principal and premium payments. The Company will pay
principal, premium, if any, and interest in money of the United Kingdom that at
the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal, premium, if any, and interest by check
payable in such money. It may mail an interest check to a holder's registered
address. If a Holder so requests, principal, premium, if any, and interest may
be paid by wire transfer of immediately available funds to an account previously
specified in writing by such Holder to the Company and the Trustee.
4. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York and in London, England. Banque Internationale
a Luxembourg S.A. will act as Paying Agent and Registrar in Luxembourg as long
as the Senior Notes are listed on the Luxembourg Stock Exchange. The Company may
change any Paying Agent or Registrar without prior notice. The Company or any of
its Affiliates may act in any such capacity.
5. Indenture. The Company issued the Senior Notes under an indenture, dated
as of March 13, 1998 (the "Indenture"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the Senior Notes include those stated
in the Indenture and those made part of the Indenture by the Trust Indenture Act
of 1939 (15 U.S. Code (Sections) 77aaa-77bbbb) as in effect on the date of the
Indenture. The Senior Notes are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Senior Notes are
unsecured general obligations of the Company limited to 300,000,000 pounds
sterling in aggregate principal amount.
6. Optional Redemption. Except as provided in Section 7 herein, the Senior
Notes are not redeemable at the Company's option prior to April 1, 2003.
Thereafter, the Senior Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on April 1
of the years indicated below:
Year Percentage
2003 ........................... 105.375%
2004............................ 103.583%
2005............................ 101.792%
2006 and thereafter............. 100.000%
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7. Optional Tax Redemption. (a) The Senior Notes may be redeemed at the
option of the Company, in whole but not in part, upon not less than 30 nor more
than 60 days notice, at any time at a redemption price equal to the principal
amount thereof plus accrued and unpaid interest to the date fixed for redemption
(or the Accreted Value thereof at the date of redemption if prior to April 1,
2003) if after the date on which Section 2 of this Senior Note becomes
applicable (the "Relevant Date") there has occurred any change in or amendment
to the laws (or any regulations or official rulings promulgated thereunder) of
the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the
Cayman Islands (or any political subdivision or taxing authority thereof or
therein), or any change in or amendment to the official application or
interpretation of such laws, regulations or rulings (a "Change in Tax Law")
which becomes effective after the Relevant Date, as a result of which the
Company is or would be so required on the next succeeding Interest Payment Date
to pay Additional Amounts with respect to the Senior Notes as described under
Section 2 hereof with respect to withholding taxes imposed by the United
Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman
Islands (or any political subdivision or taxing authority thereof or therein) (a
"Withholding Tax') and such Withholding Tax is imposed at a rate that exceeds
the rate (if any) at which Withholding Tax was imposed on the Relevant Date,
provided, however, that (i) this paragraph shall not apply to the extent that,
at the Relevant Date it was known or would have been known had professional
advice of a nationally recognized accounting firm in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands, as the
case may be, been sought, that a change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands was to
occur after the Relevant Date, (ii) no such notice of redemption may be given
earlier than 90 days prior to the earliest date on which the Company would be
obliged to pay such Additional Amounts were a payment in respect of the Senior
Notes then due, (iii) at the time such notice of redemption is given, such
obligation to pay such Additional Amount remains in effect and (iv) the payment
of such Additional Amounts cannot be avoided by the use of any reasonable
measures available to the Company.
(b) The Senior Notes may also be redeemed, in whole but not in part, at any
time at a redemption price equal to the principal amount thereof plus accrued
and unpaid to the date fixed for redemption interest (or the Accreted Value
thereof at the date fixed for redemption if prior to April 1, 2003) if the
Person formed after the Relevant Date by a consolidation, amalgamation,
reorganization or reconstruction (or other similar arrangement) of the Company
or the Person into which the Company is merged after the Relevant Date or to
which the Company conveys, transfers or leases its properties and assets after
the Relevant Date substantially as an entirety (collectively, a "Subsequent
Consolidation") is required, as a consequence of such Subsequent Consolidation
and as a consequence of a Change in Tax Law in the United Kingdom, the
Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands occurring
after the date of such Subsequent Consolidation to pay Additional Amounts with
respect to Senior Notes with respect to Withholding Tax as described under
Section 2 hereof and such Withholding Tax is imposed at a rate that exceeds the
rate (if any) at which Withholding Tax was or would have been imposed on the
date of such Subsequent Consolidation, provided, however, that this paragraph
shall not apply to the extent that, at the date of such Subsequent Consolidation
it was known or would have been known had professional advice of a nationally
recognized accounting firm in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been
sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the
Netherlands Antilles, Bermuda or the Cayman Islands was to occur after such
date.
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The Company will also pay, or make available for payment, to Holders on the
Redemption Date any Additional Amounts (as described, but subject to the
exceptions referred to, in Section 2 hereof) resulting from the payment of such
Redemption Price.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of the
Senior Notes to be redeemed at his address of record. The Senior Notes in
denominations larger than 1,000 pounds sterling may be redeemed in part but only
in integral multiples of 1,000 pounds sterling. In the event of a redemption of
less than all of the Senior Notes, the Senior Notes will be chosen for
redemption by the Trustee in accordance with the Indenture. On and after the
redemption date, interest ceases to accrue on the Senior Notes or portions of
them called for redemption. If this Senior Note is redeemed subsequent to a
record date with respect to any interest payment date specified above and on or
prior to such interest payment date, then any accrued interest will be paid to
the Person in whose name this Senior Note is registered at the close of business
on such record date.
9. Mandatory Redemption. The Company will not be required to make mandatory
redemption or repurchase payments with respect to the Senior Notes. There are no
sinking fund payments with respect to the Senior Notes.
10. Repurchase at Option of Holder. (a) If there is a Change of Control
Triggering Event, the Company shall be required to offer to purchase on the
Purchase Date all outstanding Senior Notes at a purchase price equal to 101% of
the Accreted Value thereof on the date of purchase (if such date is prior to
April 1, 2003), or 101% of the aggregate principal amount thereof, plus accrued
and unpaid interest to the Purchase Date (if on or after April 1, 2003). Holders
of Senior Notes that are subject to an offer to purchase will receive a Change
of Control offer from the Company prior to any related Purchase Date and may
elect to have such Senior Notes or portions thereof in authorized denominations
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
and when the aggregate amount of Excess Proceeds from such Asset Sales exceeds
$15 million, the Company shall be required to make an offer (an "Asset Sale
Offer") to all holders of the Senior Notes and Other Qualified Notes to purchase
the maximum principal amount of Senior Notes and Other Qualified Notes
(determined on a pro rata basis according to the principal amount or accreted
value, as the case may be, of the Senior Notes and the Other Qualified Notes;
provided, however, that the asset sale offer must be made first to the holders
of the Applicable Notes) that may be purchased out of the Excess Proceeds, if
any, remaining after the consummation of an asset sale offer made to the holders
of the Applicable Notes, with respect to the Senior Notes, at an offer price in
cash in an amount equal to 100% of the Accreted Value on the date fixed for the
closing of such offer (if such date is prior to April 1, 2003) or 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer (if such date is on or after
April 1, 2003). To the extent that the aggregate principal amount or accreted
value, as the case may be, of Senior Notes, Applicable Notes and Other Qualified
Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use such deficiency for general corporate purposes. If the
aggregate principal amount or accreted value, as the case may be, of Senior
Notes and Other Qualified Notes surrendered by holders thereof exceeds the
amount of Excess Proceeds, if any, remaining after the consummation of an asset
sale offer made to the holders of the Applicable Notes, then any remaining
Excess Proceeds will be
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allocated pro rata according to principal amount or accreted value, as the case
may be, to the Senior Notes and each issue of the Other Qualified Notes and, the
Trustee will select the Senior Notes to be purchased in accordance with Section
3.09(e) of the Indenture. Upon completion of such offer to purchase, the amount
of Excess Proceeds will be reset at zero.
11. Denominations, Transfer, Exchange. The Senior Notes are in registered
form, without coupons, in denominations of 1,000 pounds sterling and integral
multiples of 1,000 pounds sterling. The transfer of Senior Notes may be
registered, and Senior Notes may be exchanged, as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Senior Note or portion of a Senior Note selected for
redemption (except the unredeemed portion of any Senior Note being redeemed in
part). Also, it need not exchange or register the transfer of any Senior Note
for a period of 15 days before a selection of Senior Notes to be redeemed.
12. Persons Deemed Owners. Except as provided in paragraph 3 of this Senior
Note, the registered Holder of a Senior Note may be treated as its owner for all
purposes.
13. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for two years, the Trustee and the Paying Agent shall pay the
money back to the Company at its written request. After that, Holders of Senior
Notes entitled to the money must look to the Company for payment unless an
abandoned property law designates another Person and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
14. Defaults and Remedies. The Senior Notes shall have the Events of
Default as set forth in Section 6.01 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company or the Holders of at least 25% in aggregate
principal amount of the then outstanding Senior Notes by notice to the Company
and the Trustee may declare all the Senior Notes or Accreted Value to be due and
payable immediately, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all unpaid principal and interest
accrued on the Senior Notes shall become due and payable immediately without
further action or notice. The Holders of a majority in principal amount of the
Senior Notes then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest or Accreted Value that has
become due solely because of the acceleration. Holders may not enforce the
Indenture or the Senior Notes as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Senior Notes issued under the Indenture may direct the Trustee in its exercise
of any trust or power. The Company must furnish annually compliance certificates
to the Trustee. The above description of Events of Default and remedies is
qualified by reference, and subject in its entirety, to the more complete
description thereof contained in the Indenture.
15. Amendments, Supplements and Waivers. Subject to certain exceptions, the
Indenture or the Senior Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Senior Notes (including consents obtained in connection with a tender offer or
exchange offer for Senior Notes), and any existing default may be waived with
the
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consent of the Holders of a majority in principal amount of the then outstanding
Senior Notes. Without the consent of any Holder, the Indenture or the Senior
Notes may be amended among other things, to cure any ambiguity, defect or
inconsistency, to provide for assumption of the Company's obligations to
Holders, to make any change that does not adversely affect the rights of any
Holder or to qualify the Indenture under the TIA or to comply with the
requirements of the SEC in order to maintain the qualification of the Indenture
under the TIA.
16. Restrictive Covenants. The Indenture imposes certain limitations on the
ability of the Company and its Subsidiaries to, among other things, engage in
certain transactions with Affiliates, incur additional Indebtedness and make
payments in respect of Capital Stock. The limitations are subject to a number of
important qualifications and exceptions.
17. Trustee Dealings with the Company. The Trustee, in its individual or
any other capacity may become the owner or pledgee of the Senior Notes and may
otherwise deal with the Company or an Affiliate with the same rights it would
have, as if it were not Trustee, subject to certain limitations provided for in
the Indenture and in the TIA. Any Agent may do the same with like rights.
18. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Notes or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Senior Notes by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Notes.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THE INDENTURE AND THE SENIOR NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
20. Authentication. The Senior Notes shall not be valid until authenticated
by the manual signature of an authorized officer of the Trustee or an
authenticating agent.
21. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and UGMA (= Uniform Gifts to
Minors Act).
The Company will furnish to any Holder of the Senior Notes upon written
request and without charge a copy of the Indenture. Request may be made to:
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
General Counsel
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ASSIGNMENT FORM
To assign this Senior Note, fill in the form below:
(I) or (we) assign and transfer this Senior Note to
_________________________ (Insert assignee's social security or tax I.D. no.)
______________________________________
______________________________________
_________________________ (Print or type assignee's name, address and zip code)
and irrevocably appoint __________________________________________ agent to
transfer this Senior Note on the books of the Company. The agent may substitute
another to act for him.
Your Signature:________________________________________
(Sign exactly as your name appears
on the other side of this Senior Note)
Date: __________________
Signature Guarantee: **/ ______________________________
_____________________________
**/ Signature must be guaranteed by a commercial Bank, trust company or member
of the New York Stock Exchange.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note or a portion thereof
repurchased by the Company pursuant to Section 3.09, 4.10 or 4.13 of the
Indenture, check the box: |_|
If the purchase is in part, indicate the portion (in denominations of 1,000
pounds sterling or any integral multiple thereof) to be purchased:
_____________________
Your Signature: _____________________________________________
(Sign exactly as your name appears on the
other side of this Senior Note)
Date: ________________________
Signature Guarantee:***
_____________________
*** Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
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SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount of this Global Note shall be
__________________ pounds sterling. The following increases or decreases in the
principal amount of this Global Note have been made:
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Amount of Amount of Principal Signature of Date of
decrease in increase in amount of authorized exchange
principal principal this Global officer of following such
amount of this amount of this Note Trustee or decrease or
Global Note Global Note Notes Custodian increase
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EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM RULE 144A GLOBAL NOTE
TO REGULATION S GLOBAL NOTE
(Transfers pursuant to (Section) 2.06(a)(ii)
of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 10-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held in the form of the [Rule 144A Global Note (CUSIP No.
)] with the Depositary in the name of [name of transferor] (the "Transferor") to
effect the transfer of the Senior Notes in exchange for an equivalent beneficial
interest in the Regulation S Global Notes.
In connection with such request, the Transferor does hereby certify that
such transfer has been effected in accordance with the transfer restrictions set
forth in the Senior Notes and (i) with respect to transfers made in reliance on
Regulation S, does hereby certify that:
(1) the offer of the Senior Notes was not made to a Person in the
United States;
(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor any
Person acting on its behalf knows that the transaction was pre-arranged
with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903(b) or 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933, as
amended (the "Securities Act");
and (ii) with respect to transfers made in reliance on Rule 144 does hereby
certify that the Senior Notes are being transferred in a transaction permitted
by Rule 144 under the Securities Act; and (iii) with respect to transfers made
in reliance on Rule 144A, does hereby certify that such Senior Notes are being
transferred in accordance with Rule 144A under the Securities Act to a
transferee that the Transferor reasonably believes is purchasing the Senior
Notes for its own account or an account with respect to
<PAGE>
which the transferee exercises sole investment discretion and the transferee and
any such account is a "qualified institutional buyer" within the meaning of Rule
144A, in a transaction meeting the requirements of Rule 144A and in accordance
with applicable securities laws of any state of the United States or any other
jurisdiction.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the
case may be.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Capitalized terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S.
[Name of Transferor]
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
2
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL NOTE
TO RULE 144A GLOBAL NOTE
(Transfers pursuant to (Section) 2.06(a)(iii)
of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 10-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held in the form of the Regulation S Global Note (CINS
No. [ ]) with the Depositary in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Senior Notes in exchange for an
equivalent beneficial interest in the Rule 144A Global Note.
In connection with such request, and in respect of such Senior Notes the
Transferor does hereby certify that such Senior Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Senior Notes and
(ii) Rule 144A under the United States Securities Act of 1933, as amended, to a
transferee that the Transferor reasonably believes is purchasing the Senior
Notes for its own account or an account with respect to which the transferee
exercises sole investment discretion and the transferee and any such account is
a "qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
[Name of Transferor],
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR RESTRICTED
NOTE TO RESTRICTED NOTE
(Transfers pursuant to (Section) 2.06(a)(iv)
or (Section) 2.06(a)(v) of the Indenture)
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 10-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held [in the form of the [Rule 144A/Regulation S]
[Global] [Restricted] Note (CUSIP No. [ ] CINS No. [ ]) with the Depositary in
the name of [name of transferor] (the "Transferor") to effect the transfer of
the Senior Notes.
In connection with such request, and in respect of such Senior Notes, the
Transferor does hereby certify that such Senior Notes are being transferred (i)
in accordance with the transfer restrictions set forth in the Senior Notes and
(ii) in accordance with applicable securities laws of any state of the United
States or any other jurisdiction.
*Insert, if appropriate.
[Name of Transferor],
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
<PAGE>
EXHIBIT F
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
The Chase Manhattan Bank, as Trustee
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 10-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13,1998 (the
"Indenture), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This letter relates to [ ] pounds sterling aggregate principal amount of
Senior Notes which are held [in the form of the [Rule 144/Regulation S]
[Restricted] [Global] Note (CUSIP No. [ ] CINS No. [ ]) with the Depositary * *
in the name of [name of transferor] (the "Transferor") to effect the transfer of
the Senior Notes to the undersigned.
In connection with such request, and in respect of such Senior Notes we
confirm that:
1. We understand that the Senior Notes were originally offered in a
transaction not involving any public offering in the United States within the
meaning of the United States Securities Act of 1933, as amended (the "Securities
Act"), that the Senior Notes have not been registered under the Securities Act
and that (A) the Senior Notes may be offered, resold, pledged or otherwise
transferred only (i) to a Person who the seller reasonably believes is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, in a transaction
meeting the requirements of Rule 144 under the Securities Act, to a Person who
the seller reasonably believes is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act), outside the United States in a transaction meeting the requirements of
Rule 903 or 904 of Regulation S under the Securities Act or in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (ii) to the
Company, (iii) pursuant to any other available exemption from registration or
(iv) pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction and (B) the purchaser will, and each
subsequent Holder is required to, notify any subsequent purchaser from it of the
resale restrictions set forth in (A) above.
_________________________
* Insert and modify if appropriate
<PAGE>
2. We are a corporation, partnership or other entity having such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Senior Notes, and we are (or any
account for which we are purchasing under paragraph 4 below is) an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, able to bear the economic risk of our proposed investment in the
Notes.
3. We are acquiring the Senior Notes for our own account (or for accounts
as to which we exercise sole investment discretion and have authority to make,
and do make, the statements contained in this letter) and not with a view to any
distribution of the Senior Notes, subject, nevertheless, to the understanding
that the disposition of our property shall at all times be and remain within our
control.
4. We are, and each account (if any) for which we are purchasing Senior
Notes is, purchasing Senior Notes having an aggregate [Accreted Value]
[principal amount at maturity] of not less than 100,000 pounds sterling.
5. We understand that (a) the Senior Notes will be delivered to us in
registered form only and that the certificate delivered to us in respect of the
Senior Notes will bear a legend substantially to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS NOTE,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR NOTE HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS
THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS NOTE), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
NOTE), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN TRANSFERORS PRIOR TO
THE EXPIRATION OF THE "40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE
903(c)(2) OF REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE THAT MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE, (4) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
2
<PAGE>
STATES, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (4) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM.
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
6. We agree that in the event that at some future time we wish to dispose
of any of the Senior Notes, we will not do so unless:
(a) the Senior Notes are sold to the Company;
(b) the Senior Notes are sold to a qualified institutional buyer in
compliance with Rule 144A under the Securities Act;
(c) the Senior Notes are sold outside the United States in compliance
with Rule 903 or Rule 904 under the Securities Act;
(d) the Senior Notes are sold pursuant to an effective registration
statement under the Securities Act; or
(e) the Senior Notes are sold pursuant to any other available
exemption from registration, subject to the requirements of the legend set
forth above.
Very truly yours,
[PURCHASER]
By:___________________________
Name:
Title:
Dated:
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
3
<PAGE>
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S GLOBAL NOTE FOR
RESTRICTED NOTES
(Transfers pursuant to (Section) 2.06(a)(viii))
(Transferor)
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Attn: Corporate Trustee
Administration Department
Re: NTL Incorporated 10-3/4% Senior Deferred Coupon
Notes Due 2008 (the "Senior Notes")
Reference is hereby made to the Indenture, dated as of March 13, 1998 (the
"Indenture"), between NTL Incorporated, as Issuer, and The Chase Manhattan Bank,
as Trustee. Capitalized terms used but not defined herein shall have the
respective meanings given them in the Indenture.
This certificate relates to [ ] pounds sterling aggregate principal amount
of Senior Notes which are held in the form of the Regulation S Global Note (CINS
No. [ ]) with the Depositary in the name of [name of transferor] (the
"Transferor") to effect the transfer of the beneficial interest in such
Regulation S Global Note for a beneficial interest in an equivalent aggregate
principal amount of Restricted Securities.
In connection with such request, and in respect of such Senior Notes, we
confirm that:
We are either not a U.S. Person (as defined below) or we have purchased our
beneficial interest in the above referenced Regulation S Global Note in a
transaction that is exempt from the registration requirements under the
Securities Act.
We are delivering this certificate in connection with obtaining a
beneficial interest in Restricted Securities in exchange for our beneficial
interest in the Regulation S Global Note.
For purposes of this certificate, "U.S. Person" means (i) any individual
resident in the United States, (ii) any partnership or corporation organized or
incorporated under the laws of the United States, (iii) any estate of which an
executor or administrator is a U.S. Person (other than an estate governed by
foreign law and of which at least one executor or administrator is a non-U.S.
Person who has sole or shared investment discretion with respect to its assets),
(iv) any trust of which any trustee is a U.S. Person (other than a trust of
which at least one trustee is a non-U.S. Person who has sole or shared
investment discretion with respect to its assets and no beneficiary of the trust
(and no settlor if the trust is revocable) is a U.S. Person), (v) any agency or
branch of a foreign entity located in the United States, (vi) any non-
discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a U.S. Person, (vii) any
discretionary or similar account (other than an estate or trust) held by a
dealer or other fiduciary organized, incorporated or (if an individual) resident
in the
<PAGE>
United States (other than such an account held for the benefit or account of a
non-U.S. Person), (viii) any partnership or corporation organized or
incorporated under the laws of a foreign jurisdiction and formed by a U.S.
Person principally for the purpose of investing in securities not registered
under the Securities Act (unless it is organized or incorporated, and owned, by
accredited investors within the meaning of Rule 501(a) under the Securities Act
who are not natural Persons, estates or trusts); provided, however, that the
term "U.S. Person" shall not include (A) a branch or agency of a U.S. Person
that is located and operating outside the United States for valid business
purposes as a locally regulated branch or agency engaged in the banking or
insurance business, (B) any employee benefit plan established and administered
in accordance with the law, customary practices and documentation of a foreign
country and (C) the international organizations set forth in Section 902(o)(7)
of Regulation S under the Securities Act and any other similar international
organizations, and their agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a copy hereof
to any interested party in any administrative or other proceedings with respect
to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:___________________________
Name:
Title:
Dated: To be completed by the account
Holder as, or as agent for, the
beneficial owner(s) of the Senior
Notes to which this certificate
relates.
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
General Counsel
2
EXHIBIT 4.17
EXECUTION COPY
================================================================================
125,000,000 POUNDS STERLING
9-1/2% SENIOR NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of March 13, 1998
by and among
NTL INCORPORATED
and
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
BT ALEX. BROWN INTERNATIONAL,
DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CHASE SECURITIES INC.
SALOMON BROTHERS INTERNATIONAL LIMITED
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 13, 1998 by and among NTL Incorporated, a Delaware corporation
(the "Company"), and Donaldson, Lufkin & Jenrette International, Morgan Stanley
& Co. International Limited, BT Alex. Brown International, Division of Bankers
Trust International PLC, Chase Securities Inc. and Salomon Brothers
International Limited (each an "Initial Purchaser" and collectively, the
"Initial Purchasers"). The Company proposes to issue and sell to the Initial
Purchasers (the "Initial Placement") 125,000,000 pounds sterling aggregate
principal amount of its 9-1/2% Senior Notes due 2008 (the "Notes"). As an
inducement to the Initial Purchasers to enter into the purchase agreement, dated
as of March 6, 1998 ( the "Purchase Agreement"), and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company agrees
with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders from time to time of the Notes whose names
appear in the register maintained by the Registrar in accordance with the
provisions of the Indenture (as defined in Section 1 hereof) (including the
Initial Purchasers), as follows:
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Commission Delay Period" has the meaning set forth in Section 3(a) hereof.
"Consummate" means the occurrence of (i) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Notes to be issued in the Registered Exchange Offer, (ii) the maintenance of
such Registration Statement continuously effective and the keeping of the
Registered Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(c)(ii) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture or the Exchange Notes Indenture, as
the case may be, of Exchange Notes in the same aggregate principal amount as the
aggregate principal amount of Notes that were tendered by Holders thereof and
accepted for exchange pursuant to the Registered Exchange Offer.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" means debt securities of the Company identical in all
material respects to the Notes (except that interest will accrue on the Exchange
Notes from the last day on which interest was paid on the Notes prior to the
date of original issuance of the Exchange Notes or, if no such interest has been
paid, from March 13, 1998, and paragraph 2 of, and the transfer restrictions on,
the Notes will be eliminated), to be issued under the Indenture or the Exchange
Notes Indenture.
"Exchange Notes Indenture" means an indenture between the Company and the
Exchange Notes Trustee, identical in all material respects to the Indenture
(except that interest will accrue on the Exchange Notes from the last day on
which interest was paid on the Notes prior to the date of original issuance of
the Exchange Notes or, if no such interest has been paid, from March 13, 1998,
and paragraph 2 of, and the transfer restrictions on, the Notes will be
eliminated).
"Exchange Notes Trustee" means a bank or trust company reasonably
satisfactory to the Initial Purchasers, as trustee with respect to the Exchange
Notes under the Exchange Notes Indenture.
"Exchange Offer Registration Period" means a period expiring upon the
earliest to occur of (i) the one year period following the Consummation of the
Registered Exchange Offer, (ii) the date on which, in the opinion of counsel to
the Company, all of the Transfer Restricted Securities then held by the Holders
may be sold by such Holders in the public United States securities markets in
the absence of a registration statement covering such sales and (iii) the date
on which there ceases to be outstanding any Transfer Restricted Securities.
"Exchange Offer Registration Statement" means a registration statement of
the Company on an appropriate form under the Act with respect to the Registered
Exchange Offer, all amendments and supplements to such registration statement,
including post-effective amendments, and in each case, including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchanging Dealer" means any Holder (which may include the Initial
Purchasers) that is a broker-dealer, electing to exchange Transfer Restricted
Securities, acquired for its own account as a result of market-making activities
or other trading activities, for Exchange Notes.
"Holder" has the meaning set forth in Section 2 hereof.
"Indenture" means the Indenture, dated as of March 13, 1998, between the
Company and the Trustee, relating to the Notes, as the same may be amended from
time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Losses" has the meaning set forth in Section 8(d) hereof.
2
<PAGE>
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering.
"Notes" has the meaning set forth in the preamble hereto.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of Transfer Restricted Securities or the Exchange Notes, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for Notes, a like principal
amount of the Exchange Notes.
"Registration Statement" means any Exchange Offer Registration Statement or
any Shelf Registration Statement, which is filed pursuant to the provisions
hereof, and in each case, including the Prospectus contained therein, all
amendments and supplements thereto, including post-effective amendments, and all
exhibits and material incorporated by reference therein.
"Shelf Registration" means a registration effected pursuant to Section 4
hereof.
"Shelf Registration Period" has the meaning set forth in Section 4(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 4 hereof that covers some or
all of the Transfer Restricted Securities as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement, including
post-effective amendments, and in each case, including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Supplement Delay Period" means any period commencing on the date of
receipt by a Holder of Transfer Restricted Securities or Exchange Notes of any
notice from the Company of the existence of any fact or event of the kind
described in Section 5(b)(2) hereof and ending on the date of receipt by such
Holder of an amended or supplemented Registration Statement or Prospectus, as
contemplated by Section 5(j) hereof, or the receipt by such Holder of written
notice from the Company (the "Advice") that the use of the Prospectus may be
resumed, and the receipt of copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus.
"Transfer Restricted Securities" means each Note until (i) the date on
which such Note has been exchanged by a person other than a broker-dealer for an
Exchange Note in the
3
<PAGE>
Registered Exchange Offer, (ii) following the exchange by an Exchanging Dealer
in the Registered Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with the Shelf Registration Statement (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act (or any
similar provision then in effect) or is saleable pursuant to Rule 144(k) under
the Act or (v) the date upon which such Note ceases to be outstanding.
"Trustee" means the trustee with respect to the Notes under the Indenture.
"underwriter" means any underwriter of Notes in connection with an offering
thereof under a Shelf Registration Statement.
SECTION 2. HOLDERS
A person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such person becomes the registered holder of such Notes
under the Indenture and includes broker-dealers that hold Transfer Restricted
Securities (i) as a result of market making activities and other trading
activities and (ii) which were acquired directly from the Company or an
Affiliate.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) The Company shall prepare and, on or prior to 90 days following the
Closing Date, shall file with the Commission the Exchange Offer Registration
Statement with respect to the Registered Exchange Offer. The Company shall use
its best efforts to cause the Exchange Offer Registration Statement to become
effective under the Act on or prior to 270 days after the Closing Date; provided
that, if as a result of there being no federal governmental budget for any year
following the 1997 fiscal year, the Commission ceases to review registration
statements like the Registration Statements in the time within which the
Commission normally reviews such registration statements in the ordinary course
(a "Commission Delay Period"), then such 270 day period during which the Company
must cause the Exchange Offer Registration Statement to become effective shall
be extended by the number of days of which the Commission Delay Period is
comprised. The Company shall use its best efforts to Consummate the Registered
Exchange Offer on or prior to 310 days after the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Transfer Restricted Securities for Exchange Notes (assuming that such
Holder is not an Affiliate of the Company within the meaning of the Act,
acquires the Exchange Notes in the ordinary course of such Holder's business and
has no arrangements with any person to participate in the distribution of the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any
4
<PAGE>
limitations or restrictions under the Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States.
(c) In connection with the Registered Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30 days
and not more than 45 days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law);
(iii) utilize the services of one or more depositaries or exchange
agents (which, in either case, may be the Trustee) for the Registered
Exchange Offer with an address (A) in the Borough of Manhattan, The City of
New York and (B) if the Notes are then listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require,
Luxembourg; and
(iv) comply in all material respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Transfer Restricted Securities tendered
and not validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Transfer Restricted
Securities so accepted for exchange; and
(iii) cause the Trustee or the Exchange Notes Trustee, as the case may
be, promptly to authenticate and deliver to each Holder of Transfer
Restricted Securities, Exchange Notes of a like principal amount to the
Transfer Restricted Securities of such Holder so accepted for exchange.
(e) The Initial Purchasers and the Company acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption therefrom, each Exchanging Dealer is required
to deliver a Prospectus in connection with a sale of any Exchange Notes received
by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange
for Transfer Restricted Securities acquired for its own account as a result of
market-making activities or other trading activities. Accordingly, the Company
shall:
(i) include the information set forth in (A) Annex A hereto on the
cover of the Exchange Offer Registration Statement, (B) Annex B hereto in
the forepart of the Exchange Offer Registration Statement in a section
setting forth details of the Registered
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Exchange Offer, (C) Annex C hereto in the "Plan of Distribution" section of
the Prospectus contained in the Exchange Offer Registration Statement and
(D) Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective (subject to the existence of a Supplement
Delay Period) under the Act during the Exchange Offer Registration Period
for delivery by Exchanging Dealers in connection with sales of Exchange
Notes received pursuant to the Registered Exchange Offer, as contemplated
by Section 5(g) below.
(f) In the event that any Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to the
exchange of Transfer Restricted Securities constituting any portion of an unsold
allotment of Notes, at the written request of such Initial Purchaser, the
Company shall issue and deliver to such Initial Purchaser or the party
purchasing Transfer Restricted Securities registered under a Shelf Registration
Statement as contemplated by Section 4 hereof from such Initial Purchaser, in
exchange for such Transfer Restricted Securities, a like principal amount of
Exchange Notes. Exchange Notes issued in exchange for Transfer Restricted
Securities constituting any portion of an unsold allotment of Notes that are not
registered under a Shelf Registration Statement as contemplated by Section 4
hereof shall bear a legend as to restrictions on transfer. The Company shall
seek to cause the CUSIP Service Bureau to issue the same CUSIP number for such
Exchange Notes as for Exchange Notes issued pursuant to the Registered Exchange
Offer.
SECTION 4. SHELF REGISTRATION
If, (i) the Company is not required to file the Exchange Offer Registration
Statement nor permitted to Consummate the Registered Exchange Offer because the
Registered Exchange Offer is not permitted by applicable law or Commission
policy or (ii) any Holder of Transfer Restricted Securities notifies the Company
in writing within 10 business days of the filing and effectiveness under the Act
of the Exchange Offer Registration Statement that (A) it is prohibited by law or
Commission policy from participating in the Registered Exchange Offer, (B) it
may not resell the Exchange Notes acquired by it in the Registered Exchange
Offer to the public without delivering a prospectus, and the prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales or (C) it is a broker-dealer and owns Notes acquired
directly from the Company or an Affiliate (it being understood that, for
purposes of this Section 4, (x) the requirement that an Initial Purchaser
deliver a Prospectus containing the information required by Items 507 and/or 508
of Regulation S-K under the Act in connection with sales of Exchange Notes
acquired in exchange for such Notes shall result in such Exchange Notes being
not "freely tradeable" but (y) the requirement that an Exchanging Dealer deliver
a Prospectus in connection with sales of Exchange Notes acquired in the
Registered Exchange Offer in exchange for Notes acquired as a result of
market-making activities or other trading activities shall not result in such
Exchange Notes being not "freely tradeable"), the following provisions shall
apply:
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(a) The Company shall as promptly as practicable, file with the Commission
and thereafter shall use its best efforts to cause to be declared effective
under the Act on or prior to 270 days (plus any additional days allowed as a
result of a Commission Delay Period) after the date of original issuance of the
Notes, a Shelf Registration Statement relating to the offer and sale of the
Transfer Restricted Securities by the Holders from time to time in accordance
with the methods of distribution elected by such Holders and set forth in such
Shelf Registration Statement; provided, however, that with respect to Exchange
Notes received by an Initial Purchaser in exchange for Transfer Restricted
Securities constituting any portion of an unsold allotment of Notes, the Company
may, if permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement containing
the information required by Regulation S-K Items 507 and/or 508, as applicable,
in satisfaction of its obligations under this paragraph (a) with respect
thereto, and any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions herein applicable
to, a Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the date the
Shelf Registration statement is declared effective by the Commission (or until
one year after such effective date if such Shelf Registration Statement is filed
at the request of an Initial Purchaser) or such shorter period that will
terminate when (i) all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, (ii) the date on which, in the opinion of counsel to the Company, all
of the Transfer Restricted Securities then held by the Holders may be sold by
such Holders in the public United States securities markets in the absence of a
registration statement covering such sales or (iii) the date on which there
ceases to be outstanding any Transfer Restricted Securities (in any such case,
such period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of Transfer Restricted Securities covered
thereby not being able to offer and sell such securities during that period,
unless (i) such action is required by applicable law, (ii) such action is taken
by the Company in good faith and for valid business reasons (not including
avoidance of the Company's obligations hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 5(j) hereof, if applicable or (iii) such action is
taken because of any fact or circumstance giving rise to a Supplement Delay
Period.
SECTION 5. REGISTRATION PROCEDURES
In connection with any Shelf Registration Statement and, to the extent
applicable, any Exchange Offer Registration Statement, the following provisions
shall apply:
(a) The Company shall ensure that (i) any Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any amendment or
supplement thereto complies in all material respects with the Act and the rules
and regulations thereunder, (ii) any Registration Statement and any amendment
thereto does not, when it becomes effective, contain
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<PAGE>
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
(b) (1) The Company shall advise the Initial Purchasers and, in the case of
a Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, if requested by the Initial Purchasers or any such Holder,
confirm such advice in writing when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective.
(2) The Company shall advise the Initial Purchasers and, in the case of a
Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, in the case of an Exchange Offer Registration Statement,
any Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by the Initial
Purchasers or any such Holder or Exchanging Dealer, confirm such advice in
writing:
(i) of any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus included therein or for
additional information;
(ii) of the initiation by the Commission of proceedings relating to a
stop order suspending the effectiveness of the Registration Statement;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the securities included therein for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and
(v) of the existence of any fact and the happening of any event
(including, without limitation, pending negotiations relating to, or the
consummation of, a transaction or the occurrence of any event which would
require additional disclosure of material non-public information by the
Company in the Shelf Registration Statement as to which the Company has a
bona fide business purpose for preserving confidential or which renders the
Company unable to comply with Commission requirements) that, in the opinion
of the Company, makes untrue any statement of a material fact made in its
Shelf Registration Statement, the Prospectus or any amendment or supplement
thereto or any document incorporated by reference therein or requires the
making of any changes in the Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading and do not
omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
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Such advice may be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made.
(c) The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time.
(d) The Company shall use its best efforts to furnish to each selling
Holder included within the coverage of any Shelf Registration Statement who so
requests in writing and who has provided to the Company an address for notices,
without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and, if
the Holder so requests in writing, all exhibits and schedules (including those
incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Transfer Restricted Securities covered by any Shelf Registration
Statement and who has provided to the Company an address for notices, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
contained in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; subject to any notice by the
Company in accordance with Section 6(b) hereof, the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders for the purposes of offering and resale of the Transfer Restricted
Securities covered by the Prospectus in accordance with the applicable
regulations promulgated under the Act.
(f) The Company shall furnish to each Exchanging Dealer, which so requests
in writing, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements, and, if the Exchanging Dealer so requests in writing, any documents
incorporated by reference therein and all exhibits and schedules (including
those incorporated by reference).
(g) The Company shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies of
the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably request
for delivery by such Exchanging Dealer in connection with a sale of Exchange
Notes received by it pursuant to the Registered Exchange Offer; the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
any such Exchanging Dealer for the purposes contemplated by the Act or the
applicable regulations promulgated under the Act.
(h) Prior to the Registered Exchange Offer or any offering of Transfer
Restricted Securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of Transfer Restricted
Securities named therein and their respective counsel in connection with the
registration or qualification of such Transfer Restricted Securities for offer
and sale under the securities or blue sky laws of such jurisdictions of the
United States as any such Holders reasonably request in writing not later than
the date that is five business days prior to the date upon which this Agreement
specifies that the Registration Statement shall
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<PAGE>
become effective; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(i) The Company shall endeavor to cooperate with the Holders of Transfer
Restricted Securities to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold pursuant to
any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request in writing at
least two business days prior to sales of securities pursuant to such
Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraph (b)(2)(v)
hereof, the Company shall promptly prepare a post-effective amendment to any
Registration Statement or an amendment or supplement to the related Prospectus
or file any other required document so that as thereafter delivered to
purchasers of the Transfer Restricted Securities covered thereby, the Prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that in the
event of a material business transaction (including, without limitation, pending
negotiations relating to such a transaction) which would, in the opinion of
counsel to the Company, require disclosure by the Company in the Shelf
Registration Statement of material non-public information for which the Company
has a bona fide business purpose for not disclosing, then for so long as such
circumstances exist, the Company shall not be required to prepare and file a
supplement or post-effective amendment hereunder.
(k) Not later than the effective date of any such Registration Statement
hereunder, the Company shall cause to be provided a CUSIP number for the Notes
or Exchange Notes, as the case may be, registered under such Registration
Statement, and provide the applicable trustee with printed certificates for such
Notes or Exchange Notes, in a form eligible for deposit with The Depository
Trust Company.
(l) The Company shall use its best efforts to comply with all applicable
rules and regulations of the Commission and shall make generally available to
its security holders in a regular filing on Form 10-Q or 10-K an earnings
statement satisfying the provisions of Rule 158 (which need not be audited) for
the twelve-month period commencing after effectiveness of the Shelf Registration
Statement.
(m) The Company shall cause the Indenture or the Exchange Notes Indenture,
as the case may be, to be qualified under the Trust Indenture Act in a timely
manner.
(n) The Company may require each Holder of Transfer Restricted Securities,
which are to be sold pursuant to any Shelf Registration Statement, to furnish to
the Company within 20 business days after written request for such information
has been made by the Company, such information regarding the Holder and the
distribution of such securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement and such other
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<PAGE>
information as may be necessary or advisable in the reasonable opinion of the
Company and its counsel, in connection with such Shelf Registration Statement.
No Holder of Transfer Restricted Securities shall be entitled to use the
Prospectus unless and until such Holder shall have furnished the information
required by this Section 5(n) and all such information required to be disclosed
in order to make the information previously furnished to the Company by such
Holder not materially misleading.
(o) The Company shall, if requested, promptly incorporate in a Prospectus
supplement or post-effective amendment to a Shelf Registration Statement, such
information as the Managing Underwriters and Majority Holders reasonably agree
should be included therein and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 5(o) that would, in the opinion of counsel for
the Company, violate applicable law or to include information the disclosure of
which at the time would have an adverse effect on the business or operations of
the Company and/or its subsidiaries, as determined in good faith by the Company.
(p) In the case of any Shelf Registration Statement, the Company shall
enter into such agreements (including underwriting agreements) and take all
other reasonably appropriate actions in order to expedite or facilitate the
registration or the disposition of the Transfer Restricted Securities, and in
connection therewith, if an underwriting agreement is entered into, cause the
same to contain indemnification provisions and procedures no less favorable than
those set forth in Section 8 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any), with respect to
all parties to be indemnified pursuant to Section 8 from Holders of Notes to the
Company.
(q) In the case of any Shelf Registration Statement, the Company shall:
(i) make reasonably available for inspection by representatives of the
Holders of Transfer Restricted Securities to be registered thereunder, the
Managing Underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent
retained by the Holders or any such Managing Underwriter, at the office
where normally kept during normal business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the Company's officers, directors and employees
to supply all relevant information reasonably requested by the Holders or
any Managing Underwriter, attorney, accountant or other agent in connection
with any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that the foregoing inspection
and information gathering shall be coordinated by the Managing
Underwriters, if any, or by one counsel designated by the Holders and that
such persons shall first agree in writing with the Company that any
information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such person, unless such disclosure is made in connection
with a court proceeding or required by law, or such information becomes
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available to the public generally or through a third party without an
accompanying obligation of confidentiality;
(ii) make such representations and warranties to the Holders of
Transfer Restricted Securities registered thereunder and the underwriters,
if any, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement;
(iii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any), addressed to
each selling Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters;
(iv) obtain "cold comfort" letters (or, in the case of any person that
does not satisfy the conditions for receipt of a "cold comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed-upon
procedures letter") and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed where reasonably practicable to each selling Holder
of Transfer Restricted Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and
(v) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 5(j) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The foregoing actions set forth in clauses (ii), (iii), (iv) and (v)
of this Section 5(q) shall, if reasonably requested by the Majority Holder
or the Majority Underwriters, be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and (B)
each closing under any underwriting or similar agreement, as to the extent
required thereunder.
(vi) The Company may offer securities of the Company other than the
Notes or the Exchange Notes under the Shelf Registration Statement, except
where such offer would conflict with the terms of the Purchase Agreement.
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SECTION 6. HOLDERS' AGREEMENTS
Each Holder of Transfer Restricted Securities and Exchange Notes, by the
acquisition of such Transfer Restricted Securities or Exchange Notes, as the
case may be, agrees:
(a) To furnish the information required to be furnished pursuant to Section
5(n) hereof within the time period set forth therein.
(b) That upon receipt of a notice of the commencement of a Supplement Delay
Period, it will keep the fact of such notice confidential, forthwith discontinue
disposition of its Transfer Restricted Securities or Exchange Notes, as the case
may be, pursuant to the Registration Statement, and will not deliver any
Prospectus forming a part thereof until receipt of the amended or supplemented
Registration Statement or Prospectus, as applicable, as contemplated by Section
5(j) hereof, or until receipt of the Advice. If a Supplement Delay Period should
occur, the Exchange Offer Registration Period or the Shelf Registration Period,
as applicable, shall be extended by the number of days of which the Supplement
Delay Period is comprised; provided that the Shelf Registration Period shall not
be extended if the Company has received an opinion of counsel (which counsel, if
different from counsel to the Company referred to in Section 6(a) and (b) of the
Purchase Agreement, shall be reasonably satisfactory to the Majority Holders of
the Transfer Restricted Securities named in the Shelf Registration Period) to
the effect that the Transfer Restricted Securities can be freely tradeable
without the continued effectiveness of the Shelf Registration Statement.
(c) If so directed by the Company in a notice of the commencement of a
Supplement Delay Period, each Holder of Transfer Restricted Securities or
Exchange Notes, as the case may be, 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 the Transfer Restricted
Securities or Exchange Notes, as the case may be.
(d) Sales of such Transfer Restricted Securities pursuant to a Registration
Statement shall only be made in the manner set forth in such currently effective
Registration Statement.
SECTION 7. REGISTRATION EXPENSES
The Company shall bear all expenses incurred in connection with the
performance of its obligations under Sections 3, 4 and 5 hereof and, in the
event of any Shelf Registration Statement, will reimburse the Holders for the
reasonable fees and disbursements of one firm or counsel designated by the
Majority Holders to act as counsel for the Holders in connection therewith, and,
in the case of any Exchange Offer Registration Statement, will reimburse the
Initial Purchasers for the reasonable fees and disbursements of counsel acting
in connection therewith. Notwithstanding the foregoing or anything in this
Agreement to the contrary, each Holder shall pay all underwriting discounts and
commission of any underwriters with respect to any Transfer Restricted
Securities sold by it.
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SECTION 8. INDEMNIFICATION AND CONTRIBUTION
(a) In connection with Registration Statement, the Company agrees to
indemnify and hold harmless each Holder of Transfer Restricted Securities
covered thereby (including each Initial Purchaser and, with respect to any
Prospectus delivery as contemplated in Section 5(g) hereof, each Exchanging
Dealer), the directors, officers, employees, partners, representatives and
agents of each such Holder and each person who controls any such Holder within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or 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 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 (i) the Company will not be liable
in any case to the extent that any such loss, claim, damage or liability arises
out of, or is based upon, any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any such
Holder or by the Managing Underwriters specifically for inclusion therein and
(ii) the Company will not be liable to any indemnified party under this
indemnity agreement with respect to the Registration Statement or Prospectus to
the extent that any such loss, claim, damage or liability of such indemnified
party results solely from an untrue statement of a material fact contained in,
or the omission of a material fact from, the Registration Statement or
Prospectus, which untrue statement or omission was corrected in an amended or
supplemented Registration Statement or Prospectus, if the person alleging such
loss, claim, damage or liability was not sent or given, at or prior to the
written confirmation of such sale, a copy of the amended or supplemented
Registration Statement or Prospectus if the Company had previously furnished
copies thereof to such indemnified party and if delivery of a prospectus is
required by the Act and was not so made. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 8(d), any underwriters of Notes registered under a Shelf
Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 8(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 5(p)
hereof.
(b) Each Holder of Transfer Restricted Securities or Exchange Notes covered
by a Registration Statement (including each Initial Purchaser and, with respect
to any Prospectus delivery as contemplated in Section 5(g) hereof, each
Exchanging Dealer) severally agrees to
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indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs such Registration Statement and (iv) each person
who controls the Company within the meaning of either the Act or the Exchange
Act to the same extent as the foregoing indemnity from the Company to each such
Holder, but only with reference to written information relating to such Holder
furnished to the Company by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have. In no event shall any Holder, its directors, officers or any
person who controls such Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages that such Holder, its
directors, officers or any person who controls such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
(c) Promptly after receipt by an indemnified party under this Section 8 or
notice of the commencement of any action, the indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure to so 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
reasonably 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 (and local
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 reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, (iii) the indemnifying
party did not employ 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 authorized the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party shall 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 for which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or
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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 and does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement that resulted in such Losses; provided, however, that in
no case shall any Initial Purchaser or any subsequent Holder of any Note or
Exchange Note be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Note, or in the case of an
Exchange Note, applicable to the Note which was exchangeable into such Exchange
Note, as set forth on the cover page of the Final Offering Memorandum, nor shall
any underwriter be responsible for any amount in excess of the underwriting
discount or commission applicable to the securities purchased by such
underwriter under the Registration Statement that resulted in such Losses. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits,
but also the relative fault of such indemnifying party, on the one hand, and
such indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Offering
Memorandum and (y) the total amount of additional interest that the Company was
not required to pay as a result of registering the securities covered by the
Registration Statement that resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Offering Memorandum,
and benefits received by any other Holders shall be deemed to be equal to the
value of receiving Notes or Exchange Notes, as applicable, registered under the
Act. Benefits received by any underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page of
the Prospectus forming a part of the Registration Statement that resulted in
such Losses. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation that
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 guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls a Holder within the meaning of either the Act or the
16
<PAGE>
Exchange Act and each director, officer, employee and agent of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 8 shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Company or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive the sale by a Holder of Transfer Restricted
Securities or Exchange Notes.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding and during any period in which the Company (i) is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by 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, and
(ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company has not, as of the date hereof,
entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of Notes (or, after the consummation of any Registered Exchange Offer in
accordance with Section 3 hereof, of Exchange Notes); provided, however, that
with respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to depart from the
provisions hereof, with respect to a matter, which relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and does not directly or indirectly affect the rights of other
Holders, may be given by the Majority Holders, determined on the basis of Notes
being sold rather than registered under such Registration Statement.
17
<PAGE>
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such holder
to the Company in accordance with the provisions of this Section 10(c),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the registrar under the Indenture or the Exchange
Note Indenture, as the case may be, with a copy in like manner to Morgan
Stanley & Co. International Limited;
(ii) if to the Initial Purchasers, initially at the respective
addresses set forth in the Purchase Agreement; and
(iii) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given
when received.
The Initial Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of each of the parties hereto,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Notes and/or Exchange Notes. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of Notes
and/or Exchange Notes and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State (without reference to the
conflict of law rules thereof).
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions hereof shall not be in any way impaired or affected
18
<PAGE>
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Notes Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Notes or Exchange Notes
is required hereunder, Notes or Exchange Notes, as applicable, held by the
Company or its Affiliates (other than subsequent Holders of Notes or Exchange
Notes if such subsequent Holders are deemed to be Affiliates solely by reason of
their holdings of such Notes or Exchange Notes) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(j) Entire Agreement. This 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 with respect
to 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 with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
NTL INCORPORATED
By: /s/ Richard J. Lubasch
----------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
DONALDSON LUFKIN & JENRETTE
INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
BT ALEX. BROWN INTERNATIONAL,
DIVISION OF BANKERS TRUST
INTERNATIONAL PLC
CHASE SECURITIES INC.
SALOMON BROTHERS
INTERNATIONAL LIMITED
By: MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
By: /s/ Harry Stanley
- -------------------------------------
Name: Harry Stanley
Title: Vice President
20
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Exchange Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date (as
defined herein) and ending on the close of business on the 180th day following
the Expiration Date, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
A-1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution."
B-1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business on the 180th day
following the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or by a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-
dealer that resells Exchange Notes that were received by it for its own account
pursuant to the Registered Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Act and any profit of any such resale of
Exchange Notes and any commissions or concessions received by any such persons
may be deemed to be underwriting compensation under the Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the holders of the Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Act.
[Add information required by Regulation S-K Items 507 and/or 508.]
C-1
<PAGE>
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_______________________________
Address:______________________________________________________________
______________________________________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act.
D-1
EXHIBIT 4.18
EXECUTION COPY
================================================================================
$1,300,000,000
9-3/4% SENIOR DEFERRED COUPON NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of March 13, 1998
by and among
NTL INCORPORATED
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CHASE SECURITIES INC.
SALOMON BROTHERS INC
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 13, 1998 by and among NTL Incorporated, a Delaware corporation
(the "Company"), and Donaldson, Lufkin & Jenrette Securities Corporation, Morgan
Stanley & Co. Incorporated, BT Alex. Brown Incorporated, Chase Securities Inc.
and Salomon Brothers Inc (each an "Initial Purchaser" and collectively, the
"Initial Purchasers"). The Company proposes to issue and sell to the Initial
Purchasers (the "Initial Placement") $1,300,000,000 aggregate principal amount
at maturity of its 9-3/4% Senior Deferred Coupon Notes due 2008 (the "Notes").
As an inducement to the Initial Purchasers to enter into the purchase agreement,
dated as of March 6, 1998 ( the "Purchase Agreement"), and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company agrees
with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders from time to time of the Notes whose names
appear in the register maintained by the Registrar in accordance with the
provisions of the Indenture (as defined in Section 1 hereof) (including the
Initial Purchasers), as follows:
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Commission Delay Period" has the meaning set forth in Section 3(a) hereof.
"Consummate" means the occurrence of (i) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Notes to be issued in the Registered Exchange Offer, (ii) the maintenance of
such Registration Statement continuously effective and the keeping of the
Registered Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(c)(ii) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture or the Exchange Notes Indenture, as
the case may be, of Exchange Notes in the same aggregate principal amount as the
aggregate principal amount of Notes that were tendered by Holders thereof and
accepted for exchange pursuant to the Registered Exchange Offer.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" means debt securities of the Company identical in all
material respects to the Notes (except that interest will accrue on the Exchange
Notes from the last day on which interest was paid on the Notes prior to the
date of original issuance of the Exchange Notes or, if no such interest has been
paid, from April 1, 2003, and paragraph 2 of, and the transfer restrictions on,
the Notes will be eliminated), to be issued under the Indenture or the Exchange
Notes Indenture.
"Exchange Notes Indenture" means an indenture between the Company and the
Exchange Notes Trustee, identical in all material respects to the Indenture
(except that interest will accrue on the Exchange Notes from the last day on
which interest was paid on the Notes prior to the date of original issuance of
the Exchange Notes or, if no such interest has been paid, from April 1, 2003,
and paragraph 2 of, and the transfer restrictions on, the Notes will be
eliminated).
"Exchange Notes Trustee" means a bank or trust company reasonably
satisfactory to the Initial Purchasers, as trustee with respect to the Exchange
Notes under the Exchange Notes Indenture.
"Exchange Offer Registration Period" means a period expiring upon the
earliest to occur of (i) the one year period following the Consummation of the
Registered Exchange Offer, (ii) the date on which, in the opinion of counsel to
the Company, all of the Transfer Restricted Securities then held by the Holders
may be sold by such Holders in the public United States securities markets in
the absence of a registration statement covering such sales and (iii) the date
on which there ceases to be outstanding any Transfer Restricted Securities.
"Exchange Offer Registration Statement" means a registration statement of
the Company on an appropriate form under the Act with respect to the Registered
Exchange Offer, all amendments and supplements to such registration statement,
including post-effective amendments, and in each case, including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchanging Dealer" means any Holder (which may include the Initial
Purchasers) that is a broker-dealer, electing to exchange Transfer Restricted
Securities, acquired for its own account as a result of market-making activities
or other trading activities, for Exchange Notes.
"Holder" has the meaning set forth in Section 2 hereof.
"Indenture" means the Indenture, dated as of March 13, 1998, between the
Company and the Trustee, relating to the Notes, as the same may be amended from
time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Losses" has the meaning set forth in Section 8(d) hereof.
2
<PAGE>
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering.
"Notes" has the meaning set forth in the preamble hereto.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of Transfer Restricted Securities or the Exchange Notes, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for Notes, a like principal
amount of the Exchange Notes.
"Registration Statement" means any Exchange Offer Registration Statement or
any Shelf Registration Statement, which is filed pursuant to the provisions
hereof, and in each case, including the Prospectus contained therein, all
amendments and supplements thereto, including post-effective amendments, and all
exhibits and material incorporated by reference therein.
"Shelf Registration" means a registration effected pursuant to Section 4
hereof.
"Shelf Registration Period" has the meaning set forth in Section 4(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 4 hereof that covers some or
all of the Transfer Restricted Securities as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement, including
post-effective amendments, and in each case, including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Supplement Delay Period" means any period commencing on the date of
receipt by a Holder of Transfer Restricted Securities or Exchange Notes of any
notice from the Company of the existence of any fact or event of the kind
described in Section 5(b)(2) hereof and ending on the date of receipt by such
Holder of an amended or supplemented Registration Statement or Prospectus, as
contemplated by Section 5(j) hereof, or the receipt by such Holder of written
notice from the Company (the "Advice") that the use of the Prospectus may be
resumed, and the receipt of copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus.
"Transfer Restricted Securities" means each Note until (i) the date on
which such Note has been exchanged by a person other than a broker-dealer for an
Exchange Note in the
3
<PAGE>
Registered Exchange Offer, (ii) following the exchange by an Exchanging Dealer
in the Registered Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with the Shelf Registration Statement (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act (or any
similar provision then in effect) or is saleable pursuant to Rule 144(k) under
the Act or (v) the date upon which such Note ceases to be outstanding.
"Trustee" means the trustee with respect to the Notes under the Indenture.
"underwriter" means any underwriter of Notes in connection with an offering
thereof under a Shelf Registration Statement.
SECTION 2. HOLDERS
A person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such person becomes the registered holder of such Notes
under the Indenture and includes broker-dealers that hold Transfer Restricted
Securities (i) as a result of market making activities and other trading
activities and (ii) which were acquired directly from the Company or an
Affiliate.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) The Company shall prepare and, on or prior to 90 days following the
Closing Date, shall file with the Commission the Exchange Offer Registration
Statement with respect to the Registered Exchange Offer. The Company shall use
its best efforts to cause the Exchange Offer Registration Statement to become
effective under the Act on or prior to 270 days after the Closing Date; provided
that, if as a result of there being no federal governmental budget for any year
following the 1997 fiscal year, the Commission ceases to review registration
statements like the Registration Statements in the time within which the
Commission normally reviews such registration statements in the ordinary course
(a "Commission Delay Period"), then such 270 day period during which the Company
must cause the Exchange Offer Registration Statement to become effective shall
be extended by the number of days of which the Commission Delay Period is
comprised. The Company shall use its best efforts to Consummate the Registered
Exchange Offer on or prior to 310 days after the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Transfer Restricted Securities for Exchange Notes (assuming that such
Holder is not an Affiliate of the Company within the meaning of the Act,
acquires the Exchange Notes in the ordinary course of such Holder's business and
has no arrangements with any person to participate in the distribution of the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any
4
<PAGE>
limitations or restrictions under the Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States.
(c) In connection with the Registered Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30 days
and not more than 45 days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law);
(iii) utilize the services of one or more depositaries or exchange
agents (which, in either case, may be the Trustee) for the Registered
Exchange Offer with an address (A) in the Borough of Manhattan, The City of
New York and (B) if the Notes are then listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require,
Luxembourg; and
(iv) comply in all material respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Transfer Restricted Securities tendered
and not validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Transfer Restricted
Securities so accepted for exchange; and
(iii) cause the Trustee or the Exchange Notes Trustee, as the case may
be, promptly to authenticate and deliver to each Holder of Transfer
Restricted Securities, Exchange Notes of a like principal amount to the
Transfer Restricted Securities of such Holder so accepted for exchange.
(e) The Initial Purchasers and the Company acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption therefrom, each Exchanging Dealer is required
to deliver a Prospectus in connection with a sale of any Exchange Notes received
by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange
for Transfer Restricted Securities acquired for its own account as a result of
market-making activities or other trading activities. Accordingly, the Company
shall:
(i) include the information set forth in (A) Annex A hereto on the
cover of the Exchange Offer Registration Statement, (B) Annex B hereto in
the forepart of the Exchange Offer Registration Statement in a section
setting forth details of the Registered
5
<PAGE>
Exchange Offer, (C) Annex C hereto in the "Plan of Distribution" section of
the Prospectus contained in the Exchange Offer Registration Statement and
(D) Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective (subject to the existence of a Supplement
Delay Period) under the Act during the Exchange Offer Registration Period
for delivery by Exchanging Dealers in connection with sales of Exchange
Notes received pursuant to the Registered Exchange Offer, as contemplated
by Section 5(g) below.
(f) In the event that any Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to the
exchange of Transfer Restricted Securities constituting any portion of an unsold
allotment of Notes, at the written request of such Initial Purchaser, the
Company shall issue and deliver to such Initial Purchaser or the party
purchasing Transfer Restricted Securities registered under a Shelf Registration
Statement as contemplated by Section 4 hereof from such Initial Purchaser, in
exchange for such Transfer Restricted Securities, a like principal amount of
Exchange Notes. Exchange Notes issued in exchange for Transfer Restricted
Securities constituting any portion of an unsold allotment of Notes that are not
registered under a Shelf Registration Statement as contemplated by Section 4
hereof shall bear a legend as to restrictions on transfer. The Company shall
seek to cause the CUSIP Service Bureau to issue the same CUSIP number for such
Exchange Notes as for Exchange Notes issued pursuant to the Registered Exchange
Offer.
SECTION 4. SHELF REGISTRATION
If, (i) the Company is not required to file the Exchange Offer Registration
Statement nor permitted to Consummate the Registered Exchange Offer because the
Registered Exchange Offer is not permitted by applicable law or Commission
policy or (ii) any Holder of Transfer Restricted Securities notifies the Company
in writing within 10 business days of the filing and effectiveness under the Act
of the Exchange Offer Registration Statement that (A) it is prohibited by law or
Commission policy from participating in the Registered Exchange Offer, (B) it
may not resell the Exchange Notes acquired by it in the Registered Exchange
Offer to the public without delivering a prospectus, and the prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales or (C) it is a broker-dealer and owns Notes acquired
directly from the Company or an Affiliate (it being understood that, for
purposes of this Section 4, (x) the requirement that an Initial Purchaser
deliver a Prospectus containing the information required by Items 507 and/or 508
of Regulation S-K under the Act in connection with sales of Exchange Notes
acquired in exchange for such Notes shall result in such Exchange Notes being
not "freely tradeable" but (y) the requirement that an Exchanging Dealer deliver
a Prospectus in connection with sales of Exchange Notes acquired in the
Registered Exchange Offer in exchange for Notes acquired as a result of
market-making activities or other trading activities shall not result in such
Exchange Notes being not "freely tradeable"), the following provisions shall
apply:
6
<PAGE>
(a) The Company shall as promptly as practicable, file with the Commission
and thereafter shall use its best efforts to cause to be declared effective
under the Act on or prior to 270 days (plus any additional days allowed as a
result of a Commission Delay Period) after the date of original issuance of the
Notes, a Shelf Registration Statement relating to the offer and sale of the
Transfer Restricted Securities by the Holders from time to time in accordance
with the methods of distribution elected by such Holders and set forth in such
Shelf Registration Statement; provided, however, that with respect to Exchange
Notes received by an Initial Purchaser in exchange for Transfer Restricted
Securities constituting any portion of an unsold allotment of Notes, the Company
may, if permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement containing
the information required by Regulation S-K Items 507 and/or 508, as applicable,
in satisfaction of its obligations under this paragraph (a) with respect
thereto, and any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions herein applicable
to, a Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the date the
Shelf Registration statement is declared effective by the Commission (or until
one year after such effective date if such Shelf Registration Statement is filed
at the request of an Initial Purchaser) or such shorter period that will
terminate when (i) all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, (ii) the date on which, in the opinion of counsel to the Company, all
of the Transfer Restricted Securities then held by the Holders may be sold by
such Holders in the public United States securities markets in the absence of a
registration statement covering such sales or (iii) the date on which there
ceases to be outstanding any Transfer Restricted Securities (in any such case,
such period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of Transfer Restricted Securities covered
thereby not being able to offer and sell such securities during that period,
unless (i) such action is required by applicable law, (ii) such action is taken
by the Company in good faith and for valid business reasons (not including
avoidance of the Company's obligations hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 5(j) hereof, if applicable or (iii) such action is
taken because of any fact or circumstance giving rise to a Supplement Delay
Period.
SECTION 5. REGISTRATION PROCEDURES
In connection with any Shelf Registration Statement and, to the extent
applicable, any Exchange Offer Registration Statement, the following provisions
shall apply:
(a) The Company shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration Statement
and any amendment thereto does not, when it becomes effective, contain
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an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
(b) (1) The Company shall advise the Initial Purchasers and, in the case of
a Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, if requested by the Initial Purchasers or any such Holder,
confirm such advice in writing when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective.
(2) The Company shall advise the Initial Purchasers and, in the case of a
Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, in the case of an Exchange Offer Registration Statement,
any Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by the Initial
Purchasers or any such Holder or Exchanging Dealer, confirm such advice in
writing:
(i) of any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus included therein or for
additional information;
(ii) of the initiation by the Commission of proceedings relating to a
stop order suspending the effectiveness of the Registration Statement;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the securities included therein for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and
(v) of the existence of any fact and the happening of any event
(including, without limitation, pending negotiations relating to, or the
consummation of, a transaction or the occurrence of any event which would
require additional disclosure of material non-public information by the
Company in the Shelf Registration Statement as to which the Company has a
bona fide business purpose for preserving confidential or which renders the
Company unable to comply with Commission requirements) that, in the opinion
of the Company, makes untrue any statement of a material fact made in its
Shelf Registration Statement, the Prospectus or any amendment or supplement
thereto or any document incorporated by reference therein or requires the
making of any changes in the Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading and do not
omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
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Such advice may be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made.
(c) The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time.
(d) The Company shall use its best efforts to furnish to each selling
Holder included within the coverage of any Shelf Registration Statement who so
requests in writing and who has provided to the Company an address for notices,
without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and, if
the Holder so requests in writing, all exhibits and schedules (including those
incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Transfer Restricted Securities covered by any Shelf Registration
Statement and who has provided to the Company an address for notices, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
contained in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; subject to any notice by the
Company in accordance with Section 6(b) hereof, the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders for the purposes of offering and resale of the Transfer Restricted
Securities covered by the Prospectus in accordance with the applicable
regulations promulgated under the Act.
(f) The Company shall furnish to each Exchanging Dealer, which so requests
in writing, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements, and, if the Exchanging Dealer so requests in writing, any documents
incorporated by reference therein and all exhibits and schedules (including
those incorporated by reference).
(g) The Company shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies of
the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably request
for delivery by such Exchanging Dealer in connection with a sale of Exchange
Notes received by it pursuant to the Registered Exchange Offer; the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
any such Exchanging Dealer for the purposes contemplated by the Act or the
applicable regulations promulgated under the Act.
(h) Prior to the Registered Exchange Offer or any offering of Transfer
Restricted Securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of Transfer Restricted
Securities named therein and their respective counsel in connection with the
registration or qualification of such Transfer Restricted Securities for offer
and sale under the securities or blue sky laws of such jurisdictions of the
United States as any such Holders reasonably request in writing not later than
the date that is five business days prior to the date upon which this Agreement
specifies that the Registration Statement shall
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become effective; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(i) The Company shall endeavor to cooperate with the Holders of Transfer
Restricted Securities to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold pursuant to
any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request in writing at
least two business days prior to sales of securities pursuant to such
Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraph (b)(2)(v)
hereof, the Company shall promptly prepare a post-effective amendment to any
Registration Statement or an amendment or supplement to the related Prospectus
or file any other required document so that as thereafter delivered to
purchasers of the Transfer Restricted Securities covered thereby, the Prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that in the
event of a material business transaction (including, without limitation, pending
negotiations relating to such a transaction) which would, in the opinion of
counsel to the Company, require disclosure by the Company in the Shelf
Registration Statement of material non-public information for which the Company
has a bona fide business purpose for not disclosing, then for so long as such
circumstances exist, the Company shall not be required to prepare and file a
supplement or post-effective amendment hereunder.
(k) Not later than the effective date of any such Registration Statement
hereunder, the Company shall cause to be provided a CUSIP number for the Notes
or Exchange Notes, as the case may be, registered under such Registration
Statement, and provide the applicable trustee with printed certificates for such
Notes or Exchange Notes, in a form eligible for deposit with The Depository
Trust Company.
(l) The Company shall use its best efforts to comply with all applicable
rules and regulations of the Commission and shall make generally available to
its security holders in a regular filing on Form 10-Q or 10-K an earnings
statement satisfying the provisions of Rule 158 (which need not be audited) for
the twelve-month period commencing after effectiveness of the Shelf Registration
Statement.
(m) The Company shall cause the Indenture or the Exchange Notes Indenture,
as the case may be, to be qualified under the Trust Indenture Act in a timely
manner.
(n) The Company may require each Holder of Transfer Restricted Securities,
which are to be sold pursuant to any Shelf Registration Statement, to furnish to
the Company within 20 business days after written request for such information
has been made by the Company, such information regarding the Holder and the
distribution of such securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement and such other
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<PAGE>
information as may be necessary or advisable in the reasonable opinion of the
Company and its counsel, in connection with such Shelf Registration Statement.
No Holder of Transfer Restricted Securities shall be entitled to use the
Prospectus unless and until such Holder shall have furnished the information
required by this Section 5(n) and all such information required to be disclosed
in order to make the information previously furnished to the Company by such
Holder not materially misleading.
(o) The Company shall, if requested, promptly incorporate in a Prospectus
supplement or post-effective amendment to a Shelf Registration Statement, such
information as the Managing Underwriters and Majority Holders reasonably agree
should be included therein and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 5(o) that would, in the opinion of counsel for
the Company, violate applicable law or to include information the disclosure of
which at the time would have an adverse effect on the business or operations of
the Company and/or its subsidiaries, as determined in good faith by the Company.
(p) In the case of any Shelf Registration Statement, the Company shall
enter into such agreements (including underwriting agreements) and take all
other reasonably appropriate actions in order to expedite or facilitate the
registration or the disposition of the Transfer Restricted Securities, and in
connection therewith, if an underwriting agreement is entered into, cause the
same to contain indemnification provisions and procedures no less favorable than
those set forth in Section 8 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any), with respect to
all parties to be indemnified pursuant to Section 8 from Holders of Notes to the
Company.
(q) In the case of any Shelf Registration Statement, the Company shall:
(i) make reasonably available for inspection by representatives of the
Holders of Transfer Restricted Securities to be registered thereunder, the
Managing Underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent
retained by the Holders or any such Managing Underwriter, at the office
where normally kept during normal business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the Company's officers, directors and employees
to supply all relevant information reasonably requested by the Holders or
any Managing Underwriter, attorney, accountant or other agent in connection
with any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that the foregoing inspection
and information gathering shall be coordinated by the Managing
Underwriters, if any, or by one counsel designated by the Holders and that
such persons shall first agree in writing with the Company that any
information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such person, unless such disclosure is made in connection
with a court proceeding or required by law, or such information becomes
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available to the public generally or through a third party without an
accompanying obligation of confidentiality;
(ii) make such representations and warranties to the Holders of
Transfer Restricted Securities registered thereunder and the underwriters,
if any, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement;
(iii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any), addressed to
each selling Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters;
(iv) obtain "cold comfort" letters (or, in the case of any person that
does not satisfy the conditions for receipt of a "cold comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed-upon
procedures letter") and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed where reasonably practicable to each selling Holder
of Transfer Restricted Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and
(v) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 5(j) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The foregoing actions set forth in clauses (ii), (iii), (iv) and (v)
of this Section 5(q) shall, if reasonably requested by the Majority Holder
or the Majority Underwriters, be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and (B)
each closing under any underwriting or similar agreement, as to the extent
required thereunder.
(vi) The Company may offer securities of the Company other than the
Notes or the Exchange Notes under the Shelf Registration Statement, except
where such offer would conflict with the terms of the Purchase Agreement.
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SECTION 6. HOLDERS' AGREEMENTS
Each Holder of Transfer Restricted Securities and Exchange Notes, by the
acquisition of such Transfer Restricted Securities or Exchange Notes, as the
case may be, agrees:
(a) To furnish the information required to be furnished pursuant to Section
5(n) hereof within the time period set forth therein.
(b) That upon receipt of a notice of the commencement of a Supplement Delay
Period, it will keep the fact of such notice confidential, forthwith discontinue
disposition of its Transfer Restricted Securities or Exchange Notes, as the case
may be, pursuant to the Registration Statement, and will not deliver any
Prospectus forming a part thereof until receipt of the amended or supplemented
Registration Statement or Prospectus, as applicable, as contemplated by Section
5(j) hereof, or until receipt of the Advice. If a Supplement Delay Period should
occur, the Exchange Offer Registration Period or the Shelf Registration Period,
as applicable, shall be extended by the number of days of which the Supplement
Delay Period is comprised; provided that the Shelf Registration Period shall not
be extended if the Company has received an opinion of counsel (which counsel, if
different from counsel to the Company referred to in Section 6(a) and (b) of the
Purchase Agreement, shall be reasonably satisfactory to the Majority Holders of
the Transfer Restricted Securities named in the Shelf Registration Period) to
the effect that the Transfer Restricted Securities can be freely tradeable
without the continued effectiveness of the Shelf Registration Statement.
(c) If so directed by the Company in a notice of the commencement of a
Supplement Delay Period, each Holder of Transfer Restricted Securities or
Exchange Notes, as the case may be, 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 the Transfer Restricted
Securities or Exchange Notes, as the case may be.
(d) Sales of such Transfer Restricted Securities pursuant to a Registration
Statement shall only be made in the manner set forth in such currently effective
Registration Statement.
SECTION 7. REGISTRATION EXPENSES
The Company shall bear all expenses incurred in connection with the
performance of its obligations under Sections 3, 4 and 5 hereof and, in the
event of any Shelf Registration Statement, will reimburse the Holders for the
reasonable fees and disbursements of one firm or counsel designated by the
Majority Holders to act as counsel for the Holders in connection therewith, and,
in the case of any Exchange Offer Registration Statement, will reimburse the
Initial Purchasers for the reasonable fees and disbursements of counsel acting
in connection therewith. Notwithstanding the foregoing or anything in this
Agreement to the contrary, each Holder shall pay all underwriting discounts and
commission of any underwriters with respect to any Transfer Restricted
Securities sold by it.
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SECTION 8. INDEMNIFICATION AND CONTRIBUTION
(a) In connection with Registration Statement, the Company agrees to
indemnify and hold harmless each Holder of Transfer Restricted Securities
covered thereby (including each Initial Purchaser and, with respect to any
Prospectus delivery as contemplated in Section 5(g) hereof, each Exchanging
Dealer), the directors, officers, employees, partners, representatives and
agents of each such Holder and each person who controls any such Holder within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or 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 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 (i) the Company will not be liable
in any case to the extent that any such loss, claim, damage or liability arises
out of, or is based upon, any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any such
Holder or by the Managing Underwriters specifically for inclusion therein and
(ii) the Company will not be liable to any indemnified party under this
indemnity agreement with respect to the Registration Statement or Prospectus to
the extent that any such loss, claim, damage or liability of such indemnified
party results solely from an untrue statement of a material fact contained in,
or the omission of a material fact from, the Registration Statement or
Prospectus, which untrue statement or omission was corrected in an amended or
supplemented Registration Statement or Prospectus, if the person alleging such
loss, claim, damage or liability was not sent or given, at or prior to the
written confirmation of such sale, a copy of the amended or supplemented
Registration Statement or Prospectus if the Company had previously furnished
copies thereof to such indemnified party and if delivery of a prospectus is
required by the Act and was not so made. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 8(d), any underwriters of Notes registered under a Shelf
Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 8(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 5(p)
hereof.
(b) Each Holder of Transfer Restricted Securities or Exchange Notes covered
by a Registration Statement (including each Initial Purchaser and, with respect
to any Prospectus delivery as contemplated in Section 5(g) hereof, each
Exchanging Dealer) severally agrees to
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indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs such Registration Statement and (iv) each person
who controls the Company within the meaning of either the Act or the Exchange
Act to the same extent as the foregoing indemnity from the Company to each such
Holder, but only with reference to written information relating to such Holder
furnished to the Company by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have. In no event shall any Holder, its directors, officers or any
person who controls such Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages that such Holder, its
directors, officers or any person who controls such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
(c) Promptly after receipt by an indemnified party under this Section 8 or
notice of the commencement of any action, the indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure to so 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
reasonably 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 (and local
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 reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, (iii) the indemnifying
party did not employ 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 authorized the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party shall 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 for which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or
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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 and does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement that resulted in such Losses; provided, however, that in
no case shall any Initial Purchaser or any subsequent Holder of any Note or
Exchange Note be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Note, or in the case of an
Exchange Note, applicable to the Note which was exchangeable into such Exchange
Note, as set forth on the cover page of the Final Offering Memorandum, nor shall
any underwriter be responsible for any amount in excess of the underwriting
discount or commission applicable to the securities purchased by such
underwriter under the Registration Statement that resulted in such Losses. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits,
but also the relative fault of such indemnifying party, on the one hand, and
such indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Offering
Memorandum and (y) the total amount of additional interest that the Company was
not required to pay as a result of registering the securities covered by the
Registration Statement that resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Offering Memorandum,
and benefits received by any other Holders shall be deemed to be equal to the
value of receiving Notes or Exchange Notes, as applicable, registered under the
Act. Benefits received by any underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page of
the Prospectus forming a part of the Registration Statement that resulted in
such Losses. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation that
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 guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls a Holder within the meaning of either the Act or the
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Exchange Act and each director, officer, employee and agent of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 8 shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Company or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive the sale by a Holder of Transfer Restricted
Securities or Exchange Notes.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding and during any period in which the Company (i) is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by 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, and
(ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company has not, as of the date hereof,
entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of Notes (or, after the consummation of any Registered Exchange Offer in
accordance with Section 3 hereof, of Exchange Notes); provided, however, that
with respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to depart from the
provisions hereof, with respect to a matter, which relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and does not directly or indirectly affect the rights of other
Holders, may be given by the Majority Holders, determined on the basis of Notes
being sold rather than registered under such Registration Statement.
17
<PAGE>
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such holder
to the Company in accordance with the provisions of this Section 10(c),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the registrar under the Indenture or the Exchange
Note Indenture, as the case may be, with a copy in like manner to
Donaldson, Lufkin & Jenrette Securities Corporation;
(ii) if to the Initial Purchasers, initially at the respective
addresses set forth in the Purchase Agreement; and
(iii) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given
when received.
The Initial Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of each of the parties hereto,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Notes and/or Exchange Notes. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of Notes
and/or Exchange Notes and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State (without reference to the
conflict of law rules thereof).
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions hereof shall not be in any way impaired or affected
18
<PAGE>
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Notes Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Notes or Exchange Notes
is required hereunder, Notes or Exchange Notes, as applicable, held by the
Company or its Affiliates (other than subsequent Holders of Notes or Exchange
Notes if such subsequent Holders are deemed to be Affiliates solely by reason of
their holdings of such Notes or Exchange Notes) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(j) Entire Agreement. This 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 with respect
to 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 with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
NTL INCORPORATED
By: /s/ Richard J. Lubasch
----------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CHASE SECURITIES INC.
SALOMON BROTHERS INC
By: DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Michael J. Connelly
- -----------------------------------
Name: Michael J. Connelly
Title: Managing Director
20
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Exchange Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date (as
defined herein) and ending on the close of business on the 180th day following
the Expiration Date, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
A-1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution."
B-1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business on the 180th day
following the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or by a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-
dealer that resells Exchange Notes that were received by it for its own account
pursuant to the Registered Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Act and any profit of any such resale of
Exchange Notes and any commissions or concessions received by any such persons
may be deemed to be underwriting compensation under the Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the holders of the Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Act.
[Add information required by Regulation S-K Items 507 and/or 508.]
C-1
<PAGE>
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_______________________________
Address:______________________________________________________________
______________________________________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act.
D-1
EXHIBIT 4.19
EXECUTION COPY
================================================================================
300,000,000 POUNDS STERLING
10-3/4% SENIOR DEFERRED COUPON NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of March 13, 1998
by and among
NTL INCORPORATED
and
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
BT ALEX. BROWN INTERNATIONAL,
DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CHASE SECURITIES INC.
SALOMON BROTHERS INTERNATIONAL LIMITED
================================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 13, 1998 by and among NTL Incorporated, a Delaware corporation
(the "Company"), and Donaldson, Lufkin & Jenrette International, Morgan Stanley
& Co. International Limited, BT Alex. Brown International, Division of Bankers
Trust International PLC, Chase Securities Inc. and Salomon Brothers
International Limited (each an "Initial Purchaser" and collectively, the
"Initial Purchasers"). The Company proposes to issue and sell to the Initial
Purchasers (the "Initial Placement") 300,000,000 pounds sterling aggregate
principal amount at maturity of its 10-3/4% Senior Deferred Coupon Notes due
2008 (the "Notes"). As an inducement to the Initial Purchasers to enter into the
purchase agreement, dated as of March 6, 1998 ( the "Purchase Agreement"), and
in satisfaction of a condition to the Initial Purchasers' obligations
thereunder, the Company agrees with the Initial Purchasers, (i) for the benefit
of the Initial Purchasers and (ii) for the benefit of the holders from time to
time of the Notes whose names appear in the register maintained by the Registrar
in accordance with the provisions of the Indenture (as defined in Section 1
hereof) (including the Initial Purchasers), as follows:
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following capitalized defined terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Commission Delay Period" has the meaning set forth in Section 3(a) hereof.
"Consummate" means the occurrence of (i) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Notes to be issued in the Registered Exchange Offer, (ii) the maintenance of
such Registration Statement continuously effective and the keeping of the
Registered Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(c)(ii) hereof, and (iii) the delivery by the
Company to the Registrar under the Indenture or the Exchange Notes Indenture, as
the case may be, of Exchange Notes in the same aggregate principal amount as the
aggregate principal amount of Notes that were tendered by Holders thereof and
accepted for exchange pursuant to the Registered Exchange Offer.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" means debt securities of the Company identical in all
material respects to the Notes (except that interest will accrue on the Exchange
Notes from the last day on which interest was paid on the Notes prior to the
date of original issuance of the Exchange Notes or, if no such interest has been
paid, from April 1, 2003, and paragraph 2 of, and the transfer restrictions on,
the Notes will be eliminated), to be issued under the Indenture or the Exchange
Notes Indenture.
"Exchange Notes Indenture" means an indenture between the Company and the
Exchange Notes Trustee, identical in all material respects to the Indenture
(except that interest will accrue on the Exchange Notes from the last day on
which interest was paid on the Notes prior to the date of original issuance of
the Exchange Notes or, if no such interest has been paid, from April 1, 2003,
and paragraph 2 of, and the transfer restrictions on, the Notes will be
eliminated).
"Exchange Notes Trustee" means a bank or trust company reasonably
satisfactory to the Initial Purchasers, as trustee with respect to the Exchange
Notes under the Exchange Notes Indenture.
"Exchange Offer Registration Period" means a period expiring upon the
earliest to occur of (i) the one year period following the Consummation of the
Registered Exchange Offer, (ii) the date on which, in the opinion of counsel to
the Company, all of the Transfer Restricted Securities then held by the Holders
may be sold by such Holders in the public United States securities markets in
the absence of a registration statement covering such sales and (iii) the date
on which there ceases to be outstanding any Transfer Restricted Securities.
"Exchange Offer Registration Statement" means a registration statement of
the Company on an appropriate form under the Act with respect to the Registered
Exchange Offer, all amendments and supplements to such registration statement,
including post-effective amendments, and in each case, including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"Exchanging Dealer" means any Holder (which may include the Initial
Purchasers) that is a broker-dealer, electing to exchange Transfer Restricted
Securities, acquired for its own account as a result of market-making activities
or other trading activities, for Exchange Notes.
"Holder" has the meaning set forth in Section 2 hereof.
"Indenture" means the Indenture, dated as of March 13, 1998, between the
Company and the Trustee, relating to the Notes, as the same may be amended from
time to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
"Losses" has the meaning set forth in Section 8(d) hereof.
2
<PAGE>
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering.
"Notes" has the meaning set forth in the preamble hereto.
"Prospectus" means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of Transfer Restricted Securities or the Exchange Notes, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, in exchange for Notes, a like principal
amount of the Exchange Notes.
"Registration Statement" means any Exchange Offer Registration Statement or
any Shelf Registration Statement, which is filed pursuant to the provisions
hereof, and in each case, including the Prospectus contained therein, all
amendments and supplements thereto, including post-effective amendments, and all
exhibits and material incorporated by reference therein.
"Shelf Registration" means a registration effected pursuant to Section 4
hereof.
"Shelf Registration Period" has the meaning set forth in Section 4(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement of
the Company pursuant to the provisions of Section 4 hereof that covers some or
all of the Transfer Restricted Securities as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement, including
post-effective amendments, and in each case, including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Supplement Delay Period" means any period commencing on the date of
receipt by a Holder of Transfer Restricted Securities or Exchange Notes of any
notice from the Company of the existence of any fact or event of the kind
described in Section 5(b)(2) hereof and ending on the date of receipt by such
Holder of an amended or supplemented Registration Statement or Prospectus, as
contemplated by Section 5(j) hereof, or the receipt by such Holder of written
notice from the Company (the "Advice") that the use of the Prospectus may be
resumed, and the receipt of copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus.
"Transfer Restricted Securities" means each Note until (i) the date on
which such Note has been exchanged by a person other than a broker-dealer for an
Exchange Note in the
3
<PAGE>
Registered Exchange Offer, (ii) following the exchange by an Exchanging Dealer
in the Registered Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with the Shelf Registration Statement (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act (or any
similar provision then in effect) or is saleable pursuant to Rule 144(k) under
the Act or (v) the date upon which such Note ceases to be outstanding.
"Trustee" means the trustee with respect to the Notes under the Indenture.
"underwriter" means any underwriter of Notes in connection with an offering
thereof under a Shelf Registration Statement.
SECTION 2. HOLDERS
A person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such person becomes the registered holder of such Notes
under the Indenture and includes broker-dealers that hold Transfer Restricted
Securities (i) as a result of market making activities and other trading
activities and (ii) which were acquired directly from the Company or an
Affiliate.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) The Company shall prepare and, on or prior to 90 days following the
Closing Date, shall file with the Commission the Exchange Offer Registration
Statement with respect to the Registered Exchange Offer. The Company shall use
its best efforts to cause the Exchange Offer Registration Statement to become
effective under the Act on or prior to 270 days after the Closing Date; provided
that, if as a result of there being no federal governmental budget for any year
following the 1997 fiscal year, the Commission ceases to review registration
statements like the Registration Statements in the time within which the
Commission normally reviews such registration statements in the ordinary course
(a "Commission Delay Period"), then such 270 day period during which the Company
must cause the Exchange Offer Registration Statement to become effective shall
be extended by the number of days of which the Commission Delay Period is
comprised. The Company shall use its best efforts to Consummate the Registered
Exchange Offer on or prior to 310 days after the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Transfer Restricted Securities for Exchange Notes (assuming that such
Holder is not an Affiliate of the Company within the meaning of the Act,
acquires the Exchange Notes in the ordinary course of such Holder's business and
has no arrangements with any person to participate in the distribution of the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any
4
<PAGE>
limitations or restrictions under the Act and without material restrictions
under the securities laws of a substantial proportion of the several states of
the United States.
(c) In connection with the Registered Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30 days
and not more than 45 days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law);
(iii) utilize the services of one or more depositaries or exchange
agents (which, in either case, may be the Trustee) for the Registered
Exchange Offer with an address (A) in the Borough of Manhattan, The City of
New York and (B) if the Notes are then listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require,
Luxembourg; and
(iv) comply in all material respects with all applicable laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Transfer Restricted Securities tendered
and not validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Transfer Restricted
Securities so accepted for exchange; and
(iii) cause the Trustee or the Exchange Notes Trustee, as the case may
be, promptly to authenticate and deliver to each Holder of Transfer
Restricted Securities, Exchange Notes of a like principal amount to the
Transfer Restricted Securities of such Holder so accepted for exchange.
(e) The Initial Purchasers and the Company acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption therefrom, each Exchanging Dealer is required
to deliver a Prospectus in connection with a sale of any Exchange Notes received
by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange
for Transfer Restricted Securities acquired for its own account as a result of
market-making activities or other trading activities. Accordingly, the Company
shall:
(i) include the information set forth in (A) Annex A hereto on the
cover of the Exchange Offer Registration Statement, (B) Annex B hereto in
the forepart of the Exchange Offer Registration Statement in a section
setting forth details of the Registered
5
<PAGE>
Exchange Offer, (C) Annex C hereto in the "Plan of Distribution" section of
the Prospectus contained in the Exchange Offer Registration Statement and
(D) Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer and
(ii) use its best efforts to keep the Exchange Offer Registration
Statement continuously effective (subject to the existence of a Supplement
Delay Period) under the Act during the Exchange Offer Registration Period
for delivery by Exchanging Dealers in connection with sales of Exchange
Notes received pursuant to the Registered Exchange Offer, as contemplated
by Section 5(g) below.
(f) In the event that any Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to the
exchange of Transfer Restricted Securities constituting any portion of an unsold
allotment of Notes, at the written request of such Initial Purchaser, the
Company shall issue and deliver to such Initial Purchaser or the party
purchasing Transfer Restricted Securities registered under a Shelf Registration
Statement as contemplated by Section 4 hereof from such Initial Purchaser, in
exchange for such Transfer Restricted Securities, a like principal amount of
Exchange Notes. Exchange Notes issued in exchange for Transfer Restricted
Securities constituting any portion of an unsold allotment of Notes that are not
registered under a Shelf Registration Statement as contemplated by Section 4
hereof shall bear a legend as to restrictions on transfer. The Company shall
seek to cause the CUSIP Service Bureau to issue the same CUSIP number for such
Exchange Notes as for Exchange Notes issued pursuant to the Registered Exchange
Offer.
SECTION 4. SHELF REGISTRATION
If, (i) the Company is not required to file the Exchange Offer Registration
Statement nor permitted to Consummate the Registered Exchange Offer because the
Registered Exchange Offer is not permitted by applicable law or Commission
policy or (ii) any Holder of Transfer Restricted Securities notifies the Company
in writing within 10 business days of the filing and effectiveness under the Act
of the Exchange Offer Registration Statement that (A) it is prohibited by law or
Commission policy from participating in the Registered Exchange Offer, (B) it
may not resell the Exchange Notes acquired by it in the Registered Exchange
Offer to the public without delivering a prospectus, and the prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales or (C) it is a broker-dealer and owns Notes acquired
directly from the Company or an Affiliate (it being understood that, for
purposes of this Section 4, (x) the requirement that an Initial Purchaser
deliver a Prospectus containing the information required by Items 507 and/or 508
of Regulation S-K under the Act in connection with sales of Exchange Notes
acquired in exchange for such Notes shall result in such Exchange Notes being
not "freely tradeable" but (y) the requirement that an Exchanging Dealer deliver
a Prospectus in connection with sales of Exchange Notes acquired in the
Registered Exchange Offer in exchange for Notes acquired as a result of
market-making activities or other trading activities shall not result in such
Exchange Notes being not "freely tradeable"), the following provisions shall
apply:
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<PAGE>
(a) The Company shall as promptly as practicable, file with the Commission
and thereafter shall use its best efforts to cause to be declared effective
under the Act on or prior to 270 days (plus any additional days allowed as a
result of a Commission Delay Period) after the date of original issuance of the
Notes, a Shelf Registration Statement relating to the offer and sale of the
Transfer Restricted Securities by the Holders from time to time in accordance
with the methods of distribution elected by such Holders and set forth in such
Shelf Registration Statement; provided, however, that with respect to Exchange
Notes received by an Initial Purchaser in exchange for Transfer Restricted
Securities constituting any portion of an unsold allotment of Notes, the Company
may, if permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement containing
the information required by Regulation S-K Items 507 and/or 508, as applicable,
in satisfaction of its obligations under this paragraph (a) with respect
thereto, and any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions herein applicable
to, a Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf Registration
Statement continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the date the
Shelf Registration statement is declared effective by the Commission (or until
one year after such effective date if such Shelf Registration Statement is filed
at the request of an Initial Purchaser) or such shorter period that will
terminate when (i) all the Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement, (ii) the date on which, in the opinion of counsel to the Company, all
of the Transfer Restricted Securities then held by the Holders may be sold by
such Holders in the public United States securities markets in the absence of a
registration statement covering such sales or (iii) the date on which there
ceases to be outstanding any Transfer Restricted Securities (in any such case,
such period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of Transfer Restricted Securities covered
thereby not being able to offer and sell such securities during that period,
unless (i) such action is required by applicable law, (ii) such action is taken
by the Company in good faith and for valid business reasons (not including
avoidance of the Company's obligations hereunder), including the acquisition or
divestiture of assets, so long as the Company promptly thereafter complies with
the requirements of Section 5(j) hereof, if applicable or (iii) such action is
taken because of any fact or circumstance giving rise to a Supplement Delay
Period.
SECTION 5. REGISTRATION PROCEDURES
In connection with any Shelf Registration Statement and, to the extent
applicable, any Exchange Offer Registration Statement, the following provisions
shall apply:
(a) The Company shall ensure that (i) any Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any amendment or
supplement thereto complies in all material respects with the Act and the rules
and regulations thereunder, (ii) any Registration Statement and any amendment
thereto does not, when it becomes effective, contain
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<PAGE>
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
(b) (1) The Company shall advise the Initial Purchasers and, in the case of
a Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, if requested by the Initial Purchasers or any such Holder,
confirm such advice in writing when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective.
(2) The Company shall advise the Initial Purchasers and, in the case of a
Shelf Registration Statement, the Holders of Transfer Restricted Securities
covered thereby, and, in the case of an Exchange Offer Registration Statement,
any Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by the Initial
Purchasers or any such Holder or Exchanging Dealer, confirm such advice in
writing:
(i) of any request by the Commission for amendments or supplements to
the Registration Statement or the Prospectus included therein or for
additional information;
(ii) of the initiation by the Commission of proceedings relating to a
stop order suspending the effectiveness of the Registration Statement;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement;
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the securities included therein for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and
(v) of the existence of any fact and the happening of any event
(including, without limitation, pending negotiations relating to, or the
consummation of, a transaction or the occurrence of any event which would
require additional disclosure of material non-public information by the
Company in the Shelf Registration Statement as to which the Company has a
bona fide business purpose for preserving confidential or which renders the
Company unable to comply with Commission requirements) that, in the opinion
of the Company, makes untrue any statement of a material fact made in its
Shelf Registration Statement, the Prospectus or any amendment or supplement
thereto or any document incorporated by reference therein or requires the
making of any changes in the Registration Statement or the Prospectus so
that, as of such date, the statements therein are not misleading and do not
omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
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Such advice may be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made.
(c) The Company shall use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement at the earliest
possible time.
(d) The Company shall use its best efforts to furnish to each selling
Holder included within the coverage of any Shelf Registration Statement who so
requests in writing and who has provided to the Company an address for notices,
without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and, if
the Holder so requests in writing, all exhibits and schedules (including those
incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Transfer Restricted Securities covered by any Shelf Registration
Statement and who has provided to the Company an address for notices, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
contained in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; subject to any notice by the
Company in accordance with Section 6(b) hereof, the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders for the purposes of offering and resale of the Transfer Restricted
Securities covered by the Prospectus in accordance with the applicable
regulations promulgated under the Act.
(f) The Company shall furnish to each Exchanging Dealer, which so requests
in writing, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements, and, if the Exchanging Dealer so requests in writing, any documents
incorporated by reference therein and all exhibits and schedules (including
those incorporated by reference).
(g) The Company shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies of
the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably request
for delivery by such Exchanging Dealer in connection with a sale of Exchange
Notes received by it pursuant to the Registered Exchange Offer; the Company
consents to the use of the Prospectus or any amendment or supplement thereto by
any such Exchanging Dealer for the purposes contemplated by the Act or the
applicable regulations promulgated under the Act.
(h) Prior to the Registered Exchange Offer or any offering of Transfer
Restricted Securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of Transfer Restricted
Securities named therein and their respective counsel in connection with the
registration or qualification of such Transfer Restricted Securities for offer
and sale under the securities or blue sky laws of such jurisdictions of the
United States as any such Holders reasonably request in writing not later than
the date that is five business days prior to the date upon which this Agreement
specifies that the Registration Statement shall
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become effective; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(i) The Company shall endeavor to cooperate with the Holders of Transfer
Restricted Securities to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold pursuant to
any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request in writing at
least two business days prior to sales of securities pursuant to such
Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraph (b)(2)(v)
hereof, the Company shall promptly prepare a post-effective amendment to any
Registration Statement or an amendment or supplement to the related Prospectus
or file any other required document so that as thereafter delivered to
purchasers of the Transfer Restricted Securities covered thereby, the Prospectus
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that in the
event of a material business transaction (including, without limitation, pending
negotiations relating to such a transaction) which would, in the opinion of
counsel to the Company, require disclosure by the Company in the Shelf
Registration Statement of material non-public information for which the Company
has a bona fide business purpose for not disclosing, then for so long as such
circumstances exist, the Company shall not be required to prepare and file a
supplement or post-effective amendment hereunder.
(k) Not later than the effective date of any such Registration Statement
hereunder, the Company shall cause to be provided a CUSIP number for the Notes
or Exchange Notes, as the case may be, registered under such Registration
Statement, and provide the applicable trustee with printed certificates for such
Notes or Exchange Notes, in a form eligible for deposit with The Depository
Trust Company.
(l) The Company shall use its best efforts to comply with all applicable
rules and regulations of the Commission and shall make generally available to
its security holders in a regular filing on Form 10-Q or 10-K an earnings
statement satisfying the provisions of Rule 158 (which need not be audited) for
the twelve-month period commencing after effectiveness of the Shelf Registration
Statement.
(m) The Company shall cause the Indenture or the Exchange Notes Indenture,
as the case may be, to be qualified under the Trust Indenture Act in a timely
manner.
(n) The Company may require each Holder of Transfer Restricted Securities,
which are to be sold pursuant to any Shelf Registration Statement, to furnish to
the Company within 20 business days after written request for such information
has been made by the Company, such information regarding the Holder and the
distribution of such securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement and such other
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information as may be necessary or advisable in the reasonable opinion of the
Company and its counsel, in connection with such Shelf Registration Statement.
No Holder of Transfer Restricted Securities shall be entitled to use the
Prospectus unless and until such Holder shall have furnished the information
required by this Section 5(n) and all such information required to be disclosed
in order to make the information previously furnished to the Company by such
Holder not materially misleading.
(o) The Company shall, if requested, promptly incorporate in a Prospectus
supplement or post-effective amendment to a Shelf Registration Statement, such
information as the Managing Underwriters and Majority Holders reasonably agree
should be included therein and shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 5(o) that would, in the opinion of counsel for
the Company, violate applicable law or to include information the disclosure of
which at the time would have an adverse effect on the business or operations of
the Company and/or its subsidiaries, as determined in good faith by the Company.
(p) In the case of any Shelf Registration Statement, the Company shall
enter into such agreements (including underwriting agreements) and take all
other reasonably appropriate actions in order to expedite or facilitate the
registration or the disposition of the Transfer Restricted Securities, and in
connection therewith, if an underwriting agreement is entered into, cause the
same to contain indemnification provisions and procedures no less favorable than
those set forth in Section 8 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any), with respect to
all parties to be indemnified pursuant to Section 8 from Holders of Notes to the
Company.
(q) In the case of any Shelf Registration Statement, the Company shall:
(i) make reasonably available for inspection by representatives of the
Holders of Transfer Restricted Securities to be registered thereunder, the
Managing Underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent
retained by the Holders or any such Managing Underwriter, at the office
where normally kept during normal business hours, all financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the Company's officers, directors and employees
to supply all relevant information reasonably requested by the Holders or
any Managing Underwriter, attorney, accountant or other agent in connection
with any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that the foregoing inspection
and information gathering shall be coordinated by the Managing
Underwriters, if any, or by one counsel designated by the Holders and that
such persons shall first agree in writing with the Company that any
information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such person, unless such disclosure is made in connection
with a court proceeding or required by law, or such information becomes
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available to the public generally or through a third party without an
accompanying obligation of confidentiality;
(ii) make such representations and warranties to the Holders of
Transfer Restricted Securities registered thereunder and the underwriters,
if any, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement;
(iii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any), addressed to
each selling Holder and the underwriters, if any, covering such matters as
are customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters;
(iv) obtain "cold comfort" letters (or, in the case of any person that
does not satisfy the conditions for receipt of a "cold comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed-upon
procedures letter") and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed where reasonably practicable to each selling Holder
of Transfer Restricted Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and
(v) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 5(j) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The foregoing actions set forth in clauses (ii), (iii), (iv) and (v)
of this Section 5(q) shall, if reasonably requested by the Majority Holder
or the Majority Underwriters, be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and (B)
each closing under any underwriting or similar agreement, as to the extent
required thereunder.
(vi) The Company may offer securities of the Company other than the
Notes or the Exchange Notes under the Shelf Registration Statement, except
where such offer would conflict with the terms of the Purchase Agreement.
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SECTION 6. HOLDERS' AGREEMENTS
Each Holder of Transfer Restricted Securities and Exchange Notes, by the
acquisition of such Transfer Restricted Securities or Exchange Notes, as the
case may be, agrees:
(a) To furnish the information required to be furnished pursuant to Section
5(n) hereof within the time period set forth therein.
(b) That upon receipt of a notice of the commencement of a Supplement Delay
Period, it will keep the fact of such notice confidential, forthwith discontinue
disposition of its Transfer Restricted Securities or Exchange Notes, as the case
may be, pursuant to the Registration Statement, and will not deliver any
Prospectus forming a part thereof until receipt of the amended or supplemented
Registration Statement or Prospectus, as applicable, as contemplated by Section
5(j) hereof, or until receipt of the Advice. If a Supplement Delay Period should
occur, the Exchange Offer Registration Period or the Shelf Registration Period,
as applicable, shall be extended by the number of days of which the Supplement
Delay Period is comprised; provided that the Shelf Registration Period shall not
be extended if the Company has received an opinion of counsel (which counsel, if
different from counsel to the Company referred to in Section 6(a) and (b) of the
Purchase Agreement, shall be reasonably satisfactory to the Majority Holders of
the Transfer Restricted Securities named in the Shelf Registration Period) to
the effect that the Transfer Restricted Securities can be freely tradeable
without the continued effectiveness of the Shelf Registration Statement.
(c) If so directed by the Company in a notice of the commencement of a
Supplement Delay Period, each Holder of Transfer Restricted Securities or
Exchange Notes, as the case may be, 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 the Transfer Restricted
Securities or Exchange Notes, as the case may be.
(d) Sales of such Transfer Restricted Securities pursuant to a Registration
Statement shall only be made in the manner set forth in such currently effective
Registration Statement.
SECTION 7. REGISTRATION EXPENSES
The Company shall bear all expenses incurred in connection with the
performance of its obligations under Sections 3, 4 and 5 hereof and, in the
event of any Shelf Registration Statement, will reimburse the Holders for the
reasonable fees and disbursements of one firm or counsel designated by the
Majority Holders to act as counsel for the Holders in connection therewith, and,
in the case of any Exchange Offer Registration Statement, will reimburse the
Initial Purchasers for the reasonable fees and disbursements of counsel acting
in connection therewith. Notwithstanding the foregoing or anything in this
Agreement to the contrary, each Holder shall pay all underwriting discounts and
commission of any underwriters with respect to any Transfer Restricted
Securities sold by it.
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SECTION 8. INDEMNIFICATION AND CONTRIBUTION
(a) In connection with Registration Statement, the Company agrees to
indemnify and hold harmless each Holder of Transfer Restricted Securities
covered thereby (including each Initial Purchaser and, with respect to any
Prospectus delivery as contemplated in Section 5(g) hereof, each Exchanging
Dealer), the directors, officers, employees, partners, representatives and
agents of each such Holder and each person who controls any such Holder within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or 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 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 (i) the Company will not be liable
in any case to the extent that any such loss, claim, damage or liability arises
out of, or is based upon, any such untrue statement or alleged untrue statement
or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any such
Holder or by the Managing Underwriters specifically for inclusion therein and
(ii) the Company will not be liable to any indemnified party under this
indemnity agreement with respect to the Registration Statement or Prospectus to
the extent that any such loss, claim, damage or liability of such indemnified
party results solely from an untrue statement of a material fact contained in,
or the omission of a material fact from, the Registration Statement or
Prospectus, which untrue statement or omission was corrected in an amended or
supplemented Registration Statement or Prospectus, if the person alleging such
loss, claim, damage or liability was not sent or given, at or prior to the
written confirmation of such sale, a copy of the amended or supplemented
Registration Statement or Prospectus if the Company had previously furnished
copies thereof to such indemnified party and if delivery of a prospectus is
required by the Act and was not so made. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 8(d), any underwriters of Notes registered under a Shelf
Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided in
this Section 8(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 5(p)
hereof.
(b) Each Holder of Transfer Restricted Securities or Exchange Notes covered
by a Registration Statement (including each Initial Purchaser and, with respect
to any Prospectus delivery as contemplated in Section 5(g) hereof, each
Exchanging Dealer) severally agrees to
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<PAGE>
indemnify and hold harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs such Registration Statement and (iv) each person
who controls the Company within the meaning of either the Act or the Exchange
Act to the same extent as the foregoing indemnity from the Company to each such
Holder, but only with reference to written information relating to such Holder
furnished to the Company by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have. In no event shall any Holder, its directors, officers or any
person who controls such Holder be liable or responsible for any amount in
excess of the amount by which the total amount received by such Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages that such Holder, its
directors, officers or any person who controls such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
(c) Promptly after receipt by an indemnified party under this Section 8 or
notice of the commencement of any action, the indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure to so 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
reasonably 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 (and local
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 reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, (iii) the indemnifying
party did not employ 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 authorized the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party shall 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 for which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or
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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 and does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement that resulted in such Losses; provided, however, that in
no case shall any Initial Purchaser or any subsequent Holder of any Note or
Exchange Note be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Note, or in the case of an
Exchange Note, applicable to the Note which was exchangeable into such Exchange
Note, as set forth on the cover page of the Final Offering Memorandum, nor shall
any underwriter be responsible for any amount in excess of the underwriting
discount or commission applicable to the securities purchased by such
underwriter under the Registration Statement that resulted in such Losses. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such relative benefits,
but also the relative fault of such indemnifying party, on the one hand, and
such indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Offering
Memorandum and (y) the total amount of additional interest that the Company was
not required to pay as a result of registering the securities covered by the
Registration Statement that resulted in such Losses. Benefits received by the
Initial Purchasers shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Offering Memorandum,
and benefits received by any other Holders shall be deemed to be equal to the
value of receiving Notes or Exchange Notes, as applicable, registered under the
Act. Benefits received by any underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page of
the Prospectus forming a part of the Registration Statement that resulted in
such Losses. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation that
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 guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person who
controls a Holder within the meaning of either the Act or the
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Exchange Act and each director, officer, employee and agent of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 8 shall remain in full force and effect,
regardless of any investigation made by or on behalf of any Holder or the
Company or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive the sale by a Holder of Transfer Restricted
Securities or Exchange Notes.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding and during any period in which the Company (i) is
not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon
request of any Holder, to such Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by 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, and
(ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) No Inconsistent Agreements. The Company has not, as of the date hereof,
entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of Notes (or, after the consummation of any Registered Exchange Offer in
accordance with Section 3 hereof, of Exchange Notes); provided, however, that
with respect to any matter that directly or indirectly affects the rights of any
Initial Purchaser hereunder, the Company shall obtain the written consent of
each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to depart from the
provisions hereof, with respect to a matter, which relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and does not directly or indirectly affect the rights of other
Holders, may be given by the Majority Holders, determined on the basis of Notes
being sold rather than registered under such Registration Statement.
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(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such holder
to the Company in accordance with the provisions of this Section 10(c),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the registrar under the Indenture or the Exchange
Note Indenture, as the case may be, with a copy in like manner to Morgan
Stanley & Co. International Limited;
(ii) if to the Initial Purchasers, initially at the respective
addresses set forth in the Purchase Agreement; and
(iii) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given
when received.
The Initial Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of each of the parties hereto,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Notes and/or Exchange Notes. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of Notes
and/or Exchange Notes and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed in said State (without reference to the
conflict of law rules thereof).
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and the
remaining provisions hereof shall not be in any way impaired or affected
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thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Notes Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Notes or Exchange Notes
is required hereunder, Notes or Exchange Notes, as applicable, held by the
Company or its Affiliates (other than subsequent Holders of Notes or Exchange
Notes if such subsequent Holders are deemed to be Affiliates solely by reason of
their holdings of such Notes or Exchange Notes) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(j) Entire Agreement. This 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 with respect
to 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 with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
19
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
NTL INCORPORATED
By: /s/ Richard J. Lubasch
---------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
DONALDSON LUFKIN & JENRETTE
INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
BT ALEX. BROWN INTERNATIONAL,
DIVISION OF BANKERS TRUST
INTERNATIONAL PLC
CHASE SECURITIES INC.
SALOMON BROTHERS
INTERNATIONAL LIMITED
By: MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
By: /s/ Harry Stanley
- ---------------------------------------
Name: Harry Stanley
Title: Vice President
20
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Registered Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Notes where such Exchange Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, starting on the Expiration Date (as
defined herein) and ending on the close of business on the 180th day following
the Expiration Date, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
A-1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
See "Plan of Distribution."
B-1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Registered Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such Exchange Notes. The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business on the 180th day
following the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or by a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-
dealer that resells Exchange Notes that were received by it for its own account
pursuant to the Registered Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Act and any profit of any such resale of
Exchange Notes and any commissions or concessions received by any such persons
may be deemed to be underwriting compensation under the Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the holders of the Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Act.
[Add information required by Regulation S-K Items 507 and/or 508.]
C-1
<PAGE>
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:_______________________________
Address:______________________________________________________________
______________________________________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Act.
D-1
EXHIBIT 10.1
NTL INCORPORATED
1993 STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JUNE 3, 1997)
1. PURPOSE; CONSTRUCTION.
This NTL Incorporated 1993 Stock Option Plan, as amended and restated
effective June 3, 1997 (the "Plan"), is intended to encourage stock ownership by
employees of NTL Incorporated (the "Corporation") and its divisions and
subsidiary and parent corporations and other affiliates, so that they may
acquire or increase their proprietary interest in the Corporation, and to
encourage such employees and directors (who are employees) to remain in the
employ of the Corporation or its affiliates and to put forth maximum efforts for
the success of the business. It is further intended that options ("Options")
granted by the Committee pursuant to Section 6 of this Plan shall constitute
"incentive stock options" ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder (the "Code"), and options granted by the Committee
pursuant to Section 7 of this Plan shall constitute "nonqualified stock options"
("Nonqualified Stock Options")
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated;
(a) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
(b) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(c) "FAIR MARKET VALUE" per share as of a particular date shall mean
(i) if the shares of common stock, par value $.01 per share, of the
Corporation ("Common Stock") are then traded on an over-the-counter market,
the average of the closing bid and asked prices for the shares of Common
Stock in such over-the-counter market on such date or on the last preceding
date on which there was a sale of Common Stock in such market, (ii) if the
shares of Common Stock are then admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or
other comparable quotation system and have been designated as a National
Market System ("NMS") security, or if the shares of Common Stock are then
listed on a national securities exchange, the closing sales price per share
on such
<PAGE>
date or on the last preceding date on which there was a sale of such Common
Stock on such exchange, or (iii) if the shares of Common Stock are not then
traded in an over-the-counter market, admitted to quotation on NASDAQ or
other comparable quotation system, or listed on a national securities
exchange, such value as the Committee in its discretion may determine.
(d) "OPTIONEE" shall mean a person who has been granted an Option
under the Plan.
(e) "PARENT CORPORATION" shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the employer corporation owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(f) "RULE 16b-3" shall mean Rule 16b-3 promulgated under Section 16 of
the Exchange Act (or any other comparable provisions in effect at the time
or times in question)
(g) "SUBSIDIARY CORPORATION" shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting an Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
(h) "TEN PERCENT STOCKHOLDER" shall mean an Optionee who, at the time
an Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Corporation or of its Parent or Subsidiary Corporations.
3. ADMINISTRATION.
The Plan shall be administered by the Compensation and Option Committee of
the Corporation's Board of Directors or such other committee appointed either by
the Board of Directors of the Corporation (the "Board") or by such Compensation
and Option Committee (the "Committee"); provided, however, to the extent
determined necessary to satisfy the requirements for exemption from Section
16(b) of the Exchange Act with respect to the acquisition or disposition of
securities hereunder, action by the Committee may be by a subcommittee of a
committee of the Board
2
<PAGE>
composed solely of two or more " non-employee directors," within the meaning of
Rule 16b-3, appointed by the Board or by the Compensation and Option Committee
of the Board, or by a committee composed solely of two or more "non-employee
directors," within the meaning of Rule 16b-3, as a result of the recusal of
those members who do not qualify as non-employee directors; and, provided
further, to the extent determined necessary to satisfy the requirements for the
exception for qualified performance- based compensation under Section 162(m) of
the Code and the treasury regulations thereunder, action by the Committee may be
by a committee comprised solely of two or more "outside directors, " within the
meaning of Section 162(m) of the Code and the treasury regulations thereunder,
appointed by the Board or by the Compensation and Option Committee.
Notwithstanding anything in the Plan to the contrary, and to the extent
determined to be necessary to satisfy an exemption under Rule 16b-3 with respect
to a grant hereunder (and, as applicable, with respect to the disposition to the
Corporation of a security hereunder), or as otherwise determined advisable by
the Committee, the terms of such grant and disposition under the Plan shall be
subject to the prior approval of the Board. Any prior approval of the Board, as
provided in the preceding sentence, shall not otherwise limit or restrict the
authority of the Committee to make grants under the Plan, including, but not
limited to, the authority of the Committee to make grants qualifying for the
performance-based compensation exception under Section 162(m) of the Code and
the treasury regulations thereunder.
The Committee shall have the authority in its discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Options; to determine
which Options shall constitute Incentive Stock Options and which Options shall
constitute Nonqualified Stock Options; to determine the purchase price of the
shares of Common Stock covered by each Option (the "Option Price"); to determine
the persons to whom, and the time or times at which, Options shall be granted;
to determine the number of shares to be covered by each Option; to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Option Agreements (which need
not be identical) entered into in connection with Options granted under the
Plan; and to make all other determinations deemed necessary or advisable for the
administration of the Plan. The Committee may delegate to one or more of its
members or to one or more agents such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may
3
<PAGE>
have under the Plan.
The Board shall fill all vacancies, however caused, in the Committee. The
Board may from time to time appoint additional members to the Committee, and may
at any time remove one or more Committee members and substitute others. One
member of the Committee may be selected by the Board as chairman. The Committee
shall hold its meetings at such times and places as it shall deem advisable. All
determinations of the Committee shall be made by a majority of its members
either present in person or participating by conference telephone at any meeting
or by written consent. The Committee may appoint a secretary and make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
4. ELIGIBILITY.
Options may be granted (i) to employees (including, without limitation,
officers and directors who are employees) of the Corporation, its present or
future divisions and Subsidiary Corporations and Parent Corporations and (ii) in
the case of Nonqualified Stock Options, also to employees of an affiliated
entity of the Corporation (an "Affiliated Entity") which is designated by the
Board to participate in the Plan. In determining the persons to whom Options
shall be granted and the number of shares to be covered by each Option, the
Committee shall take into account the duties of the respective persons, their
present and potential contributions to the success of the Corporation and such
other factors as the Committee shall deem relevant in connection with
accomplishing the purpose of the Plan.
An Optionee shall be eligible to receive more than one grant of an Option
during the term of the Plan, but only on the terms and subject to the
restrictions hereinafter set forth.
5. STOCK.
The stock subject to Options hereunder shall be shares of the Corporation's
Common Stock. Such shares may, in whole or in part, be authorized but unissued
shares or shares that shall have been or that may be reacquired by the
Corporation. The aggregate number of shares of Common Stock as to which Options
may be granted from time to time under the Plan shall not exceed 6,653,333. The
limitation established by the preceding sentence shall be subject to adjustment
as provided in Section 8(j) hereof.
4
<PAGE>
In the event that any outstanding Option under the Plan for any reason
expires or is canceled, surrendered or otherwise terminated without having been
exercised in full, the shares of Common Stock allocable to the unexercised
portion of such Option shall (unless the Plan shall have been terminated) become
available for subsequent grants of Options under the Plan. Notwithstanding the
foregoing, the expiration, cancellation, surrender or termination of an Option,
to the extent consistent with Section 162(m) of the Code and the treasury
regulations thereunder, shall not be disregarded for purposes of applying the
individual limit on the maximum number of shares, as provided in Section 8(f),
that may be purchased in connection with Options granted under the Plan with
respect to any individual.
6. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 6 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
8 hereof.
(a) VALUE OF SHARES. Any options granted as Incentive Stock Options
shall be traded as Nonqualified Stock Options to the extent that the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the shares of Common Stock with respect to which such
Options granted under this Plan and all other option plans of the
Corporation and any Parent or Subsidiary Corporation which would become
exercisable for the first time by such Optionee during any calendar year
exceeds $100, 000.
(b) TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (I) the Option Price shall not be
less than one hundred ten percent (110%) of the Fair Market Value of the
shares of Common Stock of the Corporation on the date of grant of such
Incentive Stock Option, and (ii) the exercise period shall not exceed five
(5) years from the date of grant of such Incentive Stock Option.
7. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 7 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 8 hereof.
5
<PAGE>
8. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a written
agreement (an "Option Agreement") between the Corporation and the Optionee,
which agreement shall comply with and be subject to the following terms and
conditions:
(a) NUMBER OF SHARES. Each Option Agreement shall state the number of
shares of Common Stock to which the Option relates.
(b) TYPE OF OPTION. Each Option Agreement shall specifically identify
the portion, if any, of the Option which constitutes an Incentive Stock
Option and the portion, if any, constitutes a Nonqualified Stock Option.
(c) OPTION PRICE. Each Option Agreement shall state the Option Price,
which, in the case of Incentive Stock Options, shall be not less than one
hundred percent (100%) of the Fair Market Value of the shares of Common
Stock of the Corporation on the date of grant of the Option, and which, in
the case of Nonqualified Stock Options, shall be determined by the
Committee. The Option Price shall be subject to adjustment as provided in
Section 8(i) hereof. An Option shall be considered to be granted on the
later of the date the Committee adopts a resolution expressly granting such
Option or the date the Plan is approved by the Stockholders of the Company.
(d) MEDIUM AND TIME OF PAYMENT. Options may be exercised in whole or
in part at any time during the option period by giving written notice of
exercise to the Corporation specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the
purchase price shall be made in such manner as the Committee may provide in
the Option Agreement, which may include cash (including cash equivalents,
such as by certified or bank check payable to the Corporation), delivery of
unrestricted shares of Common Stock that have been owned by the Optionee
or, as applicable, a permissible transferee (as provided in Section 8 (i) )
for at least six months, any other manner permitted by law as determined by
the Committee, or any combination of the foregoing.
(e) TERM AND EXERCISE OF OPTIONS. Options shall be exercisable over
the exercise period as and at the times and upon the conditions that the
Committee may determine, as reflected in the Option Agreement; provided,
however, that the Committee shall have the authority to accelerate the
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion,
6
<PAGE>
deems appropriate; and further provided, however, this such exercise period
shall not exceed ten (10) years from the date of grant of such Option. The
exercise period shall be subject to earlier termination as provided in
Sections 8(g) and 8(h) hereof. An Option may be exercised, as to any or all
full shares of Common Stock as to which the Option has become exercisable,
by giving written notice of such exercise to the Committee or to such
individual(s) as the Committee may from time to time designate.
(f) LIMITATION ON AWARDS. Commencing with the 1996 calendar year,
grants of options under the Plan to any individual in any calendar year
shall be limited to Options to purchase no greater than 300,000 shares of
Common Stock.
(g) TERMINATION. Except as provided in this Section 8(g) and in
Section 8(h) hereof, an Option may not be exercised by the Optionee to whom
it was granted or by a transferee to whom such Option was terminated (as
provided in Section 6(j)) unless the Optionee is then in the employ of the
Corporation or a division or any corporation which was, at the time of
grant of such Option, a Subsidiary Corporation or Parent Corporation
thereof (or a corporation or a Parent or Subsidiary Corporation of such
corporation issuing or assuming the Option in a transaction to which
Section 424(a) of the Code applies) or an affiliated entity, and unless the
Optionee has remained continuously so employed since the date of grant of
the Option. In the event that the employment of an Optionee shall terminate
(other than by reason of death, Disability or, in the case of Non-qualified
Stock Options, retirement), all Options granted to such Optionee or
transferred by such Optionee (as provided in Section 8(i)) that are
exercisable at the time of such termination may, unless earlier terminated
in accordance with their terms, be exercised by the Optionee or by a
transferee within three (3) months after such termination; provided,
however, that if the employment of an Optionee shall terminate for cause,
all Options theretofore granted to such Optionee or transferred by such
Optionee (as provided in Section 8 (i) ) shall, to the extent not
theretofore exercised, terminate forthwith. Nothing in the Plan or in any
Option granted pursuant hereto shall confer upon an individual any right to
continue in the employ of the Corporation or any of its divisions, Parent
or Subsidiary Corporations or Affiliated entities or interfere in any way
with the right of the Corporation or any such division, Parent or
Subsidiary Corporation or affiliated entity to terminate such employment.
(h) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall
die while employed by the Corporation or a
7
<PAGE>
division thereof or any corporation which was, at the time of grant of such
Option, a Subsidiary Corporation or Parent Corporation thereof (or a
corporation or a Parent or Subsidiary Corporation of such corporation
issuing or assuming the Option in a transaction to which Section 424 (a) of
the Code applies) or an Affiliated Entity, or within three (3) months after
the termination of such Optionee' s employment, other than for cause, or if
the Optionee's employment shall terminate by reason of Disability or, in
the case of Nonqualified Stock Options, retirement, all Options theretofore
granted to such Optionee or transferred by such Optionee (as provided in
Section 8(i)), to the extent otherwise exercisable at the time of death or
termination of employment, may, unless earlier terminated in accordance
with their terms, be exercised by the Optionee or by the Optionee's estate
or by a person who acquired the right to exercise such Option by bequest or
inheritance or otherwise by reason of the death or Disability of the
Optionee, or by a transferee (as provided in Section 8 (i) ), at any time
within one year after the date of death, Disability or retirement of the
Optionee.
(i) NONTRANSFERABILITY OF OPTIONS. Except as provided in this Section
8(i), no Option granted hereunder shall be transferable by the Optionee to
whom granted, other than by will or the laws of descent and distribution,
and the Option may be exercised during the lifetime of such Optionee only
by the Optionee or such Optionee's guardian or legal representative. To the
extent the Option Agreement so provides, and subject to such conditions as
the Committee may prescribe, an Optionee may, upon providing written notice
to the General Counsel of the Corporation, elect to transfer the
Nonqualified Stock Options granted to such Optionee pursuant to such
agreement, without consideration therefor, to members of his or her
"immediate family" (as defined below), to a trust or trusts maintained
solely for the benefit of the Optionee and/or the members of his or her
immediate family, or to a partnership or partnerships whose only partners
are the Optionee and/or the members of his or her immediate family. Any
purported assignment, alienation, pledge, attachment, sale, transfer, or
encumbrance that does not qualify as a permissible transfer under this
Section 8(1) shall be void and unenforceable against the Plan and the
Corporation. For purposes of this Section 8(i), the term "immediate family"
shall mean, with respect to a particular Optionee, the Optionee's spouse,
children or grandchildren, and such other persons as may be determined by
the Committee. The terms of any such Option and the Plan shall be binding
upon a permissible transferee, and the beneficiaries, executors,
administrators, heirs and successors of the Optionee and, as applicable, a
permissible
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<PAGE>
transferee.
(j) EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of Common
Stock through the declaration of stock or cash dividends, or
recapitalization resulting in stock splits, or combinations or
exchanges of such shares, or other corporate transactions affecting
the capitalization of the Corporation, the aggregate number of shares
of Common Stock available for Options, the aggregate number of shares
of Common Stock available for distribution under the Plan to any
single individual with respect to Options granted hereunder, the
number of such shares covered by outstanding Options, and the price
per share of such Options shall be proportionately adjusted by the
Committee to reflect any increase or decrease in the number of issued
shares of Common Stock; provided, however, that any fractional shares
resulting from such adjustment shall be rounded to the nearest whole
share. In the event of any other extraordinary corporate transaction,
including but not limited to distributions of cash or other property
to the Corporation's shareholders, the Committee may equitably adjust
outstanding Options as it deems appropriate.
(2) In the event of the proposed dissolution or liquidation of
the Corporation, in the event of any corporate separation or division,
including, but not limited to, split-up, split-off or spin-off, or in
the event of a merger or consolidation of the Corporation with another
corporation, the Committee may provide that the holder of each Option
then exercisable shall have the right to exercise such Option (at its
then Option Price) solely for the kind and amount of shares of stock
and other securities, property, cash or any combination thereof
receivable upon such dissolution, liquidation, or corporate separation
or division, or merger or consolidation by a holder of the number of
shares of Common Stock for which such Option might have been exercised
immediately prior to such dissolution, liquidation, or corporate
separation or division, or merger or consolidation; or the Committee
may provide, in the alternative, that each Option granted under the
Plan shall terminate as of a date to be fixed by the Committee;
provided, however, that not less than thirty (30) days' written notice
of the date so fixed shall be given to each Optionee, who shall have
the right, during the period of thirty (30) days preceding such
termination, to exercise the Options (unless earlier terminated in
accordance with their terms) as to all or any part of the shares of
Common Stock covered thereby, including shares as to which such
Options would not otherwise be exercisable; provided, further, that
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<PAGE>
failure to provide such notice shall not invalidate or affect the
action with respect to which such notice was required.
(3) If while unexercised Options remain outstanding under the
Plan --
(i) any corporation, person or other entity (other than the
Corporation) makes a tender or exchange offer for shares of the
Common Stock pursuant to which purchases are made ("Offer"), or
(ii) the stockholders of the Corporation approve a
definitive agreement to merge or consolidate the Corporation with
or into another corporation or to sell or otherwise dispose of
all or substantially all of its assets, or adopt a plan of
liquidation, or
(iii) the "beneficial ownership" (as defined in Rule 13d-3
under the Exchange Act) of securities representing more than 15%
of the combined voting power of the Corporation is acquired by
any "person" as defined in section 13(d) and 14(d) of the
Exchange Act, or
(iv) during any period of two consecutive years, individuals
who at the beginning of such period were members of the Board
cease for any reason to constitute at least a majority thereof
(unless the election, or the nomination for election by the
Corporation's stockholders, of each new director was approved by
a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period),
then from and after the date of the first purchase of Common Stock
pursuant to such Offer, or the date of any such stockholder approval
or adoption, or the date on which public announcement of the
acquisition of such percentage shall have been made, or the date on
which the change in the composition of the Board set forth above shall
have occurred, whichever is applicable (the applicable date being
referred to hereinafter as the "Acceleration Date") , all Options
shall be exercisable in full, whether or not otherwise exercisable.
Following the Acceleration Date, the Committee shall, in the case of a
merger, consolidation or sale or disposition of assets, promptly make
an appropriate adjustment to the number and class of shares of Common
Stock available for Options, and to the amount and kind of shares or
other securities or property receivable upon exercise of any
outstanding Options after the effective date of such
10
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transaction, and the price thereof.
(4) Paragraphs (2) and (3) of this Section 8(j) shall not apply
to a merger or consolidation in which the Corporation is the surviving
corporation and shares of Common Stock are not converted into or
exchanged for stock, securities of any other corporation, cash or any
other thing of value. Notwithstanding the preceding sentence, in case
of any consolidation or merger of another corporation into the
Corporation in which the Corporation is the surviving corporation and
in which there is a reclassification or change (including a change to
the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from par value to no par
value, or as a result of a subdivision or combination, but including
any change in such shares into two or more classes or series of
shares), the Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option solely for
the kind and amount of shares of stock and other securities (including
those of any new direct or indirect parent of the Corporation),
property, cash or any combination thereof, receivable upon such
reclassification, change, consolidation or merger by the holder of the
number of shares of Common Stock for which such Option might have been
exercised.
(5) In the event of a change in the Common Stock of the
Corporation as presently constituted, which is limited to a change of
all of its authorized shares with par value into the same number of
shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Common Stock
within the meaning of the Plan.
(6) To the extent that the foregoing adjustments relate to stock
or securities of the Corporation, such adjustments shall be made by
the Committee, whose determination in that respect shall be final,
binding and conclusive, provided that each Incentive Stock Option
granted pursuant to this Plan shall not be adjusted in a manner that
causes such option to fail to continue to qualify as an Incentive
Stock Option within the meaning of Section 422 of the Code.
(7) Except as hereinbefore expressly provided in this Section
8(j), the Optionee shall have no rights by reason of any subdivision
or consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or spin-off of assets
11
<PAGE>
or stock of another corporation; and any issue by the Corporation of
shares of stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares
of Common Stock subject to the Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structures or to merge or to
consolidate or to dissolve, liquidate or sell, or transfer all or part
of its business or assets.
(k) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option
shall have no rights as a stockholder with respect to any shares covered by
the Option until the date of the issuance of a stock certificate to him for
such shares. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 8(j)
hereof.
(1) RIGHTS AS AN EMPLOYEE. Nothing in the Plan or in any instrument
executed pursuant to the Plan will confer upon any Optionee any right to
continue in the employ of the Corporation or affect the right of the
Corporation to terminate the employment of any Optionee at any time with or
without cause.
(m) OTHER PROVISIONS. The Option Agreements authorized under the Plan
shall contain such other provisions, including, without limitation, (i) the
imposition of restrictions upon the exercise of an Option, and (ii) in the
case of an Incentive Stock Option, the inclusion of any condition not
inconsistent with such Option qualifying as an Incentive Stock Option, as
the Committee shall deem advisable.
9. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES.
If the Committee shall so require, as a condition of exercise, each
Optionee shall agree that --
(a) no later than the date of exercise of any Option granted
hereunder, the Optionee will pay to the Corporation or make arrangements
satisfactory to the Committee regarding payment of any federal, state or
local taxes of any kind required by law to be withheld upon the exercise of
such Option, and
(b) the Corporation shall, to the extent permitted or
12
<PAGE>
required by law, have the right to deduct federal, state and local and
employment taxes of any kind required by law to be withheld upon the exercise of
such Option from any payment of any kind required by law to be withheld upon the
exercise of such Option from any payment of any kind otherwise due to the
Optionee.
10. TERM OF PLAN.
Options may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the date the Plan is adopted by the Board, or the
date the Plan is approved by the stockholders of the Corporation, whichever is
earlier.
11. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan; provided, however, that no amendment that requires
stockholder approval under applicable Delaware law, under the rules or
regulations of any securities exchange or regulatory agency, or in order for the
Plan to continue to comply with Rule 16b-3 or, if applicable, to comply with the
exception for qualified performance-based compensation under Code Section 162
(in) , or in order for Options intended to constitute Incentive Stock Options to
satisfy the requirements of Section 422 of the Code shall be effective unless
the same shall be approved by the requisite vote of the stockholders of the
Corporation. Except as provided in Section 8 hereof, no suspension, termination,
modification or amendment of the Plan may adversely affect any Option previously
granted, unless the written consent of the Optionee or, as applicable, a
permissible transferee (as provided in Section 8(i)) is obtained.
12. INTERPRETATION.
The Plan is designed and intended to comply with Rule 16b-3 and, to the
extent applicable, Sections 162(m) and 422 of the Code, and all provisions
hereof shall be construed in a manner to so comply.
13. APPROVAL AND RATIFICATION BY STOCKHOLDERS.
The Plan shall take effect as set forth in Section 16 upon its adoption by
the Board of Directors, but shall be subject to its approval and ratification by
the holders of a majority of the issued and outstanding shares of Common Stock
of the Corporation, which approval and ratification must occur within twelve
months after the date that the Plan is adopted by the Board.
13
<PAGE>
14. EFFECT OF HEADINGS.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
15. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
16. EFFECTIVE DATE OF PLAN.
The effective date of the Plan is the date the Plan is adopted by the
Board.
14
<PAGE>
NTL INCORPORATED
1993 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JUNE 3, 1997)
1. PURPOSE; CONSTRUCTION.
The purpose of this NTL Incorporated 1993 Non-Employee Directors Stock
Option Plan, as amended and restated effective June 3, 1997 (the "Plan"), is to
encourage stock ownership by non-employee directors of NTL Incorporated (the
"Corporation") in order to increase their identification with the interests of
the Corporation's shareholders, and to encourage such directors to remain in the
service of the Corporation and to put forth maximum efforts for the success of
the business.
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "BOARD" shall mean the Board of Directors of the Corporation.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the common stock, par value $.01 per share,
of the Corporation.
(d) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or that has lasted or
can be expected to last for a continuous period of not less than twelve (12)
months.
(e) "FAIR MARKET VALUE" per share as of a particular date shall mean (i) if
the Common Stock is then traded on an over-the-counter market, the average of
the closing bid and asked prices for the Common Stock in such over-the-counter
market on such date or on the last preceding date on which there was a sale of
such Common Stock in such market, (ii) if the Common Stock is then admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other comparable quotation system and has been designated
as a National Market System ("NMS") security, or if the Common Stock is then
listed on a national securities exchange, the closing sales price per share on
such date or on the last preceding date on which there was a sale of such Common
Stock on such exchange, or (iii) if the Common Stock is not then traded in an
over-the-counter market, admitted to quotation on NASDAQ or other comparable
quotation system, or listed on a national securities exchange, such value as the
Committee in its discretion may determine.
(f) "OPTION" shall mean a stock option granted pursuant to the Plan.
<PAGE>
(g) "OPTIONEE" shall mean a person to whom an Option has been granted under
the Plan.
3. ADMINISTRATION.
The Plan shall be administered by the Compensation and Option Committee
(the "Committee") established by the Board.
The Committee shall have the powers vested in it by the terms of the Plan,
such powers to include the authority to prescribe the form of the agreements
embodying awards of Options made under the Plan. The Committee shall, subject to
and not inconsistent with the express provisions of the Plan, have the authority
to administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to
prescribe, amend and rescind rules and regulations relating to the Plan; and to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
The Committee may delegate to one or more of its members or to one or more
agents such administrative duties as it may deem advisable, and the Committee or
any person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan.
The Board shall fill all vacancies, however caused, in the Committee. The
Board may from time to time appoint additional members to the Committee, and may
at any time remove one or more Committee members and substitute others. One
member of the Committee may be selected by the Board as chairman. The Committee
shall hold its meetings at such times and places as it shall deem advisable. All
determinations of the Committee shall be made by a majority of its members
either present in person or participating by conference telephone at any meeting
or by written consent. The Committee may appoint a secretary and make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
4. ELIGIBILITY.
Each member of the Board who is not an employee of the Corporation or any
of its affiliates (a "Non-Employee Director") shall be granted Options in
accordance with Section 6 hereof. The adoption of this Plan shall not be deemed
to give any director any right to be granted an Option to purchase shares of
Common Stock, other than in accordance with the terms of this Plan.
2
<PAGE>
5. STOCK.
The stock subject to Options granted hereunder shall be shares of the
Corporation's Common Stock. Such shares may, in whole or in part, be authorized
but unissued shares or shares that shall have been or that may be reacquired by
the Corporation. The aggregate number of shares of Common Stock as to which
Options may be granted from time to time under the Plan shall not exceed
320,000. The limitation established by the preceding sentence shall be subject
to adjustment as provided in Section 6(k) hereof.
In the event that any outstanding Option under the Plan for any reason
expires or is cancelled, surrendered or otherwise terminated without having been
exercised in full, the shares of Common Stock allocable to the unexercised
portion of such Option shall (unless the Plan shall have been terminated) become
available for subsequent grants of Options under the Plan.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted pursuant to the Plan shall be evidenced by a written
agreement between the Corporation and the Optionee in such form as the Committee
shall prescribe from time to time, which agreement shall comply with and be
subject to the following terms and conditions:
(a) INITIAL FORMULA GRANTS. On May 26, 1993 the ("Initial Grant Date"),
each Non-Employee Director as of such date shall be granted automatically,
without action by the Committee, an Option to purchase 34,667 shares of Common
Stock. In addition, each Non-Employee Director who, after the Initial Grant Date
but prior to June 3, 1997, is elected to the Board for the first time will, at
the time such Director is elected and duly qualified, be granted automatically,
without action by the Committee, an Option to purchase 34,667 shares of Common
Stock.
(b) FORMULA GRANTS TO CONTINUING DIRECTORS. On the date of each of the
first, second and third annual meetings of stockholders at least six months
subsequent to the Initial Grant Date, each continuing Director (i.e., a
Non-Employee Director not being elected by stockholders for the first time) will
be granted automatically, without action by the Committee, an Option to purchase
1,333 shares of Common Stock.
(c) DISCRETIONARY GRANTS. After the third annual meeting of stockholders at
least six months subsequent to the Initial Grant Date, the remaining options
available for grant under this plan shall be granted to the Non-Employee
Directors in the amounts and on such date as determined by the Committee or by
the Board of Directors.
(d) TYPE OF OPTION. Each Option granted under the Plan shall be a stock
option which is not intended to qualify as an "incentive stock option" under
Section 422 of the Code.
3
<PAGE>
(e) OPTION PRICE. The Option Price of each Option granted under the Plan
shall be equal to one hundred percent (100%) of the Fair Market Value of the
shares of Common Stock subject to such Option on the date of grant thereof. The
Option Price shall be subject to adjustment as provided in Section 6(k) hereof.
(f) MEDIUM AND TIME OF PAYMENT. Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
specifying the number of shares to be purchased, accompanied by payment of the
purchase price. Payment of the purchase price may be made in cash (including
cash equivalents, such as by certified or bank check payable to the
Corporation), by delivery of unrestricted shares of Common Stock that have been
owned by the Optionee or, as applicable, a permissible transferee (as provided
in Section 6(j)) for at least six months, or in any combination of the
foregoing.
(g) TERM AND EXERCISE OF OPTIONS. Options granted under the Plan shall
become exercisable as to twenty percent (20%) of the shares subject thereto on
the date of grant thereof and as to an additional twenty percent (20%) of the
shares subject thereto on each of the first, second, third and fourth
anniversaries of the date of grant thereof. An Option shall be exercisable for a
period of ten (10) years from the date of grant of such Option; provided,
however, that, except as provided in this Section 6(g), the exercise period
shall be subject to earlier termination as provided in Sections 6(h) and 6(i)
hereof. An Option may be exercised, as to any or all full shares of Common Stock
as to which the Option has become exercisable, by giving written notice of such
exercise to the Committee, or to such individual(s) as the Committee may from
time to time designate. Notwithstanding anything in the Plan to the contrary, in
the case of the termination of service of an Optionee as a director, the
Committee or, to the extent determined necessary to satisfy the requirements for
an exemption from Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Board, in its sole discretion, may determine
that all or a portion of the Options that are then held by the Optionee (or, as
applicable, by a permissible transferee of such Options (as provided in Section
6(j)) shall, to the extent not then exercisable, become exercisable in
accordance with the first sentence of this Section 6(g) or as provided in
Section 6(k) and that all or a portion of the Options held by the Optionee or by
a transferee at the time of the Optionee's termination of service may be
exercised by the Optionee or, as applicable, by a transferee (or, as applicable,
by their beneficiaries, executors, administrators, heirs and successors) during
such period as determined by the Committee (or, as applicable, the Board),
provided that such period shall terminate no earlier than the end of the
exercise period that otherwise would apply under Section 6(h) or Section 6(i)
following such termination of service under the Plan and no later than the end
of the applicable Option term.
(h) TERMINATION. Except as provided in this Section 6(h) and in Section
6(i) hereof, an Option may not be exercised by the Optionee to whom it was
granted or by a transferee to whom such Option was transferred (as provided in
Section 6(j)) unless the Optionee is then in service as a director of the
Corporation and unless the Optionee has remained continuously in the
Corporation's service as a director since the date of grant of the Option. In
the event
4
<PAGE>
that the service of an Optionee as a director shall terminate (other than by
reason of death, Disability or retirement), all Options granted to such Optionee
or transferred by such Optionee (as provided in Section 6(j)) that are
exercisable at the time of such termination may, unless earlier terminated in
accordance with their terms, be exercised by the Optionee or by a transferee
within three (3) months after such termination; provided, however, that if the
service of an Optionee as a director of the Corporation shall terminate for
cause, all Options theretofore granted to such Optionee or transferred by such
Optionee (as provided in Section 6(j)), shall, to the extent not theretofore
exercised, terminate forthwith. Nothing in the Plan or in any Option granted
pursuant hereto shall confer upon an individual any right to continue in service
as a director of the Corporation or interfere in any way with the right of the
Corporation to terminate such service.
(i) DEATH, DISABILITY OR RETIREMENT OF OPTIONEE. If an Optionee shall die
while in service as a director of the Corporation or within three (3) months
after the termination of such Optionee's service, other than for cause, or if
the Optionee's service as a director shall terminate by reason of Disability or
retirement, all Options theretofore granted to such Optionee or transferred by
such Optionee (as provided in Section 6(j)), to the extent otherwise exercisable
at the time of death or termination of service, may, unless earlier terminated
in accordance with their terms, be exercised by the Optionee or by the
Optionee's estate or by a person who acquired the right to exercise such Option
by bequest or inheritance or otherwise by reason of the death or Disability of
the Optionee, or by a transferee at any time within one year after the date of
death, Disability or retirement of the Optionee.
(j) NONTRANSFERABILITY OF OPTIONS. Except as provided in this Section 6(j),
no Option granted hereunder shall be transferable by the Optionee to whom
granted, other than by will or the laws of descent and distribution, and the
Option may be exercised during the lifetime of such Optionee only by the
Optionee or such Optionee's guardian or legal representative. To the extent the
Option Agreement so provides, and subject to such conditions as the Committee
may prescribe (provided such prescription of conditions does not cause the
acquisition or disposition of securities hereunder to fail to qualify for an
exemption under Section 16(b) of the Exchange Act), an Optionee may, upon
providing written notice to the General Counsel of the Corporation, elect to
transfer the stock options granted to such Optionee pursuant to such agreement,
without consideration therefor, to members of his or her "immediate family" (as
defined below), to a trust or trusts maintained solely for the benefit of the
Optionee and/or the members of his or her immediate family, or to a partnership
or partnerships whose only partners are the Optionee and/or the members of his
or her immediate family. Any purported assignment, alienation, pledge,
attachment, sale, transfer, or encumbrance that does not qualify as a
permissible transfer under this Section 6(j), shall be void and unenforceable
against the Plan and the Corporation. For purposes of this Section 6(j), the
term "immediate family" shall mean, with respect to a particular Optionee, the
Optionee's spouse, children or grandchildren, and such other persons as may be
determined by the Committee. The terms of any such Option and the Plan shall be
binding upon a permissible transferee, and the beneficiaries, executors,
administrators, heirs and successors of the Optionee and, as applicable, a
permissible transferee.
5
<PAGE>
(k) EFFECT OF CERTAIN CHANGES. (1) If there is any change in the number of
shares of Common Stock through the declaration of stock or cash dividends, or
recapitalization resulting in stock splits, or combinations or exchanges of such
shares, the aggregate number of shares of Common Stock available for Options,
the number of such shares covered by outstanding Options, and the exercise price
per share of such Options shall be proportionately adjusted by the Committee to
reflect any increase or decrease in the number of issued shares of Common Stock;
provided, however, that any fractional shares resulting from such adjustment
shall be rounded to the nearest whole share. In the event of any other
extraordinary corporate transaction, including, but not limited to,
distributions of cash or other property to the Corporation's shareholders, the
Committee shall equitably adjust outstanding Options to preserve, but not
increase, the benefits of such Options.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, in the event of any corporate separation or division,
including, but not limited to, split-up, split-off or spin-off, or in the
event of a merger or consolidation of the Corporation with another
corporation, the Committee shall provide that the holder of each Option
then exercisable shall have the right to exercise such Option (at its then
Option Price) solely for the kind and amount of shares, of stock and other
securities, property, cash or any combination thereof receivable upon such
dissolution, liquidation, or corporate separation or division, or merger or
consolidation by a holder of the number of shares of Common Stock for which
such Option might have been exercised immediately prior to such
dissolution, liquidation, or corporate separation or division, or merger or
consolidation.
(3) If while unexercised Options remain outstanding under the Plan--
(i) any corporation, person or other entity (other than the
Corporation) makes a tender or exchange offer for shares of Common
Stock pursuant to which purchases are made ("Offer"), or
(ii) the stockholders of the Corporation approve a definitive
agreement to merge or consolidate the Corporation with or into another
corporation or to sell or otherwise dispose of all or substantially
all of its assets, or adopt a plan of liquidation, or
(iii) the "beneficial ownership" (as defined in Rule 13d-3 under
the Exchange Act) of securities representing more than 15% of the
combined voting power of the Corporation is acquired by any "person"
as defined in sections 13(d) and 14(d) of the Exchange Act, or
(iv) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for
any reason to constitute at least a majority thereof (unless the
election, or the nomination for election by the Corporation's
stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at
the beginning of such
6
<PAGE>
period),
then from and after the date of the first purchase of Common Stock pursuant
to such Offer, or the date of any such stockholder approval or adoption, or
the date on which public announcement of the acquisition of such percentage
shall have been made, or the date on which the change in the composition of
the Board set forth above shall have occurred, whichever is applicable (the
applicable date being referred to hereinafter as the "Acceleration Date"),
all Options shall be exercisable in full, whether or not otherwise
exercisable. Following the Acceleration Date, the Committee shall, in the
case of a merger, consolidation or sale or disposition of assets, promptly
make an appropriate adjustment to the number and class of shares of Common
Stock available for Options, and to the amount and kind of shares or other
securities or property receivable upon exercise of any outstanding Options
after the effective date of such transaction, and the price thereof.
(4) Paragraphs (2) and (3) of this Section 6(k) shall not apply to a
merger or consolidation in which the Company is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or
merger of another corporation into the Corporation in which the Corporation
is the surviving corporation and in which there is a reclassification or
change (including a change to the right to receive cash or other property)
of the shares of Common Stock (other than a change in par value, or from
par value to no par value, or as a result of a subdivision or combination,
but including any change in such shares into two or more classes or series
of shares), the Committee shall provide that the holder of each Option then
exercisable shall have the right to exercise such Option solely for the
kind and amount of shares of stock and other securities (including those of
any new direct or indirect parent of the Corporation), property, cash or
any combination thereof receivable upon such reclassification, change,
consolidation or merger by the holder of the number of shares of Common
Stock for which such Option might have been exercised.
(5) In the event of a change in the Common Stock of the Corporation as
presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any
such change shall be deemed to be the Common Stock within the meaning of
the Plan.
(6) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
(7) Except as hereinbefore expressly provided in this Section 6(k),
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
of any class or by reason of any dissolution, liquidation, merger, or
consolidation
7
<PAGE>
or spinoff of assets or stock of another corporation; and any issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to the Option. The grant of an Option pursuant to the
Plan shall not affect in any way the right or power of the Corporation to
make adjustments, reclassifications, reorganizations or changes of its
capital or business structures or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or part of its business or
assets.
(l) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an Option shall
have no rights as a stockholder with respect to any shares covered by the Option
until the date of the issuance of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 6(k) hereof.
(m) OTHER PROVISIONS. The Option Agreements authorized under the Plan shall
contain such other provisions, including, without limitation, the imposition of
restrictions upon the exercise of an Option, unless the inclusion of such
provisions would cause the acquisition or disposition of shares of Common Stock
in connection with such Option Agreements to fail to qualify for an exemption
from Section 16(b) of the Exchange Act.
7. TERM OF PLAN.
Options may be granted pursuant to the Plan from time to time within a
period of ten (10) years from the date the Plan is adopted by the Board, or the
date the Plan is approved by the stockholders of the Corporation, whichever is
earlier.
8. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan; provided, however, that no amendment that requires
stockholder approval under applicable Delaware law, under the rules or
regulations of any securities exchange or regulatory agency, or in order for the
Plan to continue to comply with Rule 16b-3 (as promulgated under Section 16(b)
of the Exchange Act) shall be effective unless the same shall be approved by the
requisite vote of the stockholders of the Corporation. Except as provided in
Section 6 hereof, no suspension, termination, modification or amendment of the
Plan may adversely affect any Option previously granted, unless the written
consent of the Optionee or, as applicable, a permissible transferee (as provided
in Section 6(j)) is obtained.
8
<PAGE>
9. APPROVAL AND RATIFICATION BY STOCKHOLDERS.
The Plan shall take effect as set forth in Section 12 upon its adoption by
the Board of Directors, but shall be subject to its approval and ratification by
the holders of a majority of the issued and outstanding shares of Common Stock
of the Corporation, which approval and ratification must occur within twelve
months after the date that the Plan is adopted by the Board.
10. EFFECT OF HEADINGS.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
11. GOVERNING LAW.
The Plan shall be governed by the laws of the State of Delaware.
12. EFFECTIVE DATE OF PLAN.
The effective date of the Plan is the date the Plan is adopted by the
Board.
9
EXHIBIT 11
NTL INCORPORATED
CALCULATION OF NET (LOSS) PER SHARE
<TABLE>
<CAPTION>
Weighted Average Number of Shares
------------------------------------------------------------------
Date Description Total Year Ended Year Ended Year Ended
Issued of Issuance Outstanding 31-Dec-97 31-Dec-96 31-Dec-95
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
12/31/94 Common Stock 30,180,114 30,180,114 30,180,114 30,180,114
01/01/95 Common Stock 20 20 20 20
01/12/95 Common Stock 200 200 200 193
02/02/95 Common Stock 2,075 2,075 2,075 1,887
02/23/95 Common Stock 556 556 556 474
04/04/95 Common Stock 1,333 1,333 1,333 990
06/08/95 Common Stock 2,667 2,667 2,667 1,505
08/04/95 Common Stock 200 200 200 82
08/07/95 Common Stock 417 417 417 167
08/21/95 Common Stock 156 156 156 56
09/05/95 Common Stock 13,333 13,333 13,333 4,274
02/13/96 Common Stock 2,223 2,223 1,956
02/22/96 Common Stock 533 533 456
02/28/96 Common Stock 4,919 4,919 4,126
03/06/96 Common Stock 1,133 1,133 929
03/12/96 Common Stock 5,925 5,925 4,759
03/20/96 Common Stock 3,450 3,450 2,696
03/25/96 Common Stock 75,000 75,000 57,582
04/11/96 Common Stock 10,419 10,419 7,515
04/26/96 Common Stock 25,000 25,000 17,008
05/30/96 Common Stock 1,333 1,333 783
06/13/96 Common Stock 128,793 128,793 70,731
06/14/96 Common Stock 132,000 132,000 72,131
08/29/96 Common Stock 1,415,000 1,415,000 599,249
11/06/96 Common Stock 44 44 7
11/25/96 Common Stock 1,112 1,112 109
12/26/96 Common Stock 5,500 5,500 75
12/27/96 Common Stock 2,000 2,000 22
12/31/96 Common Stock 50,667 50,667 0
01/14/97 Common Stock 1,000 962
01/17/97 Common Stock 4,489 4,280
01/21/97 Common Stock 23,332 20,914
02/06/97 Common Stock 223 183
03/26/97 Common Stock 1,500 1,151
05/30/97 Common Stock 900 530
06/20/97 Common Stock 1,001 532
06/25/97 Common Stock 5,334 2,762
07/10/97 Common Stock 17,967 8,565
09/16/97 Common Stock 3,533 1,026
09/26/97 Common Stock 28,666 7,540
10/03/97 Common Stock 200 49
10/15/97 Common Stock 8,239 1,738
10/16/97 Common Stock 2,250 468
12/10/97 Common Stock 556 32
12/18/97 Common Stock 719 26
12/22/97 Common Stock 2,000 49
12/26/97 Common Stock 2,000 27
01/08/98 Common Stock 40,137 0
------------------------------------------------------------------
Total 32,210,169 32,116,957 31,041,206 30,189,763
==================================================================
Loss before extraordinary item ($328,557,000) ($254,454,000) ($90,785,000)
Preferred stock dividend (11,978,000) 0 0
--------------------------------------------------
(340,535,000) (254,454,000) (90,785,000)
Loss from early extinguishment of debt (4,500,000) 0 0
--------------------------------------------------
Loss available to common shareholders ($345,035,000) ($254,454,000) ($90,785,000)
==================================================
Basic and diluted net (loss) per common share:
(Loss) before extraordinary item ($10.60) ($8.20) ($3.01)
Extraordinary item (0.14) 0.00 0.00
--------------------------------------------------
Net (loss) per common share ($10.74) ($8.20) ($3.01)
==================================================
Note: Adjusted to give retroactive effect to the 4-for-3 stock split by way of a stock dividend
paid on August 11, 1995.
</TABLE>
EXHIBIT 21
SUBSIDIARIES OF NTL INCORPORATED
All of the corporations listed below were organized in the United Kingdom.
CableTel Cardiff Ltd.
CableTel Central Hertfordshire Limited
CableTel Glasgow
CableTel Hertfordshire Limited
CableTel Herts and Beds Limited
CableTel Investments Limited
CableTel Kirklees
CableTel Limited
CableTel Newport
CableTel North Bedfordshire Limited
CableTel Northern Ireland Limited
CableTel Scotland Ltd.
CableTel South Wales Ltd.
CableTel Surrey and Hampshire Limited
CableTel Telecom Supplies Limited
CableTel (UK) Limited
CableTel West Glamorgan Ltd.
CableTel West Riding Limited
Chamber Online Limited
Columbia Management Limited
Digital Television Network Limited
DTELS Limited
Enablis Limited
Metro Hertfordshire Limited
Metro South Wales Limited
National Transcommunications Limited
NTL Group Limited
NTL Insurance Limited
NTL Internet Limited
NTL Investment Holdings Limited
NTL Limited
NTL Networks Limited
NTL Trustees Limited
Prospectre Limited
Secure Backup Systems Limited
<PAGE>
All of the corporations listed below were incorporated in Delaware:
CableTel Programming, Inc.
CableTel Ventures Limited
Cellular Paging, Inc.
L.D. Data, Inc.
NTL International Services, Inc.
NTL (UK) Group, Inc.
OCOM Corporation
OCOM New York, Inc.
OCOM Pennsylvania, Inc.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the (i) Registration Statements
(Forms S-8 No. 33-41527, No. 33-55446, No. 33-55448, No. 33-78848, No. 33-78844,
No. 333-44763, No. 333-44765, No. 333-13007, No. 33-78834, No. 33-95270, No.
333-13015 and No. 333-07879) of NTL Incorporated (formerly International
CableTel Incorporated (the "Company")) and (ii) Registration Statements (Forms
S-3 No. 333-00118, No. 33-92792, No. 333-07879, and No. 333-16751) of the
Company and in the related Prospectuses of our report dated March 20, 1998, with
respect to the consolidated financial statements and schedule of the Company
included in the Annual Report (Form 10-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
New York, New York
March 26, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1997 ANNUAL FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 98,902,000
<SECURITIES> 4,998,000
<RECEIVABLES> 74,078,000
<ALLOWANCES> (8,056,000)
<INVENTORY> 0
<CURRENT-ASSETS> 67,232,000
<PP&E> 1,972,749,000
<DEPRECIATION> (215,764,000)
<TOTAL-ASSETS> 2,421,639,000
<CURRENT-LIABILITIES> 289,070,000
<BONDS> 2,015,057,000
108,534,000
0
<COMMON> 322,000
<OTHER-SE> (61,990,000)
<TOTAL-LIABILITY-AND-EQUITY> 2,421,639,000
<SALES> 0
<TOTAL-REVENUES> 491,775,000
<CGS> 0
<TOTAL-COSTS> 301,644,000
<OTHER-EXPENSES> 169,133,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 202,570,000
<INCOME-PRETAX> (344,148,000)
<INCOME-TAX> 15,591,000
<INCOME-CONTINUING> (328,557,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (4,500,000)
<CHANGES> 0
<NET-INCOME> (333,057,000)
<EPS-PRIMARY> (10.74)
<EPS-DILUTED> (10.74)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1997 INTERIM FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 390,400,000
<SECURITIES> 39,440,000
<RECEIVABLES> 99,789,000
<ALLOWANCES> (4,847,000)
<INVENTORY> 0
<CURRENT-ASSETS> 23,996,000
<PP&E> 1,820,584,000
<DEPRECIATION> (203,869,000)
<TOTAL-ASSETS> 2,613,651,000
<CURRENT-LIABILITIES> 477,556,000
<BONDS> 1,983,071,000
104,931,000
0
<COMMON> 322,000
<OTHER-SE> (21,151,000)
<TOTAL-LIABILITY-AND-EQUITY> 2,613,651,000
<SALES> 0
<TOTAL-REVENUES> 348,373,000
<CGS> 0
<TOTAL-COSTS> 217,087,000
<OTHER-EXPENSES> 122,934,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152,095,000
<INCOME-PRETAX> (278,277,000)
<INCOME-TAX> 21,485,000
<INCOME-CONTINUING> (256,792,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (256,792,000)
<EPS-PRIMARY> (8.26)<F1>
<EPS-DILUTED> (8.26)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1997 INTERIM FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 513,065,000
<SECURITIES> 87,250,000
<RECEIVABLES> 94,912,000
<ALLOWANCES> (4,915,000)
<INVENTORY> 0
<CURRENT-ASSETS> 29,371,000
<PP&E> 1,767,949,000
<DEPRECIATION> (177,300,000)
<TOTAL-ASSETS> 2,760,814,000
<CURRENT-LIABILITIES> 262,154,000
<BONDS> 2,192,219,000
105,039,000
0
<COMMON> 321,000
<OTHER-SE> 113,117,000
<TOTAL-LIABILITY-AND-EQUITY> 2,760,814,000
<SALES> 0
<TOTAL-REVENUES> 221,639,000
<CGS> 0
<TOTAL-COSTS> 141,251,000
<OTHER-EXPENSES> 82,210,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,117,000
<INCOME-PRETAX> (178,104,000)
<INCOME-TAX> 4,669,000
<INCOME-CONTINUING> (173,435,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (173,435,000)
<EPS-PRIMARY> (5.56)<F1>
<EPS-DILUTED> (5.56)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1997 INTERIM FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 706,378,000
<SECURITIES> 81,255,000
<RECEIVABLES> 99,318,000
<ALLOWANCES> (4,289,000)
<INVENTORY> 0
<CURRENT-ASSETS> 25,948,000
<PP&E> 1,627,089,000
<DEPRECIATION> (145,552,000)
<TOTAL-ASSETS> 2,841,474,000
<CURRENT-LIABILITIES> 313,958,000
<BONDS> 2,156,532,000
101,697,000
0
<COMMON> 321,000
<OTHER-SE> 177,646,000
<TOTAL-LIABILITY-AND-EQUITY> 2,841,474,000
<SALES> 0
<TOTAL-REVENUES> 106,817,000
<CGS> 0
<TOTAL-COSTS> 70,756,000
<OTHER-EXPENSES> 38,317,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,609,000
<INCOME-PRETAX> (85,761,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (85,761,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (85,761,000)
<EPS-PRIMARY> (2.73)<F1>
<EPS-DILUTED> (2.73)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1996 ANNUAL FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 445,884,000
<SECURITIES> 0
<RECEIVABLES> 32,210,000
<ALLOWANCES> (3,870,000)
<INVENTORY> 0
<CURRENT-ASSETS> 66,817,000
<PP&E> 1,582,875,000
<DEPRECIATION> (123,347,000)
<TOTAL-ASSETS> 2,454,611,000
<CURRENT-LIABILITIES> 298,939,000
<BONDS> 1,732,168,000
0
0
<COMMON> 321,000
<OTHER-SE> 327,793,000
<TOTAL-LIABILITY-AND-EQUITY> 2,454,611,000
<SALES> 0
<TOTAL-REVENUES> 228,343,000
<CGS> 0
<TOTAL-COSTS> 144,315,000
<OTHER-EXPENSES> 114,992,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 137,032,000
<INCOME-PRETAX> (246,801,000)
<INCOME-TAX> (7,653,000)
<INCOME-CONTINUING> (254,454,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (254,454,000)
<EPS-PRIMARY> (8.20)<F1>
<EPS-DILUTED> (8.20)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1996 INTERIM FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 639,082,000
<SECURITIES> 0
<RECEIVABLES> 44,202,000
<ALLOWANCES> (2,527,000)
<INVENTORY> 0
<CURRENT-ASSETS> 28,554,000
<PP&E> 1,264,835,000
<DEPRECIATION> (88,414,000)
<TOTAL-ASSETS> 2,271,827,000
<CURRENT-LIABILITIES> 348,956,000
<BONDS> 1,682,956,000
0
0
<COMMON> 320,000
<OTHER-SE> 227,745,000
<TOTAL-LIABILITY-AND-EQUITY> 2,271,827,000
<SALES> 0
<TOTAL-REVENUES> 143,473,000
<CGS> 0
<TOTAL-COSTS> 91,567,000
<OTHER-EXPENSES> 80,673,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,368,000
<INCOME-PRETAX> (170,769,000)
<INCOME-TAX> (5,183,000)
<INCOME-CONTINUING> (175,952,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (175,952,000)
<EPS-PRIMARY> (5.73)<F1>
<EPS-DILUTED> (5.73)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1996 INTERIM FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 735,334,000
<SECURITIES> 0
<RECEIVABLES> 52,353,000
<ALLOWANCES> (2,590,000)
<INVENTORY> 0
<CURRENT-ASSETS> 35,749,000
<PP&E> 1,018,544,000
<DEPRECIATION> (66,003,000)
<TOTAL-ASSETS> 2,332,713,000
<CURRENT-LIABILITIES> 479,433,000
<BONDS> 1,575,657,000
0
0
<COMMON> 306,000
<OTHER-SE> 255,432,000
<TOTAL-LIABILITY-AND-EQUITY> 2,332,713,000
<SALES> 0
<TOTAL-REVENUES> 66,217,000
<CGS> 0
<TOTAL-COSTS> 43,698,000
<OTHER-EXPENSES> 51,852,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,406,000
<INCOME-PRETAX> (98,401,000)
<INCOME-TAX> (3,481,000)
<INCOME-CONTINUING> (101,882,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (101,882,000)
<EPS-PRIMARY> (3.36)<F1>
<EPS-DILUTED> (3.36)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM APPLICABLE
1996 INTERIM FINANCIAL STATEMENTS OF NTL INCORPORATED. THE SCHEDULE IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 661,945,000
<SECURITIES> 0
<RECEIVABLES> 10,929,000
<ALLOWANCES> (1,143,000)
<INVENTORY> 0
<CURRENT-ASSETS> 16,784,000
<PP&E> 766,268,000
<DEPRECIATION> (50,184,000)
<TOTAL-ASSETS> 1,592,693,000
<CURRENT-LIABILITIES> 139,796,000
<BONDS> 1,134,122,000
0
0
<COMMON> 303,000
<OTHER-SE> 292,074,000
<TOTAL-LIABILITY-AND-EQUITY> 1,592,693,000
<SALES> 0
<TOTAL-REVENUES> 18,434,000
<CGS> 0
<TOTAL-COSTS> 12,629,000
<OTHER-EXPENSES> 21,798,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,711,000
<INCOME-PRETAX> (42,682,000)
<INCOME-TAX> (42,000)
<INCOME-CONTINUING> (42,724,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,724,000)
<EPS-PRIMARY> (1.41)<F1>
<EPS-DILUTED> (1.41)<F1>
<FN>
<F1>RESTATED TO REFLECT THE ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO.128, "EARNINGS PER SHARE"
</FN>
</TABLE>
EXHIBIT 99.55
Radiocommunications Agency
Wireless Telegraphy Act 1949
RADIO FIXED ACCESS OPERATOR LICENCE
Licence no. PN/110838
Date of issue 3 November 1997 Fee payment date 30 November
1. This Licence authorises NTL (UK) Group Inc.
("the Licensee")
of Bristol House
1 Lakeside Road
Farnborough Aerospace Centre
Farnborough
Hampshire
GU14 6XP
to establish, install and use radio transmitting and receiving stations and/or
radio apparatus as described in the schedule(s) (hereinafter together called
"the Radio Equipment") subject to the terms set out below.
Licence Term
2. This Licence shal1 continue in force until revoked by the Secretary of State
or surrendered by the Licensee.
Licence Variation and Revocation
3. Pursuant to section 3A(4) of the Wireless Telegraphy Act 1949 (the 1949 Act),
the Secretary of State may not revoke or vary this licence under section 1(4) of
the 1949 Act save at the request or with the consent of the Licensee except:
(a) if there is no longer in force a Licence granted to the Licensee under
section 7 of the Telecommunications Act 1984;
(b) in accordance with paragraph 6 of this Licence;
(c) in accordance with section 3A (7) of the 1949 Act;
1
<PAGE>
(d) for reasons related to the management of the radio spectrum, provided
that in such case the power to revoke may only be exercised after one
year's notice is given in writing and after the Secretary of State has
considered any pertinent factors;
(e) if there has been a breach of any of the terms of this Licence or the
schedule(s) hereto.
Changes
4. This Licence may not be transferred.
5. The Licensee must give prior or immediate notice to the Secretary of State in
writing of any change in the details of the name and/or address recorded above.
Fees
6. The Licensee shall pay to the Secretary of State the relevant fee as provided
in section 2(1) of the Wireless Telegraphy Act 1949 and the Regulations made
thereunder:
(a) on or before the date of issue of this Licence; and/or
(b) on or before the fee payment date shown above each year, or on or
before such dates as shall be notified in writing to the Licensee,
failing which the Secretary of State may revoke this Licence.
Radio Equipment Use
7. The Licensee must ensure that the Radio Equipment is constructed and used
only in accordance with the provisions specified in the schedule(s). Any
proposal to amend any detail specified in the schedule(s) must be agreed with
the Secretary of State in advance and implemented only after this Licence has
been varied or reissued accordingly.
8. The Licensee must ensure that the Radio Equipment is operated in compliance
with the terms of this Licence and is used only by persons who have been
authorised in writing by the Licensee to do so and that such persons are made
aware of, and of the requirement to comply with, the terms of this Licence.
2
<PAGE>
Access and Inspection
9. The Licensee shall permit a person authorised by the Secretary of State:
(a) to have access to the Radio Equipment; and
(b) to inspect this Licence and the Radio Equipment,
at any and all reasonable times or, when in the opinion of that person an urgent
situation exists, at any time to ensure the Radio Equipment is being used in
accordance with the terms of this Licence.
Modification, Restriction and Closedown
10. A person authorised by the Secretary of State may require the Radio
Equipment, or any part thereof, to be modified or restricted in use, or
temporarily or permanently closed down immediately if in the opinion of the
person authorised by the Secretary of State:
(a) a breach of this Licence has occurred; and/or
(b) the use of the Radio Equipment is causing or contributing to undue
interference to the use of other authorised radio equipment.
11. The Secretary of State may in the event of a national or local state of
emergency being declared require the Radio Equipment to be modified or
restricted in use, or temporarily or permanently closed down either immediately
or on the expiry of such period as he may specify. He shall exercise this power
by a written notice served on the Licensee or by a general notice applicable to
holders of this class of Licence published by public broadcast or in the London,
Edinburgh and Belfast Gazettes.
Interpretation
12. In this Licence:
(a) the establishment, installation and use of the Radio Equipment shall
be interpreted as establishment and use of stations and installation
and use of apparatus for wireless telegraphy as specified in section 1
of the Wireless Telegraphy Act 1949;
3
<PAGE>
(b) the expression "undue interference" shall have the same meaning that
it has under the Wireless Telegraphy Act 1949;
(c) the expression "inspect" includes examine and test;
(d) the schedule(s) form(s) part of this Licence together with any
subsequent schedule(s) which the Secretary of State may issue as a
variation to this Licence at a later date; and
(e) the Interpretation Act 1978 shall apply to the Licence as it applies
to an Act of Parliament.
Issued on behalf of the Secretary of State for Trade and Industry.
Robert Emson
Public Networks Section
Radiocommunications Agency
4
<PAGE>
RADIO FIXED ACCESS OPERATOR LICENCE
SCHEDULE 1 TO LICENCE NUMBER PN/110838
DESCRIPTION OF RADIO EQUIPMENT COVERED BY THIS LICENCE
This schedule forms part of Licence no. PN/110838, issued to NTL (UK) Group
Inc., the Licensee on 3 November 1997, and describes the Radio Equipment covered
by the Licence and the purpose for which the Radio Equipment may be used.
1. Description of the Radio Equipment licensed
In this Licence the Radio Equipment means equipment used as:
a) radio fixed access base stations as detailed in subsequent schedules
to this Licence, which are connected to a telecommunications network;
b) network termination stations which gain fixed radio access to a
telecommunications network via a base station; and
c) repeater stations which relay information between the base station and
the network termination stations.
2. Purpose of the Radio Equipment
The Licensee shall install, maintain and use the Radio Equipment in such a way
that it forms part of a radio telecommunications network ("the Network"), in
which base stations connected to the Network communicate with network
termination stations by wireless telegraphy.
3. Approved Standards for the Radio Equipment
The Radio Equipment covered by this Licence is required to be type approved in
accordance with the relevant 3 - 11 GHz ETSI standard or its successor.
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4. Special conditions relating to the operation of the Radio Equipment
(a) The Licensee shall use the Network in such a way as to enable the provision
of any telecommunications service as defined in section 4(3) of the
Telecommunications Act 1984 to an area where at least 68 % of the population of
the United Kingdom live, by no later than 31 December 2002 and thereafter.
(b) During the period that this Licence remains in force and for 6 months
thereafter, the Licensee shall compile and maintain accurate records of:
(i) the following details relating to the network termination stations:
(a) postal address;
(b) National Grid Reference. (to 100 metres resolution);
(c) antenna height, type and bearing ETN;
(d) radio frequencies in operation;
(ii) a statement of the number of subscribing customers using the Network;
and
the Licensee must produce the above records when a person authorised by the
Secretary of State requires him to do so.
(c) The Licensee shall inform the Secretary of State of the address of the
premises at which this Licence and the information detailed at sub-paragraph (c)
above shall be kept.
(d) The Licensee must submit to the Secretary of State copies of the records
detailed in sub-paragraph (c) above at such intervals as the Secretary of State
shall notify to the Licensee.
(e) The Licensee shall, upon request, supply the Secretary of State or any
person authorised by him in that behalf with the name and address of any
subscribing customers to the Network, or shall require its agents to provide
such information on its behalf.
5. Site clearance requirements
(a) The Licensee shall ensure that the Radio Equipment is operated in accordance
with the relevant site clearance conditions for that type of equipment, and that
where appropriate, it is in possession of valid site clearance documentation
issued by the Radiocommunications
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Agency on behalf of the Secretary of State Site clearance is required for all
base stations and network termination stations except those incorporating
transmitters radiating not more than 17 dBW EIRP and with aerial systems, the
highest point of which is less than 30 metres above ground level or which does
not increase the height of an existing building by more than 5 metres (whichever
is the higher).
(b) The Licensee must not install Radio Equipment in any exclusion zone notified
by the Ministry of Defence without written authority having been given to the
Licensee by the Radiocommunications Agency on behalf of the Secretary of State.
TECHNICAL PERFORMANCE REQUIREMENTS
6. Frequencies of operation
The Radio Equipment shall be operated at frequencies between 10202 MHz and 10225
MHz paired with 10552 MHz and 10575 MHz in compliance with such co-ordination
and sharing procedures as may be considered necessary and notified by the
Radiocommunications Agency on behalf of the Secretary of State.
7. Bit rate
The radio connection between the base station and the customer's terminal unit
must be capable of providing a minimum bit rate of 144 kbit/s.
8. RE carrier spacing
The RF carrier spacing shall be in accordance with CEPT Recommendation
CEPT/ERC/REC 12-05
9. ITU Emission designation
7M00G7WWT
10. Maximum permissible EIRP for base stations
(a) The maximum EIRP (per carrier) is 25 dBW.
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11. Maximum permissible EIRP for repeater stations
(a) The maximum EIRP (per carrier) is 33 dBW.
12. Maximum permissible EIRP for network termination stations
(a) The maximum EIRP (per carrier) is 33 dBW.
13. Interpretation
In this Schedule:
(a) "ETSI" means the European Telecommunications Standards Institute;
(b) "ETS" means European Telecommunications Standard;
(c) "EIRP" means the equivalent isotropically radiated power. This is the
product of the power supplied to the antenna and the antenna gain in a
given direction relative to an isotropic antenna (absolute or
isotropic gain);
(d) "ITU" means the International Telecommunications Union, and "emission
designation" shall have the meaning as defined in the ITU Radio
Regulations RR 4-2 and Appendix 6 Parts A & B;
(e) "MPT" means a MPT technical performance standard published by the
Radiocommunications Agency on behalf of the Secretary of State;
(f) "ETN" means a geographic bearing east of true north;
(g) "CEPT" means the European Conference of Postal and Telecommunications
Administrations;
(h) "RF" means Radio Frequency;
(i) "radio fixed access" means the provision of a link between a fixed
telephone connector and a telecommunications network using a radio
link;
(j) "base station" means a station connected to the Network which
communicates with a number of network termination stations in a given
locality;
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(k) "repeater station" means a station which communicates information
between a base station and network termination stations;
(1) "network termination station" means a station which communicates with
a base station.
Issued on behalf of the Secretary of State for Trade and Industry.
Robert Emson
Public Networks Section
Radiocommunications Agency
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