<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 27, 1999
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------------
NTL INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4899 52-1822078
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
(212) 906-8440
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
</TABLE>
<TABLE>
<S> <C>
RICHARD J. LUBASCH, ESQ. COPY TO:
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND THOMAS H. KENNEDY, ESQ.
SECRETARY SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
NTL INCORPORATED 919 THIRD AVENUE
110 EAST 59TH STREET NEW YORK, NEW YORK 10022
NEW YORK, NEW YORK 10022 (212) 735-3000
(212) 906-8440
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
-------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 1/2% Series B Senior Notes due 2008........ $625,000,000 100% $625,000,000 $173,750
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12 3/8% Series B Senior Deferred Coupon Notes
due 2008.................................... $450,000,000 55.505% $249,772,500 $69,437
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</TABLE>
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
The information in this prospectus in not complete and may be changed. We may
not deliver these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JANUARY , 1999
OFFER TO EXCHANGE
NTL INCORPORATED (NTL LOGO)
ALL 11 1/2% SENIOR NOTES DUE 2008 AND
12 3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
FOR 11 1/2% SERIES B SENIOR NOTES DUE 2008 AND
12 3/8% SERIES B SENIOR DEFERRED COUPON NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
------------------------
NTL Incorporated is offering to exchange an aggregate principal amount of
up to $625,000,000 of its new 11 1/2% Series B Senior Notes due 2008 and an
aggregate principal amount at maturity of up to $450,000,000 of its new 12 3/8%
Series B Senior Deferred Coupon Notes due 2008, which have been registered under
the Securities Act of 1933, as amended, for a like amount of its existing
11 1/2% Senior Notes due 2008 and its existing 12 3/8% Senior Deferred Coupon
Notes due 2008, respectively.
TERMS OF THE EXCHANGE OFFER
- The Exchange Offer expires at 5:00 p.m., New York City time, on
, 1999, unless extended.
- We will exchange all outstanding Old Notes that are validly tendered and
not validly withdrawn.
- You may withdraw tenders of outstanding Old Notes at any time prior to
the expiration of the Exchange Offer.
- The exchange of outstanding Old Notes for New Notes will not be a taxable
event for United States federal income tax purposes. See "Certain Federal
Income Tax Considerations" on page 115 for more information.
- We will not receive any proceeds from the Exchange Offer.
- The terms of the New Notes are substantially identical to the outstanding
Old Notes, except that the New Notes will be freely tradeable.
SEE "RISK FACTORS" BEGINNING ON PAGE 17 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is , 1999.
<PAGE> 3
Until , 1999 (90 days after the date of this Prospectus)
dealers affecting transactions in the New Notes, whether or not participating in
the Exchange Offer, may be required to deliver a Prospectus. This obligation is
in addition to the obligation of dealers to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
WHERE YOU CAN FIND MORE INFORMATION
We are currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance with the Exchange Act we file reports, proxy statements, information
statements and other information with the Commission. Any reports, proxy
statements, information statements and other information we file with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located
at Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661 and 13th Floor, Seven World Trade Center, New York, New York
10048, and copies of such material may also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a site on the World
Wide Web, the address of which is http://www.sec.gov, that contains our reports,
proxy and information statements and other information. Such reports, proxy
statements and other information concerning the Company may also be inspected at
the offices of the Nasdaq Stock Market, Reports Section, at 1735 K Street, N.W.,
Washington, D.C. 20006. If the New Notes are listed on the Luxembourg Stock
Exchange, copies of such reports, proxy statements and other information will
also be made available free of charge at the specified office of the Company's
agent in Luxembourg, Banque Internationale a Luxembourg S.A. (the "Luxembourg
Agent").
We have filed with the Commission a Registration Statement on Form S-4
(herein together with all amendments and exhibits thereto, called the
"Registration Statement") under the Securities Act with respect to our offering
of New Notes. This Prospectus does not contain all of the information set forth
or incorporated by reference in the Registration Statement and the exhibits and
schedules relating to the Registration Statement, certain portions of which have
been omitted as permitted by the rules and regulations of the Commission. You
will find additional information about us and the New Notes in the Registration
Statement and the exhibits filed or incorporated as a part thereof, which are on
file at the offices of the Commission and may be obtained upon payment of the
fee prescribed by the Commission, or may be examined without charge at the
offices of the Commission. Copies of the documents which are exhibits to, or
incorporated as part of, the Registration Statement, will be made available free
of charge at the specified office of the Luxembourg Agent. Statements contained
in this Prospectus as to the contents of any documents referred to are not
necessarily complete, and, in each such instance, are qualified in all respects
by reference to the applicable documents filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by us with the Commission are hereby
incorporated by reference into this Prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, dated March 30, 1998 as amended by Form 10-K/A-1, dated
October 12, 1998, as amended by Form 10-K/A-2, dated November 6, 1998;
(b) the Company's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1998, dated May 14, 1998, for the three months ended June
30, 1998, dated August 14, 1998 and for the three months ended September
30, 1998, dated November 12, 1998; and
(c) the Company's Current Reports on Form 8-K dated February 5, 1998
(filed February 6, 1998), March 6, 1998 (filed March 9, 1998), March 18,
1998 (filed March 20, 1998), May 29, 1998 (filed June 2, 1998), June 16,
1998 (filed June 16, 1998), August 14, 1998 (filed August 18, 1998),
<PAGE> 4
October 5, 1998 (filed October 5, 1998), October 27, 1998 (filed October
28, 1998), October 29, 1998 (filed November 4, 1998), December 16, 1998
(filed December 17, 1998), December 21, 1998 (filed December 23, 1998),
December 22, 1998 (filed December 22, 1998) and January 25, 1999 (filed on
January 25, 1999).
All documents that we file with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of New Notes hereunder shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the day we file such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. WE WILL PROVIDE THESE DOCUMENTS WITHOUT CHARGE TO
EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED UPON THE REQUEST OF SUCH PERSON
TO: NTL INCORPORATED, 110 EAST 59TH STREET, 26TH FLOOR, NEW YORK, NEW YORK
10022, ATTENTION: RICHARD J. LUBASCH, ESQ.; TELEPHONE: (212) 906-8440. IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE NO LESS THAN
FIVE DAYS PRIOR TO THE EXPIRATION OF THE EXCHANGE OFFER. IN ADDITION, COPIES OF
SUCH DOCUMENTS WILL BE MADE AVAILABLE FREE OF CHARGE AT THE SPECIFIED OFFICE OF
THE LUXEMBOURG AGENT.
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY NOTES OTHER THAN THE REGISTERED NOTES TO WHICH IT RELATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY SUCH NOTES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
------------------------
In this Prospectus, references to "pounds sterling," "L" "pence" or "p" are
to the lawful currency of the United Kingdom and references to "U.S. dollars,"
"dollars," "$" or "c" are to the lawful currency of the United States. Solely
for the convenience of the reader, this Prospectus 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 have been made at $1.6995 per L1.00, the noon buying
rate in The City of New York for cable transfers in pounds sterling as certified
for customers purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate") on September 30, 1998. See "Exchange Rates" for information regarding the
Noon Buying Rate for the past ten fiscal years. On January 15, 1999, the Noon
Buying Rate was 1.65 per L1.00.
------------------------
The New Notes exchanged pursuant to the Exchange Offer will be available
initially only in book-entry form and will be issued in the form of Global Notes
(as defined). The Global Notes will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") and registered in its name or in the name of
Cede & Co., its nominee. Beneficial interests in the Global Notes will be shown
on, and transfers thereof, records maintained by DTC and its Participants (as
defined). Beneficial interests in the New Notes may be held through the
Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("CEDEL"). After
initial issuance of the Global Notes, New Notes in certificated form will be
issued in exchange for the Global Notes only in limited circumstances. See
"Book-Entry; Delivery and Form" for further discussion of these matters and for
definitions of certain of the capitalized terms used in this paragraph.
<PAGE> 5
PROSPECTUS SUMMARY
This section summarizes the more detailed information and financial
statements appearing elsewhere in this Prospectus or incorporated in this
Prospectus by reference. You should carefully consider the factors set forth
under the caption "Risk Factors." As used in this Prospectus, the term "Company"
or "NTL" means NTL Incorporated and, unless the context otherwise requires, its
consolidated subsidiaries and partnerships. Capitalized terms not defined in
this Summary have the meanings given them elsewhere in this Prospectus. Unless
otherwise stated, statistical data included in this Prospectus are as of
September 30, 1998. Unless otherwise stated, statistical data relating to the
Company included in this Prospectus do not include statistical data relating to
ComTel or Partners (each as defined herein) or give effect to the proposed
acquisition of Diamond (as defined herein). Certain technical terms used in this
Prospectus are defined in the Glossary which begins on page A-1 of this
Prospectus.
NTL
We are 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 ("CATV") 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) Broadcast Services including digital and analog television and radio
broadcast transmission services.
We provide a 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.
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.
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 UK. The Company is presently the sole provider of
broadband services in its franchise areas, offering residential telephony, cable
television and Internet access services to customers connected to its networks.
As of September 30, 1998, the Company had more than 429,000 residential
customers, approximately 92% of which subscribed to both telephony and
television services. As of September 30, 1998, the Company had approximately
823,400 Revenue Generating Units ("RGUs") resulting in 40.1% telephony
penetration, 40.6% cable penetration and 80.7% RGU penetration of homes
marketed. As of September 30, 1998, after giving pro forma effect to the
Amalgamation (but excluding Cable London) and the proposed acquisition of
Diamond, the Company had approximately 1.1 million residential customers,
approximately 61% of which subscribed to both telephony and television services.
As of September 30, 1998, after giving similar pro forma effect, the Company had
approximately 1.8 million RGUs resulting in 35.3% telephony penetration, 28%
cable penetration and 61.6% 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 customer penetration
averaged approximately 28% for telephony and approximately 22.2% 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.
1
<PAGE> 6
The following table illustrates operating statistics for the Company's
newly constructed network:
<TABLE>
<CAPTION>
PRO FORMA(1)
-------------
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
------------- ------------- ---------------------------------------
1998 1998(6) 1997 1996 1995 1994
------------- ------------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Homes passed(2)..................... 3,378,500 1,197,000 1,007,000 779,100 463,000 144,000
Homes marketed...................... 2,907,800(3) 1,020,000 810,000 467,300 176,200 7,200
Homes marketed (as % of homes
passed)........................... 86% 85% 80% 60% 38% 5%
Total customers..................... 1,111,300 429,600 321,300 168,200 57,700 2,280
Total RGUs(4)....................... 1,792,000 823,400 608,500 302,000 102,330 3,960
Customer penetration................ 38% 42% 40% 36% 33% 32%
RGU penetration(5).................. 62% 81% 75% 65% 58% 55%
Annualized churn.................... NA 14% 11% 10% NM NM
</TABLE>
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(1) Pro forma operating statistics for the Company's newly constructed network
give effect to the Amalgamation (but excluding Cable London), the
acquisition of ComTel and the proposed acquisition of Diamond.
(2) "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.
(3) Represents only those homes marketed for CATV. As of September 30, 1998, on
a pro forma basis, 2,776,000 homes were marketed for telephone.
(4) An RGU (revenue generating unit) is one telephone account or one CATV
account; a dual customer represents two RGUs.
(5) RGU penetration is the number of RGUs per 100 homes marketed. As defined,
maximum RGU penetration is 200%.
(6) Does not include operating data related to ComTel.
NA Not available.
NM Not meaningful due to the limited customer base and recent commencement of
services.
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 service packages which bundle telephony 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 customers, 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").
NTL's local franchise areas cover approximately 2.1 million homes, spanning
a broad geographic area across England, Scotland, Wales and Northern Ireland. As
of September 30, 1998, the Company's integrated full-service network had been
constructed past over 1.2 million (or approximately 57%) of its homes under
franchise. 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 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.
2
<PAGE> 7
NATIONAL TELECOMS SERVICES
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
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 extended the network to include the
first resilient fiber connection between Northern Ireland, the Republic of
Ireland and England.
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.
Capitalizing on the extended reach of its national network, the Company is
competing for a share of the approximately L21 billion ($36 billion) UK telecoms
market on a national basis. In the business telecoms market, the Company has
been increasingly successful in obtaining telecoms contracts from businesses
located within its franchise areas. As of September 30, 1998, the Company had a
total of approximately 11,300 business customers and 44,200 business telephony
lines, which represented growth in the first nine months of 1998 of more than
70% for both customers and lines. The Company's current business customers
include major international corporations, universities, local governmental
authorities, and small and medium sized businesses. 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. To connect the "last
mile" to the customers' premises from the national network, NTL has a variety of
options, including building fiber where justified, using microwave links from
the NTL tower infrastructure, or leasing circuits from other local operators.
NTL launched its national business telecoms service in November 1997 and its
strategy is to target medium to large sized businesses, beginning with those
located near the major urban areas currently served by the NTL national network.
The Company also offers a variety of other telecommunications services from
its national fiber network and microwave transmission facilities. NTL competes
in the growing market for bandwidth and leased line services as a national and
international wholesale telecommunications carrier. 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
telecommunications 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.
In addition to business and carrier telecoms, the Company provides the
following telecom services: (i) a full range of services in the design, building
and operation of radio based networks, and the provision of infrastructure and
support services to customers in the emergency services sector; (ii) global
satellite connectivity for clients requiring video, digital audio and data
services; and (iii) residential, wholesale and business Internet access and
support services, consulting and systems integration services, and Intranet
design and implementation.
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.
3
<PAGE> 8
NTL transmits television and radio broadcast signals for the UK's main
commercial television channels and independent radio stations from a national
infrastructure of over 1,200 owned and shared transmission sites across the UK.
Current customers include the Independent Television ("ITV" or "Channel 3")
companies, Channel 4 and the Welsh Fourth Channel ("S4C"), and Channel 5. 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. In addition to transmission services, the Broadcast
Services group markets value added services to its existing television
customers. This group also designs, installs, operates and maintains new
transmitter networks and has a spectrum planning service to plan the coverage of
television and radio networks.
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 introduction of DTT broadcasting in the UK will
significantly expand the Company's broadcasting transmission services business.
The Company, a Delaware corporation, was incorporated on April 2, 1993. The
Company is a holding company and conducts its operations through direct and
indirect wholly owned subsidiaries. The Company is not a subsidiary of any other
company. The Company's principal executive office is located at 110 East 59th
Street, New York, New York 10022, and its telephone number is (212) 906-8440.
RECENT DEVELOPMENTS
PARTNERS ACQUISITION
On February 4, 1998, the Company and NTL (Bermuda) Limited, a Bermuda
corporation and a wholly owned subsidiary of NTL ("Sub"), entered into an
Agreement and Plan of Amalgamation, as amended (the "Amalgamation Agreement"),
with Comcast UK Cable Partners Limited ("Partners") which provided for the
amalgamation of Sub with Partners (the "Amalgamation"), with the separate
existence of Sub and Partners continuing in the form of the company resulting
from the Amalgamation. At special meetings of shareholders of the Company and of
Partners held on October 29, 1998, the Amalgamation was approved by the
shareholders of the Company and of Partners, respectively. The Amalgamation
closed on the same day following receipt of those approvals. Partners'
shareholders received 0.3745 shares of the Company's common stock for each
Partners' Class A common share or Class B common share, an aggregate of
approximately 18,700,000 shares of the Company's common stock.
Business of Partners
Partners was formed to develop, construct, manage and operate the interests
of Comcast Corporation in the UK cable and telecommunications industry. As of
September 30, 1998, Partners had interests in four operations: Birmingham Cable
Corporation Limited ("Birmingham Cable") in which Partners owned a 27.5%
interest (the "Birmingham Cable Equity Interest"), Cable London PLC ("Cable
London") in which Partners currently owns a 50% interest (the "Cable London
Equity Interest"), Cambridge Holding Company Limited ("Cambridge Cable"), in
which Partners currently owns a 100% interest, and two companies holding the
franchises for Darlington and Teesside, in which Partners currently owns a 100%
interest ("Darlington and Teesside"). As a result of the execution of the
Amalgamation Agreement, TeleWest Communications plc ("TeleWest") which at that
time owned a 27.5% interest in Birmingham Cable and a 50% interest in Cable
London, had certain rights to acquire the interests of Partners in Birmingham
Cable and Cable London. Pursuant to an Agreement in Respect of the Rights of
First Refusal Relating to Birmingham Cable and Cable of London, dated August 14,
1998, (the "TeleWest Agreement") between the Company, Partners, TeleWest and
TeleWest Communications Holdings Limited ("TeleWest Communications"), the
Birmingham Cable Equity Interest was sold to TeleWest immediately prior to the
consummation of the Amalgamation for approximately L130 million ($221 million)
in cash. Pursuant to the TeleWest Agreement, TeleWest and Partners passed a
special resolution to Cable London's articles of association which, for purposes
of the Amalgamation, effectively eliminated the rights
4
<PAGE> 9
to TeleWest to acquire the Cable London Equity Interest. However, the TeleWest
Agreement generally provides that, at any time during the period beginning April
29, 1999 and ending July 29, 1999, Partners will either sell the Cable London
Equity Interest to TeleWest or purchase TeleWest's 50% ownership interest in
Cable London. See "-- Cable London "Shoot-out"" and "Agreement Relating to Cable
London" for more information. Cable London, Cambridge Cable and Darlington and
Teesside are referred to herein collectively as the "Partners Operating
Companies." When build-out of the Partners Operating Companies' systems is
complete, these systems will have the potential to serve approximately 1.1
million homes and the businesses within their franchise areas. Excluding Cable
London, the Partners Operating Companies will have the potential to serve
approximately 750,000 homes and the businesses within their franchise areas.
Partners Operating Companies' Systems
The following table sets forth, for each Partners Operating Company, homes
passed, homes marketed, cable subscriber, residential telephony subscriber and
business telephony subscriber information for each of the years in the five year
period ended December 31, 1997. The information presented below does not give
effect to the Partner's proportionate ownership interests in Cable London and
Cambridge Cable (prior to March 31, 1996).
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
HOMES PASSED(1)
Cambridge Cable(5)....................... 238,942 188,513 151,577 115,518 75,072
Teesside................................. 155,505 100,542 40,608
Cable London............................. 358,707 312,050 246,198 171,864 121,755
HOMES MARKETED(2)
Cambridge Cable(5)....................... 224,833 174,868 142,237 107,987 64,846
Teesside................................. 145,665 92,839 34,585
Cable London............................. 345,163 296,416 230,325 163,564 121,755
CABLE SUBSCRIBERS(3)
Cambridge Cable(5)....................... 52,766 45,378 36,799 30,763 16,007
Teesside................................. 45,387 30,280 14,391
Cable London............................. 83,142 67,877 52,871 42,977 30,111
RESIDENTIAL TELEPHONY SUBSCRIBERS(4)
Cambridge Cable(5)....................... 76,350 56,448 43,002 33,302 12,012
Teesside................................. 79,840 49,612 20,094
Cable London............................. 80,193 57,495 39,608 31,121 17,577
BUSINESS TELEPHONY SUBSCRIBERS(4)
Cambridge Cable(5)....................... 2,936 2,227 1,779 1,253 474
Teesside................................. 1,796 554 75
Cable London............................. 2,963 2,560 1,864 1,429 889
</TABLE>
- ---------------
(1) A home is deemed "passed" if it can be connected to the distribution system
without further extension of the transmission lines.
(2) A home is deemed "marketed" if it has been released to the Partners
Operating Companies' marketing departments for sales.
(3) A dwelling with one or more television sets connected to a system is counted
as one Cable Subscriber.
(4) A dwelling with one or more telephone lines connected to a system is counted
as one Telephony Subscriber.
(5) Prior to March 31, 1996, Partners owned 50% of Cambridge Cable.
5
<PAGE> 10
Cambridge Cable Franchise Area. Cambridge Cable holds, through wholly
owned subsidiaries, the Cambridge, Harlow and Ipswich/Colchester franchises,
which were awarded in 1990, and the local delivery operator license for the
South East Anglia area (the "SEA Franchise"), which was awarded in 1995. The
franchise areas contain approximately 490,000 homes, although the build
milestones in the SEA Franchise only require Cambridge Cable to pass 104,000 of
the 205,000 homes in the SEA Franchise.
Teesside Franchise Area. Wholly owned subsidiaries of the Company hold the
Darlington and Teesside franchises which were awarded in 1991 and contain
approximately 254,000 homes.
Cable London Franchise Area. Cable London holds, through wholly owned
subsidiaries, the Camden, Haringey, Enfield and Hackney/Islington franchises,
which were awarded in 1989 and 1990. Cable London's franchise area covers a
contiguous area of approximately 65 square miles or roughly 20% of Greater
London and contains approximately 437,000 homes.
Revenue Sources
Cable Communications. The Partners Operating Companies offer varying
levels of cable communications service, depending primarily on their respective
channel capacities. Monthly service rates and related charges vary in accordance
with the type of service selected by the subscriber. Partners may receive an
additional monthly fee for premium services, the charge for which varies with
the type and level of service selected by the subscriber. Additional charges are
often imposed for installation services, commercial subscribers, program guides
and other services. Partners also generates revenue from pay-per-view services
and advertising sales. Subscribers typically pay on a monthly basis and
generally may discontinue services at any time.
Residential Telephony. The Partners Operating Companies charge residential
telephony subscribers an initial connection fee, a monthly exchange line rental
fee, usage fees, which are charges for each local, long distance or
international call, and fees for additional services.
Business Telecommunications. The Partners Operating Companies charge
business telecommunications subscribers a connection fee based upon the number
of lines being installed and for the initial connection or reconnection to the
Partners Operating Companies' networks, a monthly exchange line rental fee,
usage fees, which are charges for each local, long distance or international
call, and fees for additional services.
Cable London "Shoot-out." The TeleWest Agreement provides that at any time
during the Shoot-out Period (as defined herein), Partners may give notice, and
not later than the end of the Shoot-out Period Partners shall give notice (the
"Offer Notice"), to TeleWest offering to sell to TeleWest the Cable London
Equity Interest and all of the rights and interests of Partners and its
subsidiaries in the CUKCP Cable London Loans and Fees (as defined herein) for
the cash sum (the "Sum") specified in the Offer Notice on the terms and
conditions set forth in the TeleWest Agreement (the "Offer"). If Partners fails
to give the Offer Notice prior to the end of the Shoot-out Period, then Partners
will be deemed to have delivered an Offer Notice for a Sum equal to L100
million. For purposes of the TeleWest Agreement, "Shoot-out Period" means the
period commencing on the date which is the earlier of (i) April 29, 1999 and
(ii) the earlier of (A) the date on which a public announcement is made of a
firm intention to make a recommended offer for the ordinary shares of TeleWest
(other than those owned or contracted to be acquired by the offeror or persons
acting in concert with the offeror) or of a merger between NTL and a third party
where NTL is not the surviving entity whether or not, in either case, subject to
the satisfaction of any pre-conditions, and (B) the completion of any such offer
or merger whether or not recommended, and ending at midnight on the date which
is three months thereafter (both dates inclusive).
Pursuant to the TeleWest Agreement, TeleWest will have 30 days (the
"Acceptance Period") in which to accept or decline the Offer by notice to
Partners. If TeleWest accepts the Offer, Partners will sell, and will procure
that its subsidiaries will sell, subject to and conditional upon the receipt or
waiver of certain third-party and regulatory approvals, to TeleWest, and
TeleWest will purchase from Partners or any of its subsidiaries, the Cable
London Equity Interest, as of the date of completion of the obligations
6
<PAGE> 11
required for such sale and purchase (the "Cable London Completion"), as well as
their respective rights and interests in the CUKCP Cable London Loans and Fees,
at the Sum specified in the Offer Notice. If TeleWest declines the Offer or
gives no notice within the Acceptance Period, TeleWest will sell, and will
procure that its subsidiaries and MediaOne Cable Communications Limited
("MediaOne") will sell, subject to and conditional upon the receipt or waiver of
the required approvals, to Partners, and Partners will purchase from TeleWest or
any of its subsidiaries, all of the shares in the capital of Cable London owned
and to be owned, or in which TeleWest has an interest, at the Cable London
Completion, as well as the respective rights and interests of TeleWest and its
subsidiaries in the TeleWest Cable London Loans and Fees (as defined herein), at
the Sum specified in the Offer Notice.
If, as referred to in the preceding paragraph, either TeleWest or Partners
(the "Purchaser") becomes obliged or agrees to purchase the shares in Cable
London which are owned by the other (the "Vendor"), the sale of such shares (the
"Cable London Sale Shares") will be completed on such date as the Purchaser may
specify upon at least 10 business days' prior notice to the Vendor. If the Cable
London Completion has not occurred within 90 days after the end of the
Acceptance Period (the "Long Stop Date"), the Purchaser will no longer be
entitled to purchase the Cable London Sale Shares and the relevant Cable London
Loans and Fees unless it elects, by prior written notice to the Vendor, to delay
the date of the Cable London Completion by a period of up to a further 90 days
from the Long Stop Date. If the Purchaser exercises such option, it shall pay to
the Vendor at the Cable London Completion an amount equal to 5% of the Sum for
every 30 days (or part thereof) by which the date for the Cable London
Completion is extended from the Long Stop Date up to a maximum of 90 days. If
the Cable London Sale Shares have not been purchased by the end of the
prescribed period, the Purchaser will no longer be entitled to purchase the
Cable London Sale Shares or the relevant Cable London Loan and Fees, and the
Vendor will then have the option (to be exercised and completed within 60 days)
to purchase the Cable London Sale Shares and the relevant Cable London Loan and
Fees from the Purchaser for an amount equal to 70% of the Sum. Such option will
be the only remedy of the Vendor for any failure by the Purchaser to acquire the
Cable London Sale Shares and the relevant Cable London Loans and Fees. See
"Agreement Relating To Cable London -- Cable London "Shoot-out"."
PROPOSED DIAMOND ACQUISITION
On June 16, 1998, the Company entered into an acquisition agreement (the
"Diamond Agreement") with the shareholders of Diamond Cable Communications, plc
("Diamond"). Pursuant to the Diamond Agreement, on the closing date of the
Diamond transaction, the Company will transfer to each shareholder of Diamond
one share of NTL common stock for each four issued and outstanding ordinary
shares, par value 2.5p per share, and each deferred share, par value 25p per
share, of Diamond. However, the Diamond Agreement provides for adjustment of
such consideration as follows: (i) if the closing date occurs within four months
of the date of the Diamond Agreement, and the average sales price of the NTL
common stock, as calculated pursuant to the Diamond Agreement, is $52.00 or
more, the number of shares of NTL common stock to be transferred for each four
ordinary shares will be decreased such that the value of such consideration will
not exceed $52.00 (the "Maximum Average Stock Price"), (ii) if the Closing Date
occurs after October 16, 1998 and prior to February 1, 1999, the Maximum Average
Stock Price will increase by $.50 on October 16, 1998, and on each subsequent
monthly anniversary date thereof until the Closing Date; and (iii) if the
Closing Date occurs on February 1, 1999 or thereafter, the Maximum Average Stock
Price will be $65.00. Because four months have passed since June 16, 1998, the
date of the Diamond Agreement, and the Closing Date will not occur prior to
February 1, 1999, clauses (i) and (ii) above are no longer relevant adjustment
mechanisms. The Diamond Agreement provides that approximately 15.2 million
shares of NTL common stock will be issued in connection with the Diamond
transaction. The consummation of the Diamond transaction is subject to, among
other things, the approval by the stockholders of the Company of the issuance of
shares of NTL common stock in accordance with the terms of the Diamond
Agreement. There can be no assurance that the Diamond acquisition will be
consummated on the terms described herein or at all. See "Risk
Factors -- Network Construction Costs; Need for Additional Financing." The
Offering is not conditioned on the closing of the Diamond acquisition.
7
<PAGE> 12
COMTEL ACQUISITION
Pursuant to an acquisition agreement (the "ComTel Agreement"), dated June
16, 1998, with Vision Networks III B.V. ("Vision Networks"), a wholly-owned
subsidiary of Royal PTT Nederland NV (KPN), the Company acquired the operations
of ComTel Limited and Telecential Communications (collectively, "ComTel") for a
total of approximately L550 million ($935 million) paid in two stages (the
"ComTel Acquisition"). In the first stage, the Company acquired certain of the
ComTel properties for L275 million ($467 million) in cash. In the second stage,
which was completed on September 22, 1998, the Company acquired the remaining
ComTel properties for L200 million ($340 million) in cash and L75 million ($127
million) in NTL preferred stock. Such NTL preferred stock has a pay-in-kind
coupon of 9.9%, will mature in 2008 and is redeemable within 15 months for NTL
common stock valued at market, new NTL convertible preferred securities or cash,
at NTL's option.
EASTERN GROUP ACQUISITION
On December 22, 1998, NTL acquired Eastern Group from Eastern Group plc for
L60 million in cash and L31 million in 9.9% Preferred Stock, Series B. Such 9.9%
Preferred Stock, Series B has a pay-in-kind coupon of 9.9%, will mature in 2008
and is redeemable within 18 months for cash or NTL common stock.
Eastern Group is headquartered in Ipswich, England, and is comprised of two
business divisions. The telecoms division utilizes a 1,800 km SDH fiberoptic
network across the southeast and east of England, and the radio sites division,
consisting of 121 radio masts across East Anglia, serves the UK's major mobile
phone network operators.
NEWCASTLE UNITED SHARE ACQUISITION
On December 17, 1998, Premium TV Limited ("Premium TV"), a wholly-owned
subsidiary of NTL, acquired 9,000,000 shares, or 6.3%, of Newcastle United from
Cameron Hall Developments Limited ("CHD"), the majority shareholder of Newcastle
United, for approximately L10 million in cash.
In conjunction with the sale of such shares, CHD also entered into an
irrevocable commitment to Premium TV which provides that if Premium TV makes a
general offer for all of the issued share capital of Newcastle United, CHD will
accept such offer in respect of the remaining balance of its shares in Newcastle
United, representing 50.8% of the issued share capital of Newcastle United. If
made, any such offer would be at a price of 111.7p per share in cash and may, if
Premium TV so decides, carry a full zero coupon loan note alternative.
Premium TV's decision regarding whether to make such an offer may be
influenced by, among other things, the substance of the report by the Monopolies
and Mergers Commission on the proposed offer for Manchester United Football
Club. The irrevocable commitment given by CHD is binding until 12 weeks
following the publication of such report, subject to extension in certain
circumstances.
STRATEGIC PARTNERSHIP WITH MICROSOFT
On January 25, 1999, Microsoft and NTL agreed to jointly develop new
broadband services for delivery to customers in the UK and Ireland. In addition,
Microsoft has agreed to purchase $500 million in 5.25% Convertible Preferred
Stock. Such 5.25% Convertible Preferred Stock is convertible into NTL common
stock at a conversion price of $100 per share, is redeemable in 10 years for
cash or NTL common stock and may be redeemed by NTL on the earlier of 7 years or
the date on which NTL common stock has traded above $120 for 25 consecutive
trading days.
Microsoft and NTL have agreed to work closely together with respect to the
development of new digital services and intend to enter into additional
agreements throughout 1999 regarding software and services. In addition,
Microsoft will receive 1.2 million five-year warrants to purchase NTL common
stock at an exercise price of $84 per share.
8
<PAGE> 13
REDEMPTION OF 10 7/8% NOTES
On June 10, 1998, the Company provided to the trustee of its 10 7/8% Notes
Due 2003 (the "10 7/8% Notes") a notice that NTL would redeem such Notes on
October 15, 1998. Pending such redemption, the Company used cash on hand to
deposit in trust with such trustee an amount equal to approximately $218.6
million (103.107% of accreted value) to pay the redemption price (including
principal) on such 10 7/8% Notes, thereby defeasing certain of its obligations
under the indenture governing such 10 7/8% Notes. In July 1998, using funds so
deposited with the trustee, the Company purchased from one holder for $65
million a portion of the 10 7/8% Notes with an accreted value of $62.2 million.
On October 15, 1998 all of the outstanding 10 7/8% Notes were redeemed.
OFFERING OF 11 1/2% NOTES AND 12 3/8% NOTES
On November 2, 1998, the Company issued and sold $625 million in aggregate
principal amount of its 11 1/2% Senior Notes Due 2008 (the "11 1/2% Old Notes").
The 11 1/2% Old Notes carry a cash-pay current coupon. The Company used the net
proceeds of the 11 1/2% Old Notes to partially repay indebtedness outstanding
under the New Credit Facility (as defined herein). The 11 1/2% Old Notes were
offered and sold in transactions exempt from, or not subject to, the
registration requirements of the Securities Act.
On November 6, 1998, the Company issued and sold $450 million in aggregate
principal amount at maturity of its 12 3/8% Senior Deferred Coupon Notes Due
2008 (the "12 3/8% Old Notes" and, together with the 11 1/2% Old Notes, the "Old
Notes"). Cash interest will not accrue on the 12 3/8% Old Notes prior to October
1, 2003. The Company used a portion of the net proceeds of the 12 3/8% Old Notes
to repay the indebtedness remaining outstanding under the New Credit Facility
after the application of the net proceeds from the offering of the 11 1/2% Old
Notes. The 12 3/8% Old Notes were offered and sold in transactions exempt from,
or not subject to, the registration requirements of the Securities Act.
OFFERING OF 7% CONVERTIBLE SUBORDINATED NOTES
On December 16, 1998, the Company issued and sold $600 million in aggregate
principal amount of its 7% Convertible Subordinated Notes Due 2008 (the "New
Convertible Notes"). The New Convertible Notes carry a cash-pay current coupon.
The New Convertible Notes are convertible into shares of NTL common stock at a
conversion price of $61.25 per share, subject to adjustment in certain events.
On December 10, 1998, the last reported sale price per share of common stock, as
reported on The Nasdaq Stock Market's National Market was $49 per share. The
Company intends to use the net proceeds of the offering of the New Convertible
Subordinated Notes to finance the construction, capital expenditures and working
capital requirements (including, without limitation, debt service and repayment
obligations). The New Convertible Notes were offered and sold in transactions
exempt from the registration requirements of the Securities Act.
9
<PAGE> 14
THE EXCHANGE OFFER
Notes Offered................. We are offering up to $625,000,000 principal
amount of new 11 1/2% Series B Senior Notes due
2008 (the "11 1/2% New Notes" and, together
with the 11 1/2% Old Notes, the "11 1/2%
Notes"), and $450,000,000 principal amount at
maturity of new 12 3/8% Series B Senior
Deferred Coupon Notes due 2008 (the "12 3/8%
New Notes" and, together with the 12 3/8% Old
Notes, the "12 3/8% Notes" and, the 12 3/8% New
Notes, together with the 11 1/2% New Notes, the
"New Notes"), which have been registered under
the Securities Act.
The Exchange Offer............ We are offering to issue the New Notes in
exchange for a like principal amount of your
Old Notes. We are offering to issue the New
Notes to satisfy our obligations contained in
the registration rights agreements entered into
when the Old Notes were sold in transactions
pursuant to Rule 144A and Regulation S under
the Securities Act and therefore not registered
with the Commission. For procedures for
tendering, see "The Exchange Offer."
Tenders, Expiration Date;
Withdrawal.................. The Exchange Offer will expire at 5:00 p.m. New
York City time on , 1999 unless it
is extended. If you decide to exchange your Old
Notes for New Notes, you must acknowledge that
you are not engaging in, and do not intend to
engage in, a distribution of the New Notes. If
you decide to tender your Old Notes pursuant to
the Exchange Offer, you may withdraw them at
any time prior to , 1999. If we
decide for any reason not to accept any Old
Note for exchange, it will be returned to you
without expense to you promptly after the
expiration or termination of the Exchange
Offer.
United States Federal Income
Tax Consequences.............. Your exchange of Old Notes for New Notes
pursuant to the Exchange Offer should not
result in any income, gain or loss to you or us
for federal income tax purposes. See "Certain
Federal Income Tax Considerations."
Use of Proceeds............... We will receive no proceeds from the exchange
pursuant to the Exchange Offer.
Exchange Agent................ The Chase Manhattan Bank through its specified
offices in New York and Luxembourg is serving
as the Exchange Agent for the Exchange Offer.
See "The Exchange Offer -- Exchange Agent."
Shelf Registration
Statement..................... Under certain circumstances, certain holders of
Old Notes (including holders who may not
participate in the Exchange Offer, or who may
not freely resell New Notes received in the
Exchange Offer) may require us to file, and
cause to become effective, a shelf registration
statement under the Securities Act, which would
cover resales of Old Notes by such holders. See
"Registration Rights."
10
<PAGE> 15
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Based on interpretations by the staff of the Commission in no action
letters issued to third parties, generally holders of Old Notes (other than any
holder who is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act) who exchange their Old Notes for New Notes pursuant to the
Exchange Offer may offer such New Notes for resale, resell such New Notes, and
otherwise transfer such New Notes without compliance with the registration and
prospectus delivery provisions of the Securities Act; provided that such New
Notes are acquired in the ordinary course of the holders' business and such
holders, other than brokers-dealers, are not engaged in, do not intend to engage
in and have no arrangement or understanding with any person to participate in, a
distribution of such New Notes.
Each broker-dealer who holds Old Notes acquired for its own account as a
result of market-making activities or other trading activities, and who receives
New Notes in exchange for such Old Notes pursuant to the Exchange Offer, may be
an "underwriter" within the meaning of the Securities Act and must acknowledge
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Notes. See "Plan of Distribution."
To comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register thereunder the New Notes prior to
offering or selling such New Notes. We have agreed, pursuant to the Registration
Rights Agreements and subject to certain specified limitations therein, to
register or qualify the New Notes held by broker-dealers for offer or sale under
the securities or blue sky laws of such jurisdictions as any such holder of such
New Notes reasonably requests in writing. Unless we are so requested, we do not
intend to register or qualify the sale of the New Notes in any such
jurisdictions.
If a Holder of Old Notes does not exchange such Old Notes for New Notes
pursuant to the Exchange Offer, such Old Notes will continue to be subject to
provisions of the applicable Indenture regarding transfer and exchange of the
Old Notes and the restrictions on transfer contained in the legend on the Old
Notes. In general, Old Notes may not be offered or sold unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state securities laws. We do
not currently anticipate that we will take any action to register Old Notes
under the Securities Act. See "The Exchange Offer -- Consequences of Failure to
Exchange" and "Registration Rights."
11
<PAGE> 16
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions and registration rights
relating to the Old Notes and except for certain provisions under the
registration rights agreements providing for special interest on the Old Notes
under certain circumstances relating to timing of the Exchange Offer, which on
each case will terminate upon consummation of the Exchange Offer.
11 1/2% NEW NOTES
Issuer..................... NTL Incorporated
Securities Offered......... $625,000,000 principal amount of 11 1/2% Series B
Senior Notes due 2008.
Maturity Date.............. October 1, 2008.
Interest................... Interest on the 11 1/2% New Notes will accrue at
the rate of 11 1/2% per annum and will be payable
in cash, semi-annually in arrears, on April 1 and
October 1, commencing on April 1, 1999. See
"Description of Notes."
Optional Redemption........ On or after October 1, 2003, the 11 1/2% Notes will
be redeemable at our option, in whole at any time
or in part from time to time, at the redemption
prices set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption.
Ranking.................... The 11 1/2% New Notes will rank senior in right of
payment to all of our subordinated indebtedness and
will rank equal in right of payment with all of our
existing and future unsubordinated obligations. As
of September 30, 1998, after giving effect to the
Amalgamation and the Recent Financings and the use
of proceeds therefrom we would have had
approximately $3.7 billion accreted value of
unsubordinated debt outstanding. Such
unsubordinated debt includes our 12 3/4% Senior
Deferred Coupon Notes Due 2005 (the "12 3/4%
Notes"), its 11 1/2% Senior Deferred Coupon Notes
Due 2006 (the "11 1/2% Deferred Coupon Notes"), its
10 3/4% Senior Deferred Coupon Notes Due 2008 (the
"10 3/4% Notes"), its 9 3/4% Senior Deferred Coupon
Notes Due 2008 (the "9 3/4% Notes" and, together
with the 12 3/4% Notes, the 11 1/2% Deferred Coupon
Notes and the 10 3/4% Notes, the "Existing Deferred
Coupon Notes"), its 10% Senior Notes Due 2007 (the
"10% Notes") and its 9 1/2% Senior Notes Due 2008
(the "9 1/2% Notes" and, together with the 10%
Notes and the Existing Deferred Coupon Notes, the
"Existing Notes"). The 11 1/2% New Notes will be
effectively subordinated to all existing and future
indebtedness and other liabilities of our
subsidiaries with respect to the cash flow and
assets of those subsidiaries. As of September 30,
1998, after giving effect to the Amalgamation and
the Recent Financings and the use of proceeds
therefrom such subsidiaries had approximately $967
million (L1,644 million) of total liabilities
outstanding. The 11 1/2% New Notes will rank senior
to our 7% Convertible Subordinated Notes Due 2008
(the "Old Convertible Subordinated Notes") and the
New Convertible Subordinated Notes (together with
the Old Convertible Subordinated Notes, the
"Convertible Notes"). See "Risk
Factors -- Potential Adverse Consequences of
Leverage."
12
<PAGE> 17
Change of Control.......... Upon the occurrence of a Change of Control
Triggering Event (which requires a Change of
Control (as defined) and a Ratings Decline (as
defined)), we will be required to make an offer to
purchase all of the 11 1/2% Notes at 101% of
principal amount thereof plus accrued and unpaid
interest to the date of purchase. We may not have
sufficient funds or the financial resources
necessary to satisfy its obligations to repurchase
the 11 1/2% Notes and other debt that may become
repayable upon a Change of Control Triggering
Event.
Certain Covenants.......... The indenture governing the 11 1/2% Notes (the
"11 1/2% Indenture") contains covenants relating
to, among other things, the following matters: (i)
restricted payments; (ii) incurrence of additional
indebtedness and issuance of preferred stock; (iii)
liens; (iv) dividend and other payment restrictions
affecting subsidiaries; (v) mergers, consolidations
and sales of assets; (vi) transactions with
affiliates; and (vii) reports.
Use of Proceeds............ We will not receive any proceeds from the Exchange
Offer. We used the net proceeds of the offering of
the 11 1/2% Old Notes to partially repay
indebtedness then outstanding under the New Credit
Facility. See "Use of Proceeds."
Registration Rights........ Holders of 11 1/2% New Notes (other than as set
forth below) are not entitled to any registration
rights with respect to the 11 1/2% New Notes.
Pursuant to the registration rights agreement, we
have agreed to use its best efforts to file an
exchange offer registration statement. The
Registration Statement of which this Prospectus is
a part constitutes the exchange offer registration
statement. Under certain circumstances, certain
Holders of 11 1/2% Old Notes (including Holders of
11 1/2% Old Notes who may not participate in the
Exchange Offer or who may not freely resell 11 1/2%
New Notes received in the Exchange Offer) may
require us to file, and cause to become effective,
a shelf registration statement under the Securities
Act, which would cover resales of 11 1/2% Old Notes
by such Holders before making a decision to tender
their 11 1/2% Old Notes in the Exchange Offer.
Book-Entry; Delivery
and Form................. The 11 1/2% New Notes will initially be represented
by one or more global notes in registered form,
without coupons attached (collectively, the
"11 1/2% Global Notes"), each of which will be
issued in an aggregate denomination equal to the
outstanding principal amount of the 11 1/2% New
Notes represented thereby. Except as set forth
under "Description of Notes," owners of beneficial
interests in the 11 1/2% Global Notes will not be
entitled to receive physical delivery of 11 1/2%
New Notes in definitive form or to have the 11 1/2%
New Notes issued and registered in their names and
will not be considered the owners or holders
thereof under the 11 1/2% Indenture. Interests in
the 11 1/2% Global Notes will be shown on, and
transfers thereof will be effected only through,
records maintained in book-entry form by The
Depository Trust Company ("DTC") or its nominee
with respect to its participants. Ownership of the
interests in the 11 1/2% Global Notes will be
limited to persons that have accounts with DTC
("Participants") or persons that may hold interests
through Participants. Investors may elect to own
interests in a 11 1/2% Global Note through the
Morgan Guaranty Trust Company, Brussels office as
operator of the Euroclear
13
<PAGE> 18
System ("Euroclear") or Cedel Bank, societe anonyme
("CEDEL") in Europe, if they are participants in
such systems, or indirectly through organizations
which are participants, through their respective
depositaries, Morgan Guaranty Trust Company of New
York and Citibank, N.A., which in turn will hold
such interests in accounts as Participants.
Listing.................... Application will be made to list the 11 1/2% New
Notes on the Luxembourg Stock Exchange.
Governing Law.............. The 11 1/2% New Notes and the 11 1/2% Indenture
will be governed exclusively by the laws of the
State of New York.
Trustee, Principal Paying
Agent and Registrar........ The Chase Manhattan Bank.
Paying Agent and Transfer
Agent in Luxembourg........ Chase Manhattan Bank Luxembourg S.A.
Listing Agent in
Luxembourg................. Banque Internationale a Luxembourg.
12 3/8% NEW NOTES
Issuer..................... NTL Incorporated
Securities Offered......... $450,000,000 principal amount at maturity of
12 3/8% Series B Senior Deferred Coupon Notes due
2008.
Issue Price................ $555.05 per $1,000 principal amount at maturity for
each 12 3/8% New Note.
Maturity Date.............. October 1, 2008.
Yield and Interest......... The Issue Price of each 12 3/8% Old Note represents
a yield to maturity of 12.375% per annum (computed
on a semi-annual bond equivalent basis). Cash
interest will not accrue on the 12 3/8% New Notes
prior to October 1, 2003. From October 1, 2003,
interest on the 12 3/8% New Notes will accrue at
the rate of 12 3/8% per annum and will be payable
in cash, semi-annually in arrears, on April 1 and
October 1, commencing on April 1, 2004. See
"Description of Notes."
Optional Redemption........ On or after October 1, 2003, the 12 3/8% Notes will
be redeemable at our option, in whole at any time
or in part from time to time, at the redemption
prices set forth herein, plus accrued and unpaid
interest, if any, to the date of redemption.
Ranking.................... The 12 3/8% New Notes will rank senior in right of
payment to all of our subordinated indebtedness and
will rank equal in right of payment with all of our
existing and future unsubordinated obligations. As
of September 30, 1998, after giving effect to the
Amalgamation and the Recent Financings and the use
of proceeds therefrom, we would have had
approximately $3.7 billion accreted value of
unsubordinated debt outstanding. Such
unsubordinated debt includes our Existing Notes.
The 12 3/8% New Notes will be effectively
subordinated to all existing and future
indebtedness and other liabilities of our
subsidiaries with respect to the cash flow and
assets of those subsidiaries. As of September 30,
1998, after giving effect to the Amalgamation, the
Recent Financings and the use of proceeds
therefrom, our subsidiaries
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had approximately $967 million of total liabilities
outstanding. The 12 3/8% New Notes will rank senior
to the Convertible Notes. See "Risk
Factors -- Potential Adverse Consequences of
Leverage."
Change of Control.......... Upon the occurrence of a Change of Control
Triggering Event (which requires a Change of
Control (as defined) and a Ratings Decline (as
defined)), we will be required to make an offer to
purchase all of the 12 3/8% Notes at 101% of
principal amount thereof plus accrued and unpaid
interest to the date of purchase (or, in the case
of repurchases of Notes prior to October 1, 2003,
at a purchase price equal to 101% of the Accreted
Value (as defined) thereof at the date of
repurchase). We may not have sufficient funds or
the financial resources necessary to satisfy its
obligations to repurchase the 12 3/8% Notes and
other debt that may become repayable upon a Change
of Control Triggering Event.
Certain Covenants.......... The indenture governing the 12 3/8% Notes (the
"12 3/8% Indenture") contains covenants relating
to, among other things, the following matters: (i)
restricted payments; (ii) incurrence of additional
indebtedness and issuance of preferred stock; (iii)
liens; (iv) dividend and other payment restrictions
affecting subsidiaries; (v) mergers, consolidations
and sales of assets; (vi) transactions with
affiliates; and (vii) reports.
Original Issue Discount.... The Old 12 3/8% Notes were issued at an original
issue discount for United States federal income tax
purposes. Thus, although cash interest will not
accrue on the 12 3/8% Notes prior to October 1,
2003, original issue discount accrues from the
issue date of the Old 12 3/8% Notes and will be
included as interest income periodically in a
holder's gross income for United States federal
income tax purposes in advance of receipt of the
cash payments to which the income is attributable.
See "Certain Federal Income Tax Considerations."
Use of Proceeds............ We will not receive any proceeds from the Exchange
Offer. We used most of the net proceeds of the
offering of the 12 3/8% Old Notes, after
application of the net proceeds from the offering
of the 11 1/2% Old Notes, to repay the remaining
indebtedness outstanding under the New Credit
Facility. We intend to use the balance of the net
proceeds to finance our construction, capital
expenditure and working capital requirements
(including debt service and repayment obligations).
In addition, a portion of the net proceeds may also
be used to make acquisitions of businesses or
assets related to our business. See "Use of
Proceeds."
Registration Rights........ Holders of 12 3/8% New Notes (other than as set
forth below) are not entitled to any registration
rights with respect to the 12 3/8% New Notes.
Pursuant to the registration rights agreement, we
agreed to use its best efforts to file an exchange
offer registration statement. The Registration
Statement of which this Prospectus is a part
constitutes the exchange offer registration
statement. Under certain circumstances, certain
Holders of 12 3/8% Old Notes (including Holders of
12 3/8% Old Notes who may not participate in the
Exchange Offer or who may not freely resell 12 3/8%
New Notes received in the Exchange Offer) may
require us to file, and cause to become effective,
a shelf registration statement under the Securities
Act, which would cover resales of
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<PAGE> 20
12 3/8% Old Notes by such Holders before making a
decision to tender their 12 3/8% Old Notes in the
Exchange Offer.
Book-Entry; Delivery
and Form................. The 12 3/8% New Notes will initially be represented
by one or more global notes in registered form,
without coupons attached (collectively, the
"12 3/8% Global Notes"), each of which will be
issued in an aggregate denomination equal to the
outstanding principal amount of the 12 3/8% New
Notes represented thereby. Except as set forth
under "Description of Notes," owners of beneficial
interests in the 12 3/8% Global Notes will not be
entitled to receive physical delivery of 12 3/8%
New Notes in definitive form or to have the 12 3/8%
New Notes issued and registered in their names and
will not be considered the owners or holders
thereof under the 12 3/8% Indenture. Interests in
the 12 3/8% Global Notes will be shown on, and
transfers thereof will be effected only through,
records maintained in book-entry form by The
Depository Trust Company ("DTC") or its nominee
with respect to its participants. Ownership of the
interests in the 12 3/8% Global Notes will be
limited to persons that have accounts with DTC
("Participants") or persons that may hold interests
through Participants. Investors may elect to own
interests in a 12 3/8% Global Note through the
Morgan Guaranty Trust Company, Brussels office as
operator of the Euroclear System ("Euroclear") or
Cedel Bank, societe anonyme ("CEDEL") in Europe, if
they are participants in such systems, or
indirectly through organizations which are
participants, through their respective
depositaries, Morgan Guaranty Trust Company of New
York and Citibank, N.A., which in turn will hold
such interests in accounts as Participants.
Listing.................... Application will be made to list the 12 3/8% New
Notes on the Luxembourg Stock Exchange.
Governing Law.............. The 12 3/8% New Notes and the 12 3/8% Indenture
will be governed exclusively by the laws of the
State of New York.
Trustee, Principal Paying
Agent and Registrar........ The Chase Manhattan Bank.
Paying Agent and Transfer
Agent in Luxembourg........ Chase Manhattan Bank Luxembourg S.A.
Listing Agent in
Luxembourg................. Banque Internationale a Luxembourg.
RISK FACTORS
Holders of Old Notes should carefully consider the information set forth
under the caption "Risk Factors" and all other information set forth in this
Prospectus before tendering their Old Notes in the Exchange Offer, although the
risk factors (other than "-- If You Do Not Exchange Your Old Notes for New Notes
You Will Continue to Hold Notes Subject to Restrictions on Transfer" and "-- To
Participate in the Exchange Offer You Will Be Required To Make Some
Representations To Us.") are generally applicable to the Old Notes as well as
the New Notes.
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<PAGE> 21
RISK FACTORS
Holders of Old Notes should consider carefully all of the information set
forth in this Prospectus and incorporated by reference in this Prospectus. See
"Where You Can Find More Information" and "Incorporation of Documents By
Reference." Holders should particularly evaluate the following risks before
tendering their Old Notes in the Exchange Offer, although the risk factors set
forth below (other than the first two risk factors) are generally applicable to
the Old Notes as well as the New Notes.
IF YOU DO NOT EXCHANGE YOUR OLD NOTES FOR NEW NOTES YOU WILL CONTINUE TO HOLD
NOTES SUBJECT TO RESTRICTIONS ON TRANSFER
We will issue the New Notes in exchange for the Old Notes pursuant to the
Exchange Offer following the prior satisfaction, or waiver, of the conditions
set forth in "The Exchange Offer -- Certain Conditions to the Exchange Offer"
and only after a timely receipt by the Exchange Agent of such Old Notes, a
properly completed and duly executed Letter of Transmittal in respect of such
Old Notes and all other required documents. If you want to exchange your Old
Notes for New Notes you should allow sufficient time to ensure timely delivery.
Neither the Exchange Agent nor we are under any duty to notify you of defects or
irregularities with respect to the tenders of Old Notes for exchange. Old Notes
that are not tendered or are tendered but not accepted will, following the
consummation of the Exchange Offer, continue to be subject to the provisions of
the applicable Indenture regarding transfer and exchange of the Old Notes, the
existing restrictions upon transfer thereof set forth in the legend on the Old
Notes, in the Offering Memorandum dated October 26, 1998 relating to the 11 1/2%
Old Notes and in the Offering Memorandum dated October 30, 1998 relating to the
12 3/8% Old Notes. Except in certain limited circumstances with respect to
certain types of holders of Old Notes (see "Registration Rights"), we will have
no further obligation to provide for the registration under the Securities Act
of such Old Notes. In general, Old Notes, unless registered under the Securities
Act, may not be offered or sold except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. We do not currently anticipate that it will take any action to register
the Old Notes under the Securities Act or blue sky laws.
TO PARTICIPATE IN THE EXCHANGE OFFER YOU WILL BE REQUIRED TO MAKE SOME
REPRESENTATIONS TO US
Based on interpretations by the staff of the Commission, as set forth in no
action letters issued to third parties, we believe that the New Notes issued in
exchange for the Old Notes, pursuant to the Exchange Offer may be offered for
resale, resold or otherwise transferred by Holders thereof (other than any such
Holder which is an "affiliate" of the Issuer within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of your business and you have no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of such New Notes. You must acknowledge (unless
you are a broker-dealer) that you are not engaged in, and do not intend to
engage in, and have no arrangement or understanding with any person to
participate in, a distribution of New Notes. If you are an affiliate of us, you
engaged in or intend to engage in or have any arrangement or understanding with
respect to the distribution of the New Notes to be acquired pursuant to the
Exchange Offer, you (i) cannot rely on the applicable interpretations of the
staff of the Commission and (ii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transactions. Each broker-dealer who holds Old Notes acquired for its own
account as a result of market-making activities or other trading activities, and
who receives New Notes in exchange for such Old Notes pursuant to the Exchange
Offer, may be an "underwriter" within the meaning of the Securities Act and must
acknowledge that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes
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<PAGE> 22
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. We have agreed that starting on the Expiration Date
and ending on the close of business of the 180th day following the Expiration
Date, we will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." However, to comply
with the securities laws of certain jurisdictions, if applicable, the New Notes
may not be offered or sold unless they have been registered or qualified for
sale in such jurisdictions or an exemption from registration nor qualification
is available and is complied with. We have agreed, pursuant to the Registration
Right Agreements and subject to certain specified limitations therein, to
register or qualify the New Notes for offer or sale under the securities or blue
sky laws of such jurisdiction as any holder of the Notes reasonably request in
writing. Unless we are so requested, we do not intend to take any action to
register or qualify the sale of the New Notes in any such jurisdictions. See
"The Exchange Offer -- Consequences of Exchanging Old Notes."
OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT THE FINANCIAL HEALTH OF THE
COMPANY
We are and, for the foreseeable future will continue to be, highly
leveraged. On September 30, 1998, after giving effect to the Amalgamation and
the Recent Financings and the use of proceeds therefrom, the accreted value of
our total long-term indebtedness (including our 13% Senior Redeemable
Exchangeable Preferred Stock (the "13% Preferred Stock")) was approximately $5.0
billion. This debt represents approximately 90% of our total capitalization. The
indentures governing the Notes, the Existing Notes and the Convertible Notes do
not restrict our ability or our subsidiaries' ability to incur additional
indebtedness. The ability of the Company and its subsidiaries to make scheduled
payments under present and future indebtedness (including the Notes) will depend
on, among other things:
- our ability and our subsidiaries' ability to complete the build out of
the franchises on a timely and cost effective basis,
- our ability to access the earnings of our subsidiaries (which may be
subject to significant contractual and legal limitations),
- our future operating performance and that of our subsidiaries and
- our ability to refinance our indebtedness when necessary.
Each of these factors is to a large extent subject to economic, financial,
competitive, regulatory and other factors that are beyond our control. See
"-- The Anticipated Construction Costs of Our Network Will Increase As a Result
of Our Acquisitions And Will Require Substantial Amounts of Additional Funding,"
"-- Need for Additional Financing -- We Do Not Expect To Generate Sufficient
Cash Flow To Repay At Maturity The Entire Principal Amount of Our Outstanding
Indebtedness," "-- We Cannot be Certain as to Future Network Construction
Progress and Costs" and "-- We are a Holding Company that is Dependent Upon Cash
Flow from Our Subsidiaries. Our Ability to Access That Cash Flow May Be Limited
in Some Circumstances."
Future agreements and debt instruments may contain various covenants which,
among other things, may require us to:
- maintain certain financial ratios,
- restrict or prohibit the payment of dividends and other distributions to
us by our subsidiaries,
- restrict asset sales and dictate the use of proceeds from the sale of
assets.
Compliance with these restrictions, in combination with current indebtedness and
the holding company structure of the Company, could limit our ability to respond
to market conditions or meet extraordinary capital needs or otherwise could
restrict corporate activities and the ability of certain of our subsidiaries to
make payments to us which might otherwise fund payments due on the Notes and our
other obligations as they fall due. There can be no assurance that such
restrictions will not adversely affect our ability to finance our future
operations or capital needs, to service and repay indebtedness (including,
without limitation, the Notes) or to engage in other business activities, such
as acquisitions, which may be in our
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<PAGE> 23
interest. See "-- We are a Holding Company that is Dependent Upon Cash Flow from
Our Subsidiaries. Our Ability to Access That Cash Flow May Be Limited in Some
Circumstances."
The degree to which we are leveraged could have important consequences to
holders of the Notes including the following:
- increasing our vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates,
- limiting our ability to obtain additional financing for working capital,
capital expenditures, acquisitions and general corporate purposes,
including the build out of the networks in the franchises and the
development and expansion of our business,
- requiring a substantial portion of our and our subsidiaries' cash flow
from operations to be dedicated to debt service requirements, thereby
reducing the funds available for dividends, operations and future
business opportunities and
- increasing our and our subsidiaries' exposure to increases in interest
rates given that certain of our and our subsidiaries' borrowings may be
at variable rates of interest.
In addition, we may under certain circumstances be obligated to offer to
repurchase certain outstanding securities prior to maturity and there can be no
assurance that we will have available financial resources necessary or otherwise
be able to repurchase those securities in such circumstances (including, without
limitation, on the occurrence of a Change of Control Triggering Event).
THE ANTICIPATED CONSTRUCTION COSTS OF OUR NETWORK WILL INCREASE AS A RESULT OF
OUR RECENT ACQUISITIONS AND WILL REQUIRE SUBSTANTIAL AMOUNTS OF ADDITIONAL
FUNDING
Following our recent and proposed acquisitions, our capital expenses and
cost of operations for the development, construction and operation of our
combined telecommunications networks will significantly increase. We intend to
fund a portion of these costs with cash, cash equivalents and marketable
securities and funds generated by the operations of our subsidiaries. However,
given our most recent acquisitions, we estimate that significant amounts of
additional funding will be necessary to meet these capital expenditure
requirements.
We cannot be certain that:
- we will be able to obtain additional financing with acceptable terms,
- actual construction costs will meet our expectations,
- we will satisfy conditions precedent to advances under future credit
facilities,
- we will not acquire additional businesses that require additional
capital,
- we will be able to generate sufficient cash from operations to meet
capital requirements, debt service and other obligations when required or
- our subsidiaries will withstand exposure to exchange and interest rate
fluctuations.
We do not have any firm additional financing plans to address the factors
enumerated above, except in relation to the New Credit Facility which we discuss
below.
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<PAGE> 24
NEED FOR ADDITIONAL FINANCING -- WE DO NOT EXPECT TO GENERATE SUFFICIENT CASH
FLOW TO REPAY AT MATURITY THE ENTIRE PRINCIPAL AMOUNT OF OUR OUTSTANDING
INDEBTEDNESS
We anticipate that NTL and its subsidiaries will not generate sufficient
cash flow from operations to repay at maturity the entire principal amount of
our outstanding indebtedness. Some of the measures we may take to refinance our
debt include:
- refinancing all or portions of such indebtedness,
- seeking modifications to the terms of such indebtedness,
- seeking additional debt financing (which may require us to obtain the
consent of some of our lenders) and
- seeking additional equity financing.
We cannot be certain that we will succeed in executing any of these
measures.
Chase has committed to make available to us a L480 million ($816 million)
senior secured credit facility, subject to the renegotiation of the New Credit
Facility structure and pricing.
ACQUISITIONS ARE SUBJECT TO RISK
We will continue to consider strategic acquisitions and combinations that
involve operators or owners of licenses to operate cable, telephone, television
or telecommunications systems or services and related businesses that operate
principally in the UK. If consummated, some of these transactions would
significantly alter our holdings and might require us to incur substantial
indebtedness or raise additional equity. We cannot assure you that, with respect
to the recent acquisitions of Comcast and ComTel and the proposed Diamond
acquisition, as well as future acquisitions, that we:
- will realize any anticipated benefits,
- will successfully integrate the businesses with our operations, or
- will manage such integration without adversely affecting NTL.
The indentures governing our existing indebtedness permit us to assume
additional debt in order to finance the acquisition of either tangible or
intangible assets, licenses and computer software that are used in connection
with a cable business, as well as certain entities that are directly or
indirectly engaged in a cable business.
WE ARE A HOLDING COMPANY THAT IS DEPENDENT UPON CASH FLOW FROM OUR SUBSIDIARIES.
OUR ABILITY TO ACCESS THAT CASH FLOW MAY BE LIMITED IN SOME CIRCUMSTANCES
We are a holding company that conducts its operations through direct and
indirect wholly-owned subsidiaries and affiliated joint ventures. Consequently,
we hold no significant assets other than our investments in and advances to our
subsidiaries and affiliated joint ventures. We depend upon the receipt of
sufficient funds from our subsidiaries and affiliated joint ventures to meet our
obligations. Additionally, our claim to any distribution of assets following
liquidation of a subsidiary or joint venture is subordinate to the prior senior
claims of any other creditors or direct or indirect owners of those subsidiaries
and joint ventures. The obligations of our subsidiaries which are payable to us
are also subordinate to the claims of the lenders under the New Credit Facility.
Additionally, the terms of the New Credit Facility (when renegotiated) and
the terms of existing and future indebtedness of our subsidiaries may limit the
payment of dividends, loans and other distributions to us. In the absence of a
default, we anticipate that the New Credit Facility, when we renegotiate it,
will generally permit payments to us to pay the interest and principal of
existing indebtedness.
Each of our subsidiaries that is a Delaware corporation may pay dividends
under Delaware General Corporation Law only out of its surplus or, in the event
that it has no surplus, out of its net profits for that
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<PAGE> 25
fiscal year or the immediately preceding fiscal year in which the subsidiary
declares the dividend. Each of our subsidiaries that is a UK corporation may pay
dividends under UK law only out of distributable profits. Under UK law such
distributable profits consist of accumulated, realized profits less previous
distributions and capitalization as well as realized losses that have not been
written off in a reduction or reorganization of capital. Other statutory and
general English law obligations also affect the ability of our subsidiaries to
declare dividends and the ability of our subsidiaries to make payments to us in
compliance with inter company loans. In addition, the UK may impose a
withholding tax on payments of interest and advance corporation tax on
distributions (of interest, dividends or otherwise) by our UK subsidiaries. Each
of our subsidiaries that is a Bermuda corporation may pay dividends subject to
the satisfaction of statutory solvency tests.
The Old Notes are, and the New Notes will be effectively subordinated to
all existing and future indebtedness and other liabilities and commitments of
our subsidiaries, including borrowings under the New Credit Facility. As of
September 30, 1998, after giving effect to the Amalgamation, the Recent
Financings and the use of proceeds therefrom, the total liabilities of our
subsidiaries were approximately $967 million (L1,644 million). In addition, our
subsidiaries may incur additional indebtedness to finance the construction,
capital expenditure and working capital needs of a cable business and the
acquisition of cable assets or the acquisitions of certain entities, directly or
indirectly, engaged in a cable business, if such entities meet certain
qualifying criteria. In light of our strategy of continued growth, in part
through acquisitions, we may and our subsidiaries may incur substantial
indebtedness in the future. Borrowings under the New Credit Facility are, and a
substantial portion of our and our subsidiaries' future indebtedness is expected
to be, secured by liens and other security interests over the assets of our
subsidiaries and our equity interests in our subsidiaries. In addition, our
ability and, therefore, the holders of Notes, to benefit from distributions of
assets of our subsidiaries may be limited to the extent that the outstanding
shares of any of its subsidiaries and such subsidiary's assets are pledged to
secure other debt of ours or our subsidiaries.
Any right we have to receive assets of any subsidiary upon such
subsidiary's liquidation or reorganization will be structurally subordinated to
the claims of that subsidiary's creditors, except to the extent we are
recognized as an unsubordinated creditor of such subsidiary. However, to the
extent we are so recognized, our claims would still be subject to any security
interests in the assets of such subsidiary and any liabilities of such
subsidiary senior to those held by us and may otherwise be challenged by third
parties in a liquidation or reorganization proceeding. In addition, the New
Credit Facility requires us to subordinate its right to repayment of
indebtedness outstanding between it and the borrower under such agreement or any
other subsidiary of ours to the rights of the lenders under the agreement. In
particular our rights and other subsidiaries to repayment of principal and
interest lent by them to the borrower or other subsidiaries under the New Credit
Facility have been and will be subordinated to the rights of the lenders under
the New Credit Facility pursuant to subordination agreements with such lenders.
Our principal fixed assets are cable headends, cable televisions and
telecommunications distribution equipment, telecommunications switches and
customer equipment, transmission towers, masts and antennas and the sites on
which they are located. These assets are highly specialized and, individually,
may have limited marketability. If secured creditors seize the assets that
secure our debt, these creditors would likely seek to sell the business as a
going concern.
WE HAVE HISTORICALLY INCURRED LOSSES AND GENERATED NEGATIVE CASH FLOWS
We had net losses for
- the nine months ended September 30, 1998 of $336.1 million and
- the nine months ended September 30, 1997 of $256.8 million
and for the years ended December 31,
- 1997: $333.1 million
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- 1996: $254.5 million
- 1995: $90.8 million
- 1994: $29.6 million
- 1993: $11.1 million
As of September 30, 1998, our accumulated deficit was $1.1 billion.
Construction and operating expenditures have resulted in negative cash
flow, which we expect will continue at least until we establish an adequate
customer base. We also expect to incur substantial additional losses. We cannot
be certain that we will achieve or sustain profitability in the future. Failure
to achieve profitability could diminish our ability to sustain operations and
obtain additional required funds. In addition, such a failure would adversely
affect our ability to make required payments on our indebtedness and our
preferred stock.
WE HAVE HISTORICALLY HAD A DEFICIENCY OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For the nine months ended September 30, 1998 and the years ended December
31, 1997, 1996, 1995, 1994 and 1993, our earnings were insufficient to cover
fixed charges by approximately $351.7 million, $355.4 million, $257.1 million,
$105.4 million, $31.8 million and $10.4 million, respectively. Our earnings for
the nine months ended September 30, 1998 and the year ended December 31, 1997
were insufficient to cover combined fixed charges and preferred stock dividends
by $363.3 million and $367.4 million, respectively. Fixed charges consist of
interest expense, including capitalized interest, amortization of fees related
to debt financing and rent expense deemed to be interest.
WE ARE SUBJECT TO REGULATORY REQUIREMENTS TO MEET BUILD MILESTONES IN THE
CONSTRUCTION OF OUR NETWORK
We hold licences under the Telecommunications Act 1984 and the Broadcasting
Act 1990 which grant exclusive rights to convey and provide cable television
services for the relevant areas subject to certain obligations as to the number
of premises to which, and the timetable within which, such services must be made
available. The aggregate requirement is to pass approximately 4 million
(excluding Cable London and Diamond) premises over the period up to 2005. This
position is now under review by the regulatory authorities in view of the U.K.
Government's announcement in 1998 that all exclusive franchising would come to
an end by January 1, 2001. We believe we have the necessary resources to satisfy
our build program milestones between now and January 1, 2001, although we cannot
be certain that such obligations will be met. Failure to meet license milestone
requirements, or to modify such requirements may result in revocation of the
relevant licenses.
WE CANNOT BE CERTAIN AS TO FUTURE NETWORK CONSTRUCTION PROGRESS AND COSTS
At September 30, 1998, construction of our network had passed in excess of
57% of our final milestone requirements for all our franchises. Successful
construction and development of the combined network will depend on, among other
things, our 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. We cannot be certain that the actual costs of network construction
will remain as budgeted.
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<PAGE> 27
Our licenses generally require underground construction of our network
through a procedure that is significantly more expensive and time consuming than
the aerial alternative. Underground construction is more expensive because
mechanized installment methods conflict with underground utility infrastructure.
Additionally, we must incur the cost of restoring the surface area subsequent to
construction. Thus far we have succeeded in negotiating favorable construction
contracts, but construction costs could increase significantly over the next few
years as existing contracts expire and as demand for cable construction services
grow. We cannot be certain that we will be able to construct our network in a
timely manner or at a reasonable cost.
WE ARE SUBJECT TO SIGNIFICANT COMPETITION IN OUR BUSINESSES
We face significant competition from established and new competitors in the
areas of residential telephony, business telecoms services and cable television.
We believe that competition will intensify in each of these business areas,
particularly business telecommunications.
Residential Telephony. We compete primarily with British
Telecommunications plc ("BT") in providing telephone services to residential
customers. BT, formerly the only major national public telephone operator
("PTC") in the UK, occupies an established market position and manages fully
built networks with resources that are substantially greater than ours.
According to OFTEL, at March 31, 1997, BT serviced nearly 90% of UK residential
telephone exchange line customers. Our growth in telecommunications services
depends upon our ability to appropriate BT's customers.
In our view, value-for-money is currently one of the more important
influences on UK customers. Our goal to remain competitive with BT's residential
telephony service rates may cause a decline in our average per-line residential
telecommunications revenues, and we may not achieve desired penetration rates.
Consequently, we may experience a decline in total revenues.
On February 8, 1996, the DTI awarded BT and RadioTEL Systems licences that
authorize those companies to operate radio fixed access services in the 2 GHz
band in Scotland, Wales and Northern Ireland. These licensees create additional
competition for the our residential telephony services in certain remote rural
areas of our franchise in Northern Ireland. We also compete with mobile
networks, which is a technology that may grow to be competitive with our other
networks, particularly if call charges are reduced further on the mobile
networks. Our Radio Communications group may enable us to benefit from growth in
the mobile networks technology. We cannot assure you that we will be able to
compete successfully with BT or any other telecommunication operations.
We believe that we have a competitive advantage in the residential market
because we offer integrated telephone, CATV, telecommunication services
(including interactive and on-line services) and dual product packages that are
designed to encourage customers to subscribe to multiple services. We cannot be
certain that this perceived competitive advantage will continue. Indeed, the UK
recently announced that BT and all other operators would be permitted to provide
and convey CATV services throughout the UK starting January 1, 2001. In
addition, all areas currently without franchises will open to general
competition in the future, and exclusive franchises will no longer be awarded.
British Sky Broadcasting ("BSkyB") currently markets telecommunications
services on an indirect access basis (which requires the customer to dial
additional digits before entering the primary telephone number, thus diverting
calls onto another operator's network). In addition, BSkyB has proposed a joint
venture with BT, Midland Bank and Matsushita that is known as British
Interactive Broadcasting. If this joint venture's bid to enter the interactive
digital services market passes review by the competition directorate of the
European Commission, we believe that the resulting combination would provide
significant competition.
Business Telecommunications. BT is also our principal competitor in
providing business telecommunications services. Additionally, we compete with
C&WC, Energis Communications Limited, a subsidiary of the National Grid Company
plc, Scottish Telecom in Scotland and with other companies that have been
granted telecommunications licenses such as WorldCom and Colt, and the new
non-network based
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resellers, such as Citibell. In the future, we 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 existing and new market entrants
compete aggressively.
CATV. Our CATV systems compete with direct reception over-the-air
broadcast television, direct-to-home satellite services and satellite master
antenna systems. Additionally, pay television and pay-per-view services offered
by us compete with other communications and entertainment media, including home
video, cinema exhibition of feature films, live theater and newly emerging
multimedia services.
On September 29, 1993, the ITC issued a statement encouraging BT and the
other national public telephone operators to provide "video-on-demand" services
under their existing licenses. We expect to face competition from programming
provided by video-on-demand services, including those provided by PTOs with
national licenses, as well as (after 2001) from companies which seek to provide
CATV services in our franchises under the recently announced change of
government policy.
The Broadcasting Act of 1996 provides for the regulation of digital
terrestrial television that will initially provide an additional 18 or more new
terrestrial channels serving between 60% and 90% of the UK's population. Some of
the channels are reserved for digital simultaneous broadcasting by the existing
terrestrial broadcasters. The introduction of digital terrestrial television, as
well as digital satellite television, will provide both additional programming
sources as well as increased competition.
We do not now how developing media may impact the market for cable
television systems. As-of-yet undeveloped technologies may become dominant in
the future and render cable television systems less profitable or even obsolete.
Broadcast Services. In February 1997, the UK Government sold the Home
Service and World Service transmission businesses of the British Broadcasting
Corporation to a consortium led by Castle Tower Corporation. We may encounter
significant competition from this consortium following the expiration of our
current contracts with the Independent Television contractors and Channel 4 and
the Welsh Fourth Channel ("SC4") for the provision of transmission services.
WE HAVE LIMITED ACCESS TO PROGRAMMING WHICH MAY AFFECT THE COMPETITIVENESS OF
OUR CABLE TELEVISION SERVICES
The competitiveness of our cable television services depends on our access
to programming at a reasonable cost. While various sources of programming are
available to cable system operators in the UK, BSkyB is currently the most
important supplier of cable programming and the exclusive supplier of certain
programming. BSkyB provides the industry with a range of programming, including
the most popular mainstream premium movie channels available in the UK and,
currently, exclusive English premier league soccer games. BSkyB also competes
with us by operating a DTH satellite service that provides programming,
including programming that is also offered by us, to approximately 4 million
subscribers in the UK. BSkyB's programming is crucial in attracting and
retaining cable television subscribers and, in the absence of more alternative
programming sources, BSkyB may raise prices for its programming without
significant competitive pricing pressure.
Like many other cable operators, we obtain most of our programming through
unofficial arrangements with BSkyB and other programming suppliers. To date, we
have not had a formal contract with BSkyB, although we have discussed entering
such an agreement for some time. We cannot be certain that we will reach a
definitive agreement with BSkyB, that the terms of such agreement will improve
our current arrangement, or that BSkyB will continue to supply programming to us
on reasonable commercial terms. Moreover, we have not, to date, entered into
written contracts with many of our other program suppliers. The loss of BSkyB or
other programming, a deterioration in the perceived quality of BSkyB or other
programming, or a material increase in the price that we must pay for BSkyB or
other programming could have a material adverse effect on us.
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OUR PRINCIPAL BUSINESSES ARE SUBJECT TO GOVERNMENT REGULATION WHICH MAY CHANGE
Our principal business activities in the UK are regulated and supervised by
various governmental bodies that include the ITC, the Department of Culture,
Media and Sport, the Radio Communications Agency, the Radio Authority and OFTEL
under the directions of the Director General and the DTI on behalf of The
Secretary of State for Trade and Industry. Changes in laws, regulations or
governmental policy or the interpretations of such laws or regulations affecting
our activities and those of our competitors, such as licensing requirements,
changes in price regulation and deregulation of interconnection arrangements,
could have a material adverse effect on us.
Specifically, the prices that we may charge the ITV companies, Channel 4
and S4C, for television transmission services are subject to price controls
imposed by the OFTEL. On December 24, 1996, the Director General of OFTEL issued
a formal modification to our Telecommunications Act License to address the new
price control for the television transmission services that we provide to the
ITV companies, Channel 4 and S4C. Under the new arrangements, our total revenues
receivable for such services (excluding certain insignificant items) can not
exceed L53.15 million in 1997 and, thereafter through 2002, they will be
adjusted annually by the Retail Prices Index minus 4%. These price controls may
be reviewed again prior to 2002 and price controls for the year following
December 31, 2002 may have a material adverse effect on the revenues receivable
from the ITV companies, Channel 4 and S4C.
As a UK company we are subject to regulatory initiatives of the European
Commission. Changes promulgated in EU Directives, particularly television
"production" and "programming" quotas, may reduce the range of programing and
increase the costs of purchasing television programming. In addition, EU
Directives may introduce provisions that require us to provide access to our
cable network infrastructure to other service providers.
OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON SITE SHARING ARRANGEMENT
As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, CTI and the Company have made arrangements to share a
large number of sites. Under the present arrangements, one of the parties (the
"Station Owner") is the owner, lessee or licensee of each site and the other
party (the "Sharer") is entitled to request a license to use certain facilities
at that site. Each site license granted pursuant to the site sharing agreement
is for an initial period expiring on December 31, 2005 (subject to title and to
the continuation in force of the site sharing agreement) and provides that, if
requested by the Sharer, it will be extended for further periods. The site
sharing agreement and each site license provide for the Station Owner to be paid
a commercial license fee and for the Sharer to be responsible, in normal
circumstances, for the costs of accommodation and equipment used exclusively by
it. Either party may terminate the agreement by 5 years' notice in writing to
the other expiring on December 31, 2005 or at any date which is a date 10 years
or a multiple of 10 years after December 31, 2005. Although the Company does not
anticipate that the site sharing agreement or the site licenses will be
terminated, there can be no assurance that such a termination will not occur.
Termination of the site sharing arrangements would have a material adverse
effect on our business.
OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON ITV AND OTHER CONTRACTS
Our broadcast services business is substantially dependent upon contracts
with the ITV contractors, Channel 4/S4C and Vodafone for the provision of
transmission services. The prices that the Company may charge these companies
for television transmission services are subject to regulation by OFTEL. See
"-- Our Principal Businesses Are Subject to Government Regulation Which May
Change." The contracts with the ITV contractors and Channel 4/S4C terminate on
December 31, 2002. Although, historically, the ITV contractors and Channel 4/S4C
have renewed their contracts with us, there can be no assurance that they will
do so upon expiration of the current contracts, that they will not negotiate
terms for our provision of transmission services on a basis less favorable to us
or that they would not seek to obtain from third
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parties a portion of the transmission services currently provided by us. The
loss of any one of these contracts could have a material adverse effect on us.
MANAGEMENT OF GROWTH AND EXPANSION
We have experienced rapid growth and development in a relatively short
period, and we plan to meet our strategic objectives and regulatory milestones.
Management of such growth will require, among other things, stringent control of
construction and other costs, continued development of our financial and
management controls, increased marketing activities and the training of new
personnel. Failure to manage our rapid growth and development successfully could
have a material adverse effect on us.
WE ARE DEPENDENT UPON A SMALL NUMBER OF KEY PERSONNEL
A small number of key executive officers manage our businesses, and the
loss of one or more of them could have a material adverse effect on us. We
believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel. We have
not entered into written employment contracts or non-compete agreements with,
nor have we obtained life insurance policies covering, such key executive
officers. Certain of our senior managers also serve as members of senior
management of other companies in the telecommunications business.
THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND WE
CANNOT PREDICT THE EFFECT OF SUCH CHANGES ON OUR BUSINESSES
The telecommunications industry is subject to rapid and significant changes
in technology and the effect of technological changes on our businesses cannot
be predicted. However, the cost of implementation for emerging and future
technologies could be significant, and our ability to fund such implementation
may depend on our ability to obtain additional financing.
WE ARE SUBJECT TO CURRENCY RISK TO THE EXTENT WE OBTAIN FINANCING IN US DOLLARS
BUT INCUR EXPENSES IN POUNDS STERLING
To the extent that we obtain financing in United States dollars and incur
construction and operating expenses in British pounds sterling, we will
encounter currency exchange rate risks. In addition, we generate revenues
primarily in British pounds sterling while we pay interest and principal
obligations with respect to most of our existing indebtedness in United States
dollars. We have entered into an option agreement to hedge some of the risk of
exchange rate fluctuations related to debt service and corporate expenses. While
we may consider entering into additional transactions to hedge the risk of
exchange rate fluctuations, we cannot be certain that we will engage in such
transactions; or, if we do, that those transactions will be successful and that
shifts in the currency exchange rates will not have a material adverse effect on
us.
WE HAVE LIMITED INSURANCE COVERAGE OF OUR NETWORK
We obtain insurance of the type and in the amounts that we believe are
customary in the UK for similar companies. Consistent with this practice, we do
not insure the underground portion of our cable network. Any catastrophe that
affects a significant portion of a system's underground cable network could
result in substantial uninsured losses.
FORWARD-LOOKING STATEMENTS
This Prospectus includes or incorporates by reference certain projections
of broadcast transmission revenues, build-out results and other forward-looking
statements, including those using words such as "believe," "anticipate,"
"should," "intend," "plan," "will," "expects," "estimates," "projects,"
"positioned," "strategy," and similar expressions; in reviewing such information
it should be kept in mind that actual results may differ materially from those
in such projections and forward-looking statements. Important assumptions and
factors that could cause actual results to differ materially from those
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contemplated or projected, forecast, estimated or budgeted in or expressed or
implied by such projections and forward-looking statements include those
specified in this Risk Factors section, as well as industry trends, our 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. We assume no
obligation to update projections or other forward-looking statements to reflect
actual funding requirements, capital expenditures and results, changes in
assumptions or in the factors affecting such projections or other
forward-looking statements. There can be no assurance that:
- any financings will be obtained when required, on acceptable terms or at
all;
- we or our subsidiaries will be able to access all amounts available under
the terms of the New Credit Facility or other financings;
- actual amounts required to complete our planned build out will not exceed
the amount estimated above (see "-- We Cannot be Certain as to Future
Network Construction Progress and Costs") or that additional financing
substantially in excess of that amount will not be required;
- conditions precedent to advances under the New Credit Facility will be
satisfied when funds are required;
- we will not acquire franchises, licenses or other new businesses (in
addition to the Amalgamation) that would require additional capital;
- operating cash flow will meet expectations or that we will be able to
access such cash from its subsidiaries' operations to meet any unfunded
portion of its capital requirements when required or to satisfy the terms
of the Notes, or the Company's other debt instruments and agreements for
the incurrence of additional debt financing (see "-- We are a Holding
Company that is Dependent Upon Cash Flow from Our Subsidiaries. Our
Ability to Access That Cash Flow May Be Limited in Some Circumstances");
- Our subsidiaries will not incur losses from their exposure to exchange
rate fluctuations or be adversely affected by interest rate fluctuations
(see "-- We are subject to Currency Risk to the extent we obtain
financing in U.S. dollars but incur expenses in pounds sterling");
- there will not be adverse changes in applicable United States or United
Kingdom tax laws; or
- the effects of monetary union in Europe, when achieved, will not be
materially adverse to us.
All forward-looking statements included or incorporated by reference in this
Prospectus are expressly qualified by the foregoing.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), we will accept for exchange Old Notes which are properly
tendered on or prior to the Expiration Date and not withdrawn as permitted
below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City
time, on , 1999; provided however, that if we, in our sole
discretion, have extended the period of time for which the Exchange Offer is
open, the term "Expiration Date" means the latest time and date to which the
Exchange Offer is extended.
As of the date of this Prospectus, $625,000,000 aggregate principal amount
of the 11 1/2% Old Notes and $450,000,000,000 aggregate principal amount at
maturity of the 12 3/8% Old Notes were outstanding. This Prospectus, together
with the Letter of Transmittal, is first being sent on or about the date of this
Prospectus, to all Holders of Old Notes known to us. Our obligation to accept
Old Notes for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth under "Certain Conditions to the Exchange Offer" below.
We expressly reserve the right, at any time or from time to time, to extend
the period of time during which the Exchange Offer is open, and thereby delay
acceptance for exchange of any Old Notes, by giving oral or written notice of
such extension to the Holders thereof. During any such extension, all Old Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by us. Any Old Notes not accepted for exchange for any
reason will be returned without expense to the tendering Holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 and any integral multiple thereof.
We expressly reserve the right to amend or terminate the Exchange Offer,
and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "Certain Conditions to the Exchange Offer." We will give
oral or written notice of any extension, amendment, non-acceptance or
termination to the Holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to us of Old Notes by a Holder thereof as set forth below and
the acceptance thereof by us will constitute a binding agreement between the
tendering Holder and us upon the terms and subject to the conditions set forth
in this Prospectus and in the accompanying Letter of Transmittal in respect of
the applicable Old Notes, as the case may be. Except as set forth below, a
Holder (which term, for purposes of the Exchange Offer, includes any participant
in the Book-Entry Transfer Facility (as defined) system whose name appears on a
security position listing as the holder of such Old Notes) who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit the Letter
of Transmittal, properly completed and duly executed, including all other
documents required by such Letter of Transmittal or (in the case of a book-entry
transfer) an Agent's Message in lieu of such Letter of Transmittal to The Chase
Manhattan Bank (the "Exchange Agent") at one of the addresses set forth below
under "Exchange Agent", on or prior to the Expiration Date. In addition, either
(i) certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal prior to the Expiration Date, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Old
Notes, if such procedure is available, into the appropriate Exchange Agent's
account at DTC (the "Book-Entry Transfer Facility") pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date along with the Letter of Transmittal or an Agent's
Message in lieu of a Letter of Transmittal, or (iii) the Holder must comply with
the guaranteed delivery procedures
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described below. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to and received by the appropriate Exchange Agent
and forming a part of a Book-Entry Confirmation, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from the
tendering participant, which acknowledgment states that such participant has
received and agrees to be bound by, and make the representations and warranties
contained in, the appropriate Letter of Transmittal and that the Company may
enforce such Letter of Transmittal against such participant.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT YOUR ELECTION AND RISK. IF SUCH DELIVERY IS BY MAIL, IT
IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO US.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a Holder of the Old Notes who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States or by such other Eligible
Institution within the meaning of Rule 17 (A)(d)-15 of the Exchange Act
(collectively, "Eligible Institutions"). If Old Notes are registered in the name
of a person other than a signer of the Letter of Transmittal, the Old Notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer, or exchange, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered Holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
us in our sole discretion, which determination shall be final and binding. We
reserve the absolute right to reject any and all tenders of any particular Old
Note not properly tendered or to not accept any particular Old Note which
acceptance might, in the judgment of the Company or its counsel, be unlawful. We
also reserve the absolute right to waive any defects or irregularities or
conditions of the Exchange Offer as to any particular Old Note either before or
after the Expiration Date (including the right to waive the ineligibility of any
Holder who seeks to tender Old Notes in the Exchange Offer). The interpretation
of the terms and conditions of the Exchange Offer as to any particular Old Note
either before or after the Expiration Date (including the appropriate Letter of
Transmittal and the instructions thereto) by us shall be final and binding on
all parties. Unless waived, any defects or irregularities in connection with
tenders of Old Notes for exchange must be cured within such reasonable period of
time as we shall determine. Neither we, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If a Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly as
the name or names of the registered Holder or Holders that appear on the Old
Notes.
If a Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to us of their authority to so act
must be submitted with the Letter of Transmittal.
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By tendering, each Holder will represent to us that, among other things,
the New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is the Holder, that neither the Holder nor any such other person
has an arrangement or understanding with any person to participate in the
distribution of such New Notes and that neither the Holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
NTL. If any Holder is an affiliate of NTL, is engaged in or intends to engage in
or has any arrangement with any person to participate in the distribution of the
New Notes to be acquired pursuant to the Exchange Offer, such Holders (i) could
not rely on the applicable interpretations of the staff of the Commission and
(ii) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
who holds Old Notes acquired for its own account as a result of market-making
activities or other trading activities, and who receives New Notes in exchange
for such Old Notes pursuant to the Exchange Offer, may be an "underwriter"
within the meaning of the Securities Act and must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
we will accept, promptly after the Expiration Date, all Old Notes properly
tendered, issue the New Notes promptly after acceptance of the Old Notes and
cause the New Notes to be authenticated by the Trustee. See "Certain Conditions
to the Exchange Offer" below. For purposes of the Exchange Offer, we shall be
deemed to have accepted properly tendered Old Notes for exchange when, as and if
we have given oral (promptly confirmed in writing) or written notice thereof to
the Exchange Agent.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note of the same class having a principal amount at maturity equal
to that of the surrendered Old Note. If the Exchange Offer with respect to the
11 1/2% Notes is not consummated by June 10, 1999, special interest will accrue
(in addition to the stated interest on the 11 1/2% Old Notes) from and including
June 11, 1999. If the Exchange Offer with respect to the 12 3/8% Notes is not
consummated by June 14, 1999, special interest will accrue (in addition to the
amortization of original issue discount) from and including June 15, 1999.
Special interest, if any, will be payable in cash semiannually in arrears each
April 1 and October 1, respectively, to holders of record of the Old Notes on
the immediately preceding March 15 and September 15, respectively, at a rate per
annum equal to 0.50% of the principal amount of the 11 1/2% Old Notes or the
Accreted Value of the 12 3/8% Old Notes, as applicable (determined daily). The
aggregate amount of special interest payable pursuant to the above provisions
will in no event exceed 1.50% per annum of the principal amount of the 11 1/2%
Old Notes or the Accreted Value of the 12 3/8% Old Notes, as applicable
(determined daily). Upon the consummation of the Exchange Offer with respect to
the 11 1/2% Old Notes after June 10, 1999, and upon the consummation of the
Exchange Offer with respect to the 12 3/8% Old Notes after June 14, 1999, the
special interest payable on the Old Notes from the date of such consummation
will cease to accrue and all accrued and unpaid special interest as of the
consummation of the Exchange Offer shall be paid promptly thereafter to the
holders of record of the Old Notes immediately prior to the time of such
occurrence. Following the consummation of the Exchange Offer the interest terms
shall revert to the original terms set forth in the Notes.
The 11 1/2% New Notes will bear interest from the most recent date to which
interest has been paid on the 11 1/2% Old Notes. Accordingly, if the relevant
record date for interest payment occurs after the consummation of the Exchange
Offer, registered holders of 11 1/2% New Notes on such record date will receive
interest accruing from the most recent date to which interest has been paid. If,
however, the relevant record date for interest payment occurs prior to the
consummation of the Exchange Offer, registered holders of 11 1/2% Old Notes on
such record date will receive interest accruing from the most recent date to
which interest has been paid. 11 1/2% Old Notes accepted for exchange will cease
to accrue
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interest from and after the date of consummation of the Exchange Offer, except
as set forth in the immediately preceding sentence. Holders of 11 1/2% Old Notes
whose 11 1/2% Old Notes are accepted for exchange will not receive any payment
in respect of interest, if any, on such 11 1/2% Old Notes otherwise payable on
any interest payment date the record date for which occurs on or after
consummation of the Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, the Letter of Transmittal properly completed and
duly executed or an Agent's Message in lieu thereof and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are submitted
for an amount or quantity greater than the Holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering Holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry procedures described below, such non-exchanged Old
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of the
Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will request the establishment of accounts with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus unless
the Exchange Agent already has established an account with the Book-Entry
Transfer Facility suitable for the Exchange Offer, and any financial institution
that is a participant in the Book-Entry Transfer Facility's system may make
book-entry delivery of Old Notes by causing the Book-Entry Transfer Facility to
transfer such Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for transfer.
ALTHOUGH DELIVERY OF OLD NOTES MAY BE EFFECTED THROUGH BOOK-ENTRY TRANSFER
AT THE BOOK-ENTRY TRANSFER FACILITY, THE LETTER OF TRANSMITTAL (OR A FACSIMILE
THEREOF), WITH ANY REQUIRED SIGNATURE GUARANTEES OR AN AGENT'S MESSAGE IN LIEU
THEREOF AND ANY OTHER REQUIRED DOCUMENTS, MUST, IN ANY CASE, BE TRANSMITTED TO
AND RECEIVED BY THE EXCHANGE AGENT AT ONE OF THE ADDRESSES SET FORTH BELOW UNDER
"EXCHANGE AGENT," AS THE CASE MAY BE, ON OR PRIOR TO THE EXPIRATION DATE OR THE
GUARANTEED DELIVERY PROCEDURES DESCRIBED BELOW MUST BE COMPLIED WITH.
GUARANTEED DELIVERY PROCEDURES
If a Holder of the Old Notes desires to tender such Old Notes and the Old
Notes are not immediately available, or time will not permit such Holder's Old
Notes or other required documents to reach the Exchange Agent before the
Expiration Date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if (i) the tender is made through an
Eligible Institution, (ii) prior to the Expiration Date, the Exchange Agent
received from such Eligible Institution the appropriate Notice of Guaranteed
delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the Holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
in proper form for transfer, or a Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof) with any required
signature guarantees, and any other documents required by the appropriate Letter
of Transmittal will be deposited by the Eligible Institution with the Exchange
Agent and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry
31
<PAGE> 36
Confirmation, as the case may be, together with a properly completed and duly
executed appropriate Letter of Transmittal (or facsimile thereof or Agent's
Message in lieu thereof) with any required signature guarantees, and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within five NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the addresses set forth below under "Exchange
Agent". Any such notice of withdrawal must specify the name of the person having
tendered the Old Notes to be withdrawn, identify the Old Notes to be withdrawn
(including the principal amount in the case of 11 1/2% Old Notes or the
principal amount at maturity in the case of the 12 3/8% Old Notes, and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing Holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent then, prior to the release of such certificates the withdrawing
Holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such Holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, the executed notice of withdrawal, guaranteed by an Eligible Institution,
unless such Holder is an Eligible Institution, must specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Old Notes and otherwise comply with the procedures of such facility.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are not exchanged for any reason will be returned to the Holder thereof without
cost to such Holder (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described above, such Old Notes
will be credited to an account maintained with such Book-Entry Transfer Facility
for the Old Notes) as soon as practicable after withdrawal, rejection of tender
or termination of the Exchange Offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "-- Procedures for
Tendering Old Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, NTL will not be
required to accept for exchange, or to issue New Notes in exchange for, the Old
Notes and may terminate or amend the Exchange Offer if at any time before the
acceptance of such Old Notes for exchange or the exchange of the New Notes for
such Old Notes any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in our
ability to accept for exchange or exchange some or all of the Old Notes
pursuant to the Exchange Offer, or any statute, rule, regulation, order or
injunction shall be sought, proposed, introduced, enacted, promulgated or
deemed applicable to the Exchange Offer or any of the transactions
contemplated by the Exchange Offer by any government or governmental
authority, domestic or foreign, or any action shall have been taken,
proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign, that in our sole judgment might directly or
indirectly result in any of the consequences referred to in clauses (i) or
(ii) above or, on our sole judgement, might result in the holders of New
Notes having obligations with respect to resales and
32
<PAGE> 37
transfers of New Notes which are greater than those described in the
interpretation of the Commission referred to on the cover page of this
Prospectus, or would otherwise make it inadvisable to proceed with the
Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the issuer to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of NTL and our subsidiaries taken as a whole that, in our
reasonable judgment, is or may be adverse to us, or we shall have become
aware of facts that, in our reasonable judgment, have or may have adverse
significance with respect to the value of the Old Notes or the New Notes;
which, in our reasonable judgment in any case, and regardless of the
circumstances (including any action by us) giving rise to any such condition,
makes it inadvisable to proceed with the Exchange Offer and/or with such
acceptance or exchange or with such exchange.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in its sole
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, we will not accept for exchange any Old Notes tendered, and no
New Notes will be issued in exchange for any such Old Notes, if at such time any
stop order shall be threatened or in effect with respect to the Registration
Statement of which this Prospectus constitutes a part or the qualification of
the Indentures under the Trust Indenture Act of 1939, as amended (the "TIA").
EXCHANGE AGENT
The Chase Manhattan Bank (the "Exchange Agent") has been appointed as the
Exchange Agent in respect of the Notes for the Exchange Offer. All executed
Letters of Transmittal in respect of the Notes should be directed to the
Exchange Agent at one of the addresses set forth below. Questions and requests
for assistance, requests for additional copies of this Prospectus or of the
Letter of Transmittal in respect of
33
<PAGE> 38
the Notes and requests for Notices of Guaranteed Delivery should be directed to
the Exchange Agent addressed as follows:
Delivery To: The Chase Manhattan Bank, as Exchange Agent
<TABLE>
<S> <C>
In New York
By Mail, By Hand and Overnight Courier: By Facsimile:
The Chase Manhattan Bank (212) 638-7380
Corporate Trust-Securities Window (212) 638-7381
Room 234 -- North Building
55 Water Street Confirm by Telephone:
New York, New York 10041 Carlos Esteves: (212) 638-0828
(212) 638-0454
In Luxembourg
By Mail, By Hand and Overnight Courier: By Facsimile:
Chase Manhattan Bank Luxembourg S.A. (352) 46 26 85 380
5 Rue Plaetis
L-2338, Luxembourg Confirm by Telephone:
Veronique Cridel: (352) 46 26 85 284
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL IN RESPECT OF THE NOTES TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptances of the Exchange Offer except for reimbursement of mailing expenses.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by us and are estimated in the aggregate to be $250,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
us to register New Notes in the name of, or request that Old Notes not tendered
or not accepted in the Exchange Offer be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject, to the provisions in
the applicable Indenture regarding transfer and exchange of the Old Notes and
the restrictions on transfer of such Old Notes as set forth in the legend on the
Old Notes and as described in the applicable Offering Memorandum as a
consequence of the issuance of such Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. We do not currently anticipate that it will
take any action to register the Old Notes under the Securities Act or blue sky
laws.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to third parties, we believe that New Notes issued in
exchange of Old Notes, pursuant to the Exchange Offer
34
<PAGE> 39
may be offered for resale, resold or otherwise transferred by Holders thereof
(other than any such Holder which is an "affiliate" of NTL within the meaning of
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such New
Notes are acquired in the ordinary course of such Holders' business and such
Holders, other than brokers-dealers, are not engaged in, do not intend to engage
in and have no arrangement or understanding with any person to participate in,
the distribution (within the meaning of the Securities Act) of such New Notes.
If any Holder has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) could not rely on the applicable interpretations of the staff of
the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes must acknowledge that such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of such New Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. We do not
currently intend to take any action to register or qualify the sale of the New
Notes in any such jurisdictions.
35
<PAGE> 40
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange of Old Notes for
New Notes pursuant to the Exchange Offer. We used the net proceeds of
approximately $606.5 million from the sale of the 11 1/2% Old Notes to partially
repay indebtedness that was incurred under the New Credit Facility to partially
fund the ComTel Acquisition. We used most of the net proceeds of approximately
$242 million from the sale of the 12 3/8% Old Notes to repay all the remaining
indebtedness of approximately $185 million that was incurred under the New
Credit Facility to fund the ComTel Acquisition. At September 30, 1998, amounts
outstanding under the New Credit Facility bore interest at a weighted average
rate of 9.776%. Chase has committed to make available to the Company a L480
million senior secured credit facility, subject to the renegotiation of the New
Credit Facility structure and pricing. The Company intends to arrange for a
reduction in the level of Chase's commitment to make available such a senior
secured credit facility by an amount equal to the amount of net proceeds of the
offering of the 12 3/8% Notes remaining after payment in full of all amounts
then outstanding under the New Credit Facility. We intend to use the balance of
the net proceeds of approximately $57 million from the sale of the 12 3/8% Old
Notes to finance our construction, capital expenditure and working capital
requirements (including debt service and repayment obligations). In addition, a
portion of the net proceeds may also be used to make acquisitions of businesses
or assets related to our business.
EXCHANGE RATES
The following table sets forth, for the periods indicated, the Noon Buying
Rate for pounds sterling expressed in U.S. dollars per Ll.00.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(1) HIGH LOW
- ----------------------- ---------- ---------- ----- -----
<S> <C> <C> <C> <C>
1988.......................................... $1.81 $1.78 $1.91 $1.66
1989.......................................... 1.61 1.63 1.82 1.51
1990.......................................... 1.93 1.79 1.98 1.59
1991.......................................... 1.87 1.76 2.00 1.60
1992.......................................... 1.51 1.76 2.00 1.51
1993.......................................... 1.48 1.50 1.59 1.42
1994.......................................... 1.57 1.53 1.64 1.46
1995.......................................... 1.55 1.58 1.64 1.53
1996.......................................... 1.71 1.56 1.72 1.49
1997.......................................... 1.65 1.64 1.71 1.56
1998.......................................... 1.66 1.66 1.72 1.61
1999 (through January 15)..................... 1.65 1.65 1.66 1.63
</TABLE>
- ---------------
(1) The average of the Noon Buying Rates on the last day of each month during
the relevant period.
36
<PAGE> 41
CAPITALIZATION
The following table sets forth our capitalization as of September 30, 1998
and as adjusted for (i) the Amalgamation (including the sale by Partners of its
interest in Birmingham Cable Corporation Limited and the application of the
proceeds therefrom prior to the Amalgamation), (ii) the redemption of the
10 7/8% Notes on October 15, 1998, (iii) the offering of the 11 1/2% Old Notes
and the application of the net proceeds therefrom of approximately $607 million,
(iv) the offering of the 12 3/8% Old Notes and the application of the net
proceeds therefrom of approximately $242 million and (v) the offering of the New
Convertible Notes and the application of the net proceeds therefrom of
approximately $583 million (clauses (ii), (iii), (iv) and (v) are collectively
referred to herein as the "Recent Financings") .
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998
-----------------------------
ACTUAL AS ADJUSTED
-------------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and marketable securities............ $ 597,769 $ 1,319,362
========== ===========
Short term debt:
10 7/8% Notes Due 2003(1)................................. $ 148,781 $ --
Partners' 9% Note Payable to Comcast...................... -- 20,450
Current portion of long-term debt......................... -- 3,298
---------- -----------
Total short-term debt............................. $ 148,781 $ 23,748
========== ===========
Long-term debt:
12 3/8% Deferred Coupon Notes Due 2008.................... $ -- $ 249,773
11 1/2% Notes Due 2008.................................... -- 625,000
9 1/2% Notes Due 2008(2).................................. 211,693 211,693
10 3/4% Deferred Coupon Notes Due 2008.................... 316,445 316,445
9 3/4% Deferred Coupon Notes Due 2008..................... 845,172 845,172
10% Notes Due 2007........................................ 400,000 400,000
11 1/2% Deferred Coupon Notes Due 2006.................... 809,150 809,150
12 3/4% Deferred Coupon Notes Due 2005.................... 229,652 229,652
7% Convertible Subordinated Notes Due 2008................ -- 600,000
7% Convertible Subordinated Notes Due 2008................ 275,000 275,000
New Credit Facility....................................... 798,377 --
Partners' 11.20% Discount Debentures Due 2007............. -- 410,230
Partners' Other........................................... -- 8,850
---------- -----------
Total long-term debt.............................. 3,885,489 4,980,965
---------- -----------
Senior redeemable exchangeable preferred stock, par value
$0.01 per share, plus accreted dividends; liquidation
preference $121,000,000; 121,000 shares issued and
outstanding............................................... 120,044 120,044
Shareholders' equity (deficiency):
Series preferred stock, $0.01 par value, 10,000,000 shares
authorized; 125,000 shares issued and outstanding...... 1 1
Common stock, $0.01 par value, 400,000,000 shares
authorized, 41,392,000 shares (actual) and 60,092,000
shares (as adjusted) issued and outstanding(3)(4)...... 414 601
Additional paid-in capital(3)............................. 844,368 1,452,661
Accumulated other comprehensive income.................... 184,115 184,115
(Deficit)(1)(5)........................................... (1,053,157) (1,080,572)
---------- -----------
Total shareholders' equity (deficiency)........... (24,259) 556,806
---------- -----------
Total capitalization........................................ $3,981,274 $ 5,657,815
========== ===========
</TABLE>
37
<PAGE> 42
- ---------------
(1) We redeemed all of the outstanding 10 7/8% Notes on October 15, 1998 using
cash on deposit with the trustee. We recorded an extraordinary loss from the
early extinguishment of debt of approximately $7.9 million as a result of
the redemption.
(2) Net of unamortized discount of $669,000.
(3) In October 1998, we issued approximately 18,700,000 shares of Common Stock
in connection with the Amalgamation.
(4) Does not include an aggregate of 35,715,000 shares of Common Stock,
consisting of: (i) 15,773,000 shares of Common Stock subject to options;
(ii) 1,697,000 shares of Common Stock subject to warrants; (iii)
approximately 2,821,000 shares of Common Stock issuable upon the conversion
of preferred stock; (iv) 7,261,000 shares of Common Stock issuable upon
conversion of the Existing Convertible Notes; and (v) 9,796,000 shares of
Common Stock initially issuable upon conversion of the New Convertible
Notes.
(5) In October 1998, we recorded an extraordinary loss from the early
extinguishment of debt of approximately L11.5 million ($20 million) as a
result of the repayment of the New Credit Facility using the proceeds from
the sale of the 11 1/2% Old Notes and the 12 3/8% Old Notes.
38
<PAGE> 43
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of and for the
years ended December 31, 1993, 1994, 1995, 1996 and 1997 have been derived from
our consolidated financial statements and the related notes. The selected
consolidated financial data and balance sheet data as of and for the nine months
ended September 30, 1998 and the selected consolidated financial data for the
nine months ended September 30, 1997 have been derived from our unaudited
consolidated financial statements and the related notes included in this
Prospectus, which we believe include all adjustments necessary for a fair
presentation of the financial condition and results of operations of the Company
for such periods. The results of operations for interim periods are not
necessarily indicative of the results for a full year's operations. You should
read the following information in conjunction with "Capitalization,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," the Consolidated Financial Statements of the Company
and the related notes and the other financial data appearing in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- ------------------------------------------------------
1998 1997 1997 1996(1) 1995 1994 1993
--------- --------- --------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues............. $ 484,590 $ 348,373 $ 491,775 $ 228,343 $ 33,741 $ 13,745 $ 10,078
(Loss) before extraordinary
item......................... (331,866) (256,792) (328,557) (254,454) (90,785) (29,573) (11,076)
Net (loss)..................... (336,105) (256,792) (333,057) (254,454) (90,785) (29,573) (11,076)
Basic and diluted net (loss)
per common share:
(Loss) before extraordinary
item(2)...................... (9.17) (8.26) (10.60) (8.20) (3.01) (.98) (.83)
Net (loss) per common
share(2)..................... (9.29) (8.26) (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
share(2)..................... 37,436 32,101 32,117 31,041 30,190 30,175 13,327
Ratio of earnings to fixed
charges(3)................... -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, AS OF DECEMBER 31,
------------- ----------------------------------------------------------
1998 1997 1996(1) 1995 1994 1993
------------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)........ $ 350,878 $ (52,344) $ 242,102 $ 76,128 $251,544 $410,421
Fixed assets, net................... 3,134,655 1,756,985 1,459,528 639,674 191,725 36,422
Total assets........................ 4,622,238 2,421,639 2,454,611 1,010,669 664,366 594,976
Long-term debt...................... 3,885,489 2,015,057 1,732,168 513,026 143,488 130,553
Senior Redeemable Exchangeable
Preferred Stock................... 120,044 108,534 -- -- -- --
Shareholders' equity (deficiency)... (24,259) (61,668) 328,114 339,257 436,534 452,402
</TABLE>
- ---------------
(1) In May 1996, NTL purchased NTL Group Limited for an aggregate purchase
price of approximately $439 million, including goodwill of approximately
$263 million. 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.
NTL did not declare or pay any cash dividends during the years indicated.
39
<PAGE> 44
(3) Fixed charges consist of interest expense, including capitalized interest,
amortization of fees related to debt financing and rent expense deemed to be
interest. The fixed charges coverage deficiency amounted to $357.1 million,
$355.4 million, $257.1 million, $105.4 million, $31.8 million and $10.4
million for the nine months ended September 30, 1998 and for the years ended
December 31, 1997, 1996, 1995, 1994 and 1993, respectively. For the nine
months ended September 30, 1998 and for the year ended December 31, 1997,
our earnings were insufficient to cover combined fixed charges and preferred
stock dividends by $363.3 million and $367.4 million.
We did not declare or pay any cash dividends during the years indicated.
40
<PAGE> 45
UNAUDITED PRO FORMA FINANCIAL DATA
In October 1998 we completed the Amalgamation whereby we acquired Partners.
In addition on June 16, 1998, we agreed to acquire substantially all of the
operations of ComTel in a two-part transaction that was completed in September
1998 in exchange for approximately L550 million. The cash portion of the
purchase price was financed using funds available under the New Credit Facility.
The amounts borrowed under the New Credit Facility were repaid with most of the
proceeds from the issuance of the 11 1/2% Old Notes and the 12 3/8% Old Notes.
The unaudited pro forma financial data presented herein give effect to the
acquisitions of Partners and ComTel. The pro forma financial data is based on
the historical financial statements of Partners, ComTel and NTL. The balance
sheet data reflects the translation of all UKL denominated amounts at the
September 30, 1998 rate of $1.699 = L1.00. The statements of operations data
reflects the translation of all UKL denominated amounts at the average rate for
the nine months ended September 30, 1998 and the year ended December 31, 1997 of
$1.651 = L1.00 and $1.638 = L1.00, respectively.
The acquisitions have been accounted for in the pro forma financial data
using the purchase method of accounting. Accordingly, the assets acquired and
liabilities assumed have been recorded at their estimated fair values, which are
subject to further adjustment based upon appraisals and other analyses. Our
Management does not currently expect future adjustments from these analyses, if
any, to be material to the unaudited pro forma financial statements.
The pro forma financial statements do not give effect to the following
financing transactions:
(i) In June 1998, we provided to the trustee of the 10 7/8% Notes a notice
that NTL will redeem such 10 7/8% Notes on October 15, 1998. Pending
such redemption, NTL deposited in trust with such trustee the cash
required to pay the redemption price for such 10 7/8% Notes on October
15, 1998;
(ii) The sale in December 1998 of $600 million of New 7% convertible notes;
and
(iii) The investment of $500 million into the Company and related
agreements with Microsoft.
The unaudited pro forma condensed combined statements of operations for the
nine months ended September 30, 1998 and for the year ended December 31, 1997
give effect to the acquisitions as if they had been consummated on January 1,
1997. The unaudited pro forma condensed combined balance sheet as of September
30, 1998 gives effect to the acquisition of Partners as if it had been
consummated on September 30, 1998.
Partners owned a 27.5% interest (the "Birmingham Cable Equity Interest") in
Birmingham Cable Corporation Limited ("Birmingham Cable") and currently owns a
50% interest (the "Cable London Equity Interest" and, together with the
Birmingham Cable Equity Interest, the "Equity Interests") in Cable London PLC
("Cable London"). Partners accounts for the Equity Interests using the equity
method. The following pro forma financial data gives effect to the issuance of
.3745 shares of NTL Common Stock for each Partners Common Share and the sale of
the Birmingham Cable Equity Interest to TeleWest Communications plc ("TeleWest")
prior to the Amalgamation.
The TeleWest Agreement (as defined herein) provides that at any time during
the Shoot-out Period (as defined in the TeleWest Agreement), Partners may give
notice to TeleWest of an offer to sell to TeleWest the Cable London Equity
Interest and related assets for the cash Sum (as defined in the TeleWest
Agreement) specified in the Offer Notice (as defined in the TeleWest Agreement).
If Partners fails to give the Offer Notice prior to the end of the Shoot-out
Period, Partners will be deemed to have delivered an Offer Notice for a Sum
equal to L100 million.
TeleWest will have 30 days in which to accept or decline the Offer (as
defined in the TeleWest Agreement). If TeleWest accepts the Offer, Partners will
sell to TeleWest the Cable London Equity Interest and related assets at the Sum
specified in the Offer Notice. If TeleWest declines the Offer, TeleWest will
sell to Partners all of the shares in the capital of Cable London owned by
TeleWest at the Sum specified in the Offer Notice.
41
<PAGE> 46
The pro forma financial statements do not give effect to the sale of the
Cable London Equity Interest to TeleWest or Partners' purchase of TeleWest's
shares in the capital of Cable London, as management is currently unable to
determine the probable outcome of the "Shoot out" procedure. The effect of the
sale or purchase of an interest in Cable London would not be material to the Pro
Forma Condensed Combined Statements of Operations. The effect of the sale of the
Cable London Equity Interest by Partners would be to reduce Partners' investment
in Cable London and increase cash by the amount of the proceeds. The effect of
Partners' purchase of all of TeleWest's shares in the capital of Cable London
would be to reduce Partners' cash and increase the amount of Partners'
investment in Cable London which would then be consolidated in the Company's
financial statements.
The pro forma adjustments are based upon available information and
assumptions that our management believes are reasonable at the time made. The
unaudited pro forma condensed combined financial statements do not purport to
present our financial position or results of operations had the acquisitions
occurred on the dates specified, nor are they necessarily indicative of the
financial position or results of operations that may be achieved in the future.
The unaudited pro forma condensed combined statements of operations do not
reflect any adjustments for synergies that we expect to realize commencing upon
consummation of the acquisitions. No assurances can be made as to the amount of
cost savings or revenue enhancements, if any, that may be realized.
The unaudited pro forma financial statements should be read in conjunction
with the consolidated financial statements and notes of NTL, Partners and ComTel
appearing elsewhere in this Prospectus.
42
<PAGE> 47
NTL INCORPORATED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NTL COMTEL(1) PARTNERS
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES.......................... $ 484,590 $ 96,864 $ 93,334 $ (786)D $ 674,002
COSTS AND EXPENSES
Operating expenses................ 243,476 62,163 29,961 335,600
Selling, general and
administrative expenses......... 192,070 32,166 43,073 267,309
Franchise fees.................... 18,729 18,729
Corporate expenses................ 11,797 11,797
Management fees................... 3,589 3,589
Depreciation and amortization..... 156,785 40,884 37,894 24,040C 259,603
--------- -------- -------- --------- ---------
622,857 135,213 114,517 24,040 896,627
--------- -------- -------- --------- ---------
Operating loss.................... (138,267) (38,349) (21,183) (24,826) (222,625)
OTHER INCOME (EXPENSE)
Interest and other income......... 39,796 474 11,148 51,418
Interest expense.................. (226,422) (7,431) (44,166) (62,417)F (340,436)
Other............................. (6,973) 6,997 24
Equity in net losses of
affiliates...................... (26,277) 11,574E (14,703)
--------- -------- -------- --------- ---------
Loss before extraordinary item.... (331,866) (45,306) (73,481) (75,669) (526,322)
Extraordinary item................ (4,239) (4,239)
--------- -------- -------- --------- ---------
Net loss.......................... (336,105) (45,306) (73,481) (75,669) (530,561)
Preferred stock dividends......... (11,587) (10,392)G (21,979)
--------- -------- -------- --------- ---------
Net loss available to common
shareholders.................... $(347,692) $(45,306) $(73,481) $ (86,061) $(552,540)
========= ======== ======== ========= =========
Net loss per common share -- basic
and fully diluted............... $ (9.29) $ (9.83)
========= =========
Weighted average shares
outstanding..................... 37,436 18,764B 56,200
========= ========= =========
</TABLE>
- ---------------
(1) For the period from January 1, 1998 until acquired by NTL
43
<PAGE> 48
NTL INCORPORATED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NTL COMTEL PARTNERS
(HISTORICAL) (HISTORICAL) (HISTORICAL) ADJUSTMENTS PRO FORMA
------------ ------------ ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES.......................... $ 491,775 $ 84,010 $ 92,812 $ (1,063)D $ 667,534
COSTS AND EXPENSES
Operating expenses................ 301,644 36,349 32,144 370,137
Selling, general and
administrative expenses......... 169,133 55,546 50,532 275,211
Franchise fees.................... 23,587 23,587
Corporate expenses................ 18,324 18,324
Nonrecurring charges.............. 20,642 20,642
Management fees................... 5,248 5,248
Depreciation and amortization..... 150,509 53,405 41,913 28,829C 274,656
--------- --------- --------- -------- ---------
683,839 145,300 129,837 28,829 987,805
--------- --------- --------- -------- ---------
Operating loss.................... (192,064) (61,290) (37,025) (29,892) (320,271)
OTHER INCOME (EXPENSE)
Interest and other income......... 28,415 3,343 11,890 43,648
Interest expense.................. (202,570) (44,298) (41,348) (62,130)F (350,346)
Other............................. 22,071 10,727 (8,860) 23,938
Equity in net losses of
affiliates...................... (10,033) (34,986) 14,113E (30,906)
--------- --------- --------- -------- ---------
Loss before income taxes.......... (344,148) (101,551) (110,329) (77,909) (633,937)
Income tax benefit................ 15,591 (164) 15,427
--------- --------- --------- -------- ---------
Loss before extraordinary item.... (328,557) (101,715) (110,329) (77,909) (618,510)
Loss from early extinguishment of
debt............................ (4,500) (4,500)
--------- --------- --------- -------- ---------
Net loss.......................... (333,057) (101,715) (110,329) (77,909) (623,010)
Preferred stock dividends......... (11,978) (12,621)G (24,599)
--------- --------- --------- -------- ---------
Net loss available to common
shareholders.................... $(345,035) $(101,715) $(110,329) $(90,530) $(647,609)
========= ========= ========= ======== =========
Net loss per common shares --basic
and fully diluted............... $ (10.74) $ (12.73)
========= =========
Weighted average shares
outstanding..................... 32,117 18,764B 50,881
========= ======== =========
</TABLE>
44
<PAGE> 49
NTL INCORPORATED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
NTL PARTNERS
(HISTORICAL) (HISTORICAL) ADJUSTMENTS PRO FORMA
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash, cash equivalents and marketable
securities............................ $ 597,769 $146,765 $ 101,068A,B,H $ 845,602
Other current assets.................... 322,012 17,006 339,018
----------- -------- --------- -----------
Total current assets...................... 919,781 163,771 101,068 1,184,620
Investment in affiliates.................. 85,492 (32,961)B 52,531
Fixed assets, net......................... 3,134,655 532,742 87,018B 3,754,415
Intangible assets, net.................... 456,304 75,110 176,589B 708,003
Other assets, net......................... 111,498 10,003 28,733A,H 150,234
----------- -------- --------- -----------
Total assets............................ $ 4,622,238 $867,118 $ 360,447 $ 5,849,803
=========== ======== ========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Other current liabilities............... $ 420,122 $ 45,651 $ -- $ 465,773
Current portion of long-term debt and
capital leases........................ 148,781 161,343 (158,044)B 152,080
Due to affiliates....................... 20,456 20,456
----------- -------- --------- -----------
Total current liabilities............. 568,903 227,450 (158,044) 638,309
Long-term debt............................ 3,885,489 419,203 76,396H 4,381,088
Other..................................... 4,354 4,354
Deferred income taxes..................... 72,061 67,231B 139,292
Senior redeemable exchangeable preferred
stock................................... 120,044 120,044
Shareholders' equity:
Preferred stock......................... 1 1
Common stock and additional paid-in
capital............................... 844,782 610,528A,B 1,455,310
Acquired company equity................. 216,111 (216,111)
Accumulated other comprehensive
income................................ 184,115 184,115
Deficit................................. (1,053,157) (19,553)H (1,072,710)
----------- -------- --------- -----------
(24,259) 216,111 374,864 566,716
----------- -------- --------- -----------
Total liabilities and shareholders'
equity.................................. $ 4,622,238 $867,118 $ 360,447 $ 5,849,803
=========== ======== ========= ===========
</TABLE>
45
<PAGE> 50
NTL INCORPORATED
PRO FORMA ADJUSTMENTS
(IN THOUSANDS)
<TABLE>
<S> <C> <C> <C>
A CONSENT PAYMENTS
Cash paid.......................................... $11,333
Value of warrants issued........................... 10,080
-------
Total increase in other assets................ $21,413
=======
</TABLE>
<TABLE>
<CAPTION>
PARTNERS
---------
<S> <C>
B PURCHASE PRICE AND ALLOCATION
PURCHASE PRICE
Partners series A shares outstanding........................ 37,232
Partners series B shares outstanding........................ 12,873
---------
Total shares outstanding............................... 50,105
Exchange ratio.............................................. 0.3745
---------
NTL Shares to be issued................................ 18,764
NTL closing price on date prior to
announcement.............................................. $ 32.00
---------
Purchase Price.............................................. 600,448
Net assets at September 30, 1998............................ (216,111)
Intangibles at September 30, 1998........................... 75,110
Investment in Birmingham.................................... 32,961
Proceeds from sale of Birmingham(1)......................... (220,922)
---------
Excess of Purchase Price over net tangible assets
acquired.................................................. $ 271,486
=========
ALLOCATED TO
Fixed assets................................................ $ 87,018
Intangible assets(2)........................................ 251,699
Deferred taxes.............................................. (67,231)
---------
$ 271,486
=========
</TABLE>
- ---------------
(1) A portion of which was used to repay Partners Bank Loan at September 30,
1998 of $158,044.
(2) The intangible assets arising from the Amalgamation include customer lists,
the excess of the fair value over historical cost of investment in Cable
London, and license acquisition costs. The amount of each individual
intangible is not currently determinable. The amounts of each intangible
will be determined based on appraisals and other analyses. The amortization
period for each may vary, although it is assumed in Pro Forma Adjustment C
following that 15 years is a representative blended amortization period.
46
<PAGE> 51
NTL INCORPORATED
PRO FORMA ADJUSTMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PARTNERS COMTEL
-------- ---------
<S> <C> <C>
C AMORTIZATION AND DEPRECIATION
For the nine months ended September 30, 1998:
Depreciation of fixed asset allocation (over 7 years)..... $ 9,323 $ 12,968
Amortization of intangibles (over 15 years)............... 12,585 5,467
Historical amortization of intangibles.................... (5,027) (11,276)
-------- ---------
$ 16,881 $ 7,159
======== =========
For the year ended December 31, 1997:
Depreciation of fixed asset allocation (over 7 years)..... $ 12,431 16,805
Amortization of intangibles (over 15 years)............... 16,780 7,092
Historical amortization of intangibles.................... (9,244) (15,035)
-------- ---------
$ 19,967 $ 8,862
======== =========
D CONSULTING REVENUE
Partners' consulting fee income earned under consulting
agreement with Birmingham which ceased upon the sale of
Birmingham
For the nine months ended September 30, 1998................ $ 786
For the year ended December 31, 1997........................ $ 1,063
E EQUITY IN NET LOSS
Partner's equity in the net loss of Birmingham that will no
longer be recorded after the sale of Birmingham.
For the nine months ended September 30, 1998................ $ 11,574
For the year ended December 31, 1997........................ $ 14,113
</TABLE>
47
<PAGE> 52
NTL INCORPORATED
PRO FORMA ADJUSTMENTS
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
F INTEREST EXPENSE
Interest on ComTel Debt Not Assumed
For the nine months ended September 30, 1998.............. $ (7,431)
=========
For the year ended December 31, 1997...................... $ (44,298)
=========
Interest on the borrowings utilized to acquire ComTel(1)
For the nine months ended September 30, 1998.............. $ 77,567
=========
For the year ended December 31, 1997...................... $ 103,741
=========
Amortization of fees on borrowings recorded as deferred
financing costs
For the nine months ended September 30, 1998.............. $ 2,015
=========
For the year ended December 31, 1997...................... $ 2,687
=========
Historical interest expense on Partners' Credit Facility(2)
For the nine months ended September 30, 1998.............. $ (9,734)
=========
For the year ended December 31, 1997...................... $ --
=========
Net Statement of Operations Impact
For the nine months ended September 30, 1998.............. $ 62,417
=========
For the year ended December 31, 1997...................... $ 62,130
=========
G PREFERRED STOCK DIVIDEND
Dividends at 9.9% on the preferred stock issued in the
ComTel acquisition
For the nine months ended September 30, 1998.............. $ 10,392
=========
For the year ended December 31, 1997...................... $ 12,621
=========
H ISSUANCE OF THE 11 1/2% OLD NOTES AND 12 3/8% OLD NOTES
Proceeds from the 11 1/2% Old Notes......................... $ 249,773
Proceeds from the 12 3/8% Old Notes......................... 625,000
Offering expenses recorded as Deferred Financing Costs...... (26,873)
Balance of New Credit Facility at September 30, 1998........ (798,377)
---------
Net increase in cash...................................... $ 49,523
=========
Extraordinary loss on the early extinguishment of the New
Credit Facility(1)........................................ $ (19,553)
=========
Net increase in other assets................................ $ 7,320
=========
</TABLE>
- ---------------
(1) On June 16, 1998, we agreed to acquire substantially all of the operations
of ComTel in a two-part transaction in exchange for approximately L550
million. A portion of the purchase price (L475 million) was financed using
funds available under the New Credit Facility. The New Credit Facility bore
interest at LIBOR plus 3% per annum increasing by .25% per annum each month
beginning three months after the first drawdown to a maximum of 4% per
annum. In November 1998, the New Credit Facility was repaid using most of
the proceeds from the issuance of the 11 1/2% Old Notes and the 12 3/8% Old
Notes.
(2) This facility was repaid by Partners with the proceeds from the sale of the
Birmingham Cable Equity Interest.
48
<PAGE> 53
DESCRIPTION OF NOTES
11 1/2% NEW NOTES
GENERAL
The 11 1/2% New Notes will be issued pursuant to an Indenture (the "11 1/2%
Indenture"), dated as of November 2, 1998, between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"). The following summary of certain
provisions of the 11 1/2% Indenture does not purport to be complete and is
qualified in its entirety by reference to the 11 1/2% Indenture, including the
definitions therein of certain terms used below. The definitions of certain
terms used in the following summary are set forth below under "-- Certain
Definitions." In this "Description of Notes," the term "Company" refers to NTL
Incorporated and not any of its Subsidiaries.
The 11 1/2% Old Notes are, and the 11 1/2% New Notes will be, unsecured
obligations of the Company, ranking equal in right of payment with all senior
unsecured Indebtedness of the Company and senior in right of payment to all
subordinated Indebtedness of the Company.
The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the 11 1/2% Notes. As a
result, the 11 1/2% Old Notes are, and the 11 1/2% New Notes will be effectively
subordinated to all existing and future indebtedness and other liabilities and
commitments of such Subsidiaries with respect to the cash flow and assets of
those Subsidiaries.
Application will be made to list the 11 1/2% New Notes on the Luxembourg
Stock Exchange.
PRINCIPAL, MATURITY AND INTEREST
The 11 1/2% New Notes will be limited in aggregate principal amount to
$625,000,000. The 11 1/2% New Notes will accrue interest at the rate of 11 1/2%
per annum and will be payable in cash, semi-annually in arrears, on April 1 and
October 1 of each year, beginning on April 1, 1999, to the holders of record on
the immediately preceding March 15 and September 15, respectively. Interest on
the 11 1/2% Notes will accrue from November 2, 1998, or the most recent date to
which interest has been paid or duly provided for on the 11 1/2% Old Notes.
Interest on overdue principal and (to the extent permitted by law) on overdue
installments of interest will accrue at a rate equal to the rate borne by the
11 1/2% New Notes. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. A reference to a payment of interest in
respect of the 11 1/2% New Notes includes a payment of special interest, if any,
and a reference to a payment of principal includes a reference to a payment of
premium, if any.
The 11 1/2% New Notes will be payable both as to principal and interest (on
presentation of such 11 1/2% New Notes if in certificated form) at the offices
or agencies of the Company maintained for such purpose within the City and State
of New York or, at the option of the Company, payment of interest may be made by
check mailed to the holders of the 11 1/2% New Notes at their respective
addresses set forth in the register of holders of 11 1/2% New Notes or, if a
holder so requests, by wire transfer of immediately available funds to an
account previously specified in writing by such holder to the Company and the
Trustee. Until otherwise designated by the Company, the Company's office or
agency in New York will be the offices of the Trustee maintained for such
purpose. The Company has designated Chase Manhattan Bank Luxembourg S.A. to act
as paying agent in Luxembourg if the 11 1/2% New Notes are approved for listing
on the Luxembourg Stock Exchange. The 11 1/2% New Notes will be payable on
maturity on October 1, 2008 at 100% of their principal amount and will be issued
in registered form, without coupons, and in denominations of $1,000 and integral
multiples thereof.
OPTIONAL REDEMPTION
Except as referred to herein under "-- Covenants -- Additional Amounts;
Optional Tax Redemption," the 11 1/2% Notes are not redeemable at the Company's
option prior to October 1, 2003. Thereafter, the 11 1/2% Notes will be subject
to redemption at the option of the Company, in whole or in part, upon not
49
<PAGE> 54
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 October 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 105.750%
2004........................................................ 103.833%
2005........................................................ 101.917%
2006 and thereafter......................................... 100.000%
</TABLE>
In the case of a redemption of any class of Notes referred to herein under
"-- Covenants -- Additional Amounts; Optional Tax Redemption," redemption of
such Notes shall be made at the redemption prices specified in the Indenture
plus accrued and unpaid interest, if any, to the applicable redemption date.
MANDATORY REDEMPTION AND REPURCHASE
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the 11 1/2% Notes. The Company is required to make a
Change of Control Offer (as defined below) and an Asset Sale Offer (as defined
below) with respect to a repurchase of the 11 1/2% Notes under the circumstances
described under the captions "Change of Control" and "Asset Sales,"
respectively.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control Triggering Event, each holder of
11 1/2% 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
11 1/2% Notes pursuant to the offer described below (the "Change of Control
Offer") at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (the "Change of
Control Payment"). Within 40 days following any Change of Control Triggering
Event, the Company shall mail a notice to each holder, and, if and as long as
the 11 1/2% Notes are listed on the Luxembourg Stock Exchange, publish a notice
in one leading newspaper with circulation in Luxembourg, stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all 11 1/2% Notes tendered
will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 40 days from the date such notice is
mailed (the "Change of Control Payment Date");
(3) that any 11 1/2% Notes not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all 11 1/2% Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(5) that holders electing to have any 11 1/2% Notes purchased pursuant
to a Change of Control Offer will be required to surrender the 11 1/2%
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the 11 1/2% Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of 11 1/2% Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such 11 1/2%
Notes purchased; and
50
<PAGE> 55
(7) that holders whose 11 1/2% Notes are being purchased only in part
will be issued new 11 1/2% Notes equal in principal amount to the
unpurchased portion of the 11 1/2% Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof.
The Company will comply with the requirements of Rules 13e-4 and 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the 11 1/2%
Notes in connection with a Change of Control Triggering Event.
On the Change of Control Payment Date, the Company will, to the extent
lawful,
(1) accept for payment 11 1/2% Notes or portions thereof tendered
pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all 11 1/2% Notes or portions thereof so
tendered and
(3) deliver or cause to be delivered to the Trustee the 11 1/2% Notes
so accepted together with an Officers' Certificate stating the 11 1/2%
Notes or portions thereof tendered to the Company.
The Paying Agent shall promptly mail to each holder of 11 1/2% Notes so
accepted (or, if such a holder requests, wire transfer immediately available
funds to an account previously specified in writing by such holder to the
Company and the Paying Agent) payment in an amount equal to the purchase price
for such 11 1/2% Notes, and the Trustee shall promptly authenticate and mail to
each holder a new 11 1/2% Note equal in principal amount to any unpurchased
portion of the 11 1/2% Notes surrendered, if any; provided that each such new
11 1/2% Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control Triggering
Event, the 11 1/2% Indenture does not contain any other provisions that permit
the holders of the 11 1/2% Notes to require that the Company repurchase or
redeem the 11 1/2% Notes in the event of a takeover, recapitalization or similar
restructuring. The 11 1/2% Indenture contains covenants which may afford holders
of the 11 1/2% Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction, including the
Change of Control provision described above and the provisions described under
"-- Incurrence of Indebtedness and Issuance of Preferred Stock" and "-- Merger,
Consolidation or Sale of Assets" below. Each such covenant is, however, subject
to certain exceptions which may permit the Company to be involved in such a
highly leveraged transaction that may adversely affect the holders of the
11 1/2% Notes.
The Change of Control Offer requirement of the 11 1/2% Notes may in certain
circumstances make more difficult or discourage a takeover of the Company, and,
thus, the removal of incumbent management. The Change of Control Offer
requirement, however, is not the result of management's knowledge of any
specific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of anti-takeover provisions. Instead,
the Change of Control Offer requirement is a result of negotiations between the
Company and the Initial Purchasers. Management has not entered into any
agreement or plan involving a Change of Control, although it is possible that
the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control Triggering Event under the 11 1/2%
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
The indentures for the 9 1/2% Notes, in an aggregate principal amount
L125,000,000, the 10 3/4% Notes, in an aggregate principal amount at maturity of
L300,000,000, the 9 3/4% Notes, in an aggregate principal amount at maturity of
$1,300,000,000, the 10% Notes, in an aggregate principal amount at maturity of
$400,000,000, the 12 3/4% Notes, in an aggregate principal amount at maturity of
$277,803,500, the 11 1/2%
51
<PAGE> 56
Deferred Coupon Notes, in an aggregate principal amount at maturity of
$1,050,000,000, and the 12 3/8% Notes, in an aggregate principal amount at
maturity of $450,000,000 which rank equal with the 11 1/2% Notes, also contain
change of control provisions. The indentures for the Convertible Notes, which
are subordinated to the 11 1/2% Notes, also contain change of control
provisions.
The Company's ability to pay cash to the holders of 11 1/2% Notes pursuant
to a Change of Control Offer may be limited by the Company's then existing
financial resources. See "Risk Factors -- Potential Adverse Consequences of
Leverage" and "-- Holding Company Structure; Dependence Upon Cash Flow from
Subsidiaries." The New Credit Facility does, and any future credit agreements or
other agreements relating to indebtedness of the Company may, contain
prohibitions or restrictions on the Company's ability to effect a Change of
Control Payment. In the event a Change of Control Triggering Event occurs at a
time when such prohibitions or restrictions are in effect, the Company could
seek the consent of its lenders to the purchase of 11 1/2% Notes and other
Indebtedness containing change of control provisions or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company will be effectively
prohibited from purchasing 11 1/2% Notes. In such case, the Company's failure to
purchase tendered 11 1/2% Notes would constitute an Event of Default under the
11 1/2% Indenture. Moreover, the events that constitute a Change of Control or
require an Asset Sale Offer under the 11 1/2% Indenture constitute events of
default under the Credit Facility and may also constitute events of default
under future debt instruments or credit agreements of the Company or the
Company's Subsidiaries. Such events of default may permit the lenders under such
debt instruments or credit agreements to accelerate the debt and, if such debt
is not paid or repurchased, to enforce their security interests in what may be
all or substantially all of the assets of the Company's Subsidiaries. Any such
enforcement may limit the Company's ability to raise cash to repay or repurchase
the 11 1/2% Notes.
The Company will not be required to make a Change of Control Offer in the
event the Company enters into a transaction with management or their affiliates
who are Permitted Holders. The definition of Change of Control includes a phrase
relating to the sale, lease, transfer, conveyance or other disposition of "all
or substantially all" of the Company's assets. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise established definition of the phrase under applicable law. Accordingly,
the ability of a holder of 11 1/2% Notes to require the Company to repurchase
such 11 1/2% Notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of the Company and its Subsidiaries
to another Person may be uncertain.
ASSET SALES
The 11 1/2% Indenture provides that 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
covenant 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
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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).
Within 360 days after any Asset Sale, the Company (or the Restricted
Subsidiary, as the case may be) will 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 the Indenture.
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 will make
an offer (an "Asset Sale Offer") to all holders of 11 1/2% Notes and Other
Qualified Notes to purchase the maximum principal amount of 11 1/2% 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 that may be purchased out of the Excess Proceeds
(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 11 1/2% 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 the 11 1/2% Indenture.
To the extent that the aggregate principal amount or accreted value, as the
case may be, of 11 1/2% 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 11 1/2% Notes and Other Qualified Notes
surrendered by holders thereof exceeds the amount of Excess Proceeds then such
remaining Excess Proceeds will be allocated pro rata according to accreted value
or principal amount, as the case may be, to the 11 1/2% Notes and each issue of
the Other Qualified Notes, and the Trustee will select the 11 1/2% Notes to be
purchased from the amount allocated to the 11 1/2% Notes on the basis set forth
under "Selection and Notice" below. Upon completion of such offers to purchase
each of the 11 1/2% Notes and the Other Qualified Notes, the amount of Excess
Proceeds will be reset at zero.
Notwithstanding the foregoing, 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
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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 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 the Cable
Assets exchanged for such Capital Stock, or
(iii) issue, sell, lease, transfer, convey or otherwise dispose of
Equity Interests of the Company (or any Capital Stock Sales
Proceeds therefrom) to any Person (including Non-Restricted
Subsidiaries).
SELECTION AND NOTICE
If less than all of the 11 1/2% Notes are to be redeemed at any time,
selection of 11 1/2% Notes for redemption will be made by the Trustee in
compliance with the requirements of any securities exchange on which the 11 1/2%
Notes are listed, or, in the absence of such requirements or if the 11 1/2%
Notes are not so listed, on a pro rata basis, provided that no 11 1/2% Notes of
$1,000 or less shall be redeemed in part. Notice of redemption shall be mailed
by first class mail at least 30 but not more than 60 days before the redemption
date to each holder of 11 1/2% Notes to be redeemed at its registered address.
If any 11 1/2% Note is to be redeemed in part only, the notice of redemption
that relates to such 11 1/2% Note shall state the portion of the principal
amount thereof to be redeemed. A new 11 1/2% Note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original 11 1/2% Note. On and after the redemption
date, interest ceases to accrue on 11 1/2% Notes or portions of them called for
redemption.
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CERTAIN COVENANTS
Restricted Payments
The 11 1/2% Indenture provides that the Company will not, and will 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 11 1/2%
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:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) 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
the next succeeding paragraph), 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 the
11 1/2% 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.
The foregoing provisions will 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 the 11 1/2%
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
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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 (b)(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 the Indenture or the indentures governing the Other
Qualified 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 11 1/2% 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 (b)(y), above or
(B) Refinancing Indebtedness permitted to be incurred under the
"Incurrence of Indebtedness and Issuance of Preferred Stock"
covenant;
(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 is 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 Capital Stock Sale Proceeds for purposes of clause
(b)(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;
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(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 Designation for the Preferred Stock.
Any Investment in a Subsidiary (other than the issuance, transfer or other
conveyance of Equity Interests of the Company (or any Capital Stock Sales
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.
Not later than the fifth Business Day after making any Restricted Payment
(other than those referred to in sub-clause (vii) of the second paragraph
preceding this paragraph), the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, which calculations may be based upon the Company's
latest available financial statements.
Incurrence of Indebtedness and Issuance of Preferred Stock
The 11 1/2% Indenture provides that the Company will not, and will 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 that the Company will not issue any Disqualified Stock and will 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.
The foregoing limitations will not apply to
(a) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility,
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(b) 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,
(c) 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,
(d) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness in an aggregate principal amount not to
exceed $50 million,
(e) the incurrence by the Company or any Restricted Subsidiary of any
Permitted Acquired Debt,
(f) 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 11 1/2% Notes,
Existing Indebtedness or Indebtedness referred to in clauses (a),
(b), (c), (d) or (e) above or Indebtedness incurred pursuant to the
preceding paragraph (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 11 1/2% Notes as and to the extent of the
Indebtedness being extended, refinanced, renewed, replaced or
refunded,
(g) 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,
(h) Indebtedness under Exchange Rate Contracts, provided that such
Exchange Rate Contracts are related to payment obligations under
Existing Indebtedness or Indebtedness incurred under this paragraph
or the preceding paragraph 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,
(i) 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 this paragraph or the preceding paragraph, and
not for speculation,
(j) 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
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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
(k) 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.
Any redesignation of a Non-Restricted Subsidiary as a Restricted Subsidiary
shall be deemed for purposes of the foregoing covenant 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.
Liens
The 11 1/2% Indenture provides that 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:
(i) Permitted Liens;
(ii) Liens securing Indebtedness and related obligations incurred
under clauses (a), (b), (c), (d), (e), (h), (i) and (k) of the
second paragraph of the "Incurrence of Indebtedness and Issuance
of Preferred Stock" covenant;
(iii) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under the "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant; and
(iv) Liens securing Refinancing Indebtedness permitted to be incurred
under the "Incurrence of Indebtedness and Issuance of Preferred
Stock" covenant; 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.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The 11 1/2% Indenture provides that the Company will not, and will 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) the 11 1/2% Indenture and the 11 1/2% Notes,
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(iii) any agreement covering or relating to Indebtedness permitted
to be incurred under clause (a), (b), (c), (d), (e), (h) or
(i) (but only, in the case of clause (h) or (i), to the extent
contemplated by the then-existing Credit Facility) of the
second paragraph of the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant, 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 the 11 1/2% Indenture and the 11 1/2%
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 the 11 1/2% 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.
Merger, Consolidation or Sale of Assets
The 11 1/2% Indenture provides that the Company may not consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, another corporation, Person or entity unless
(i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger
(if other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the
United Kingdom, the Netherlands, the Netherlands Antilles,
Bermuda or the Cayman Islands or of the United States, any state
thereof or the District of Columbia;
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(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made
assumes all the Obligations (including the due and punctual
payment of Additional Amounts (as defined in the 11 1/2%
Indenture) 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 11 1/2%
Notes and the 11 1/2% Indenture;
(iii) immediately after such transaction no Default or Event of Default
exists;
(iv) 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
(v) such transaction would not result in the loss of any material
authorization or Material License of the Company or its
Subsidiaries.
Additional Amounts; Optional Tax Redemption
The 11 1/2% Indenture provides that the "Payment of Additional Amounts"
provision therein, relating to United Kingdom, Netherlands, Netherlands
Antilles, Bermuda and Cayman Islands withholding and other United Kingdom,
Netherlands, Netherlands Antilles, Bermuda and Cayman Islands taxes, and the
"Optional Tax Redemption" provision therein, relating to the Company's option to
redeem the 11 1/2% Notes under certain circumstances if Additional Amounts are
payable, apply to the 11 1/2% Notes in certain circumstances. The provisions of
the 11 1/2% Indenture relating to the payment of Additional Amounts will only
apply 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. In such
circumstances, all payments made by the Company on the 11 1/2% Notes will be
made without deduction or withholding, 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 the 11 1/2% Notes, the Company will 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 the 11 1/2%
Notes after such deduction or withholding shall be not less than the amounts
specified in the 11 1/2% Notes to which the holder of such 11 1/2% Notes 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 the 11 1/2% Notes or the
receipt of amounts payable in respect of the 11 1/2% Notes and
the United Kingdom, the Netherlands, the Netherlands
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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 had a
permanent establishment therein or
(ii) the presentation of the 11 1/2% Notes (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 the 11 1/2% Notes been
presented on the last day of such period of 30 days;
(b) any governmental charge that is imposed or withheld by reason of
the failure to comply by the holder of the 11 1/2% Notes or, if
different, the beneficial owner of the interest payable on the
11 1/2% Notes, with a timely request of the Company addressed to
such holder or beneficial owner to provide information, documents
or other evidence concerning the nationality, 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 11 1/2% Note or withholding from the
proceeds of a sale or exchange of a 11 1/2% 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 11 1/2% 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 11 1/2% 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 11 1/2% 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 the 11 1/2% Notes 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 the
11 1/2% Notes.
The 11 1/2% 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 Issuance 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 Issuance
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
11 1/2% Notes with respect to withholding taxes imposed by the United Kingdom,
the
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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 Issuance Date provided, 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,
Netherlands, 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 Issuance 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
11 1/2% 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 11 1/2% 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 Issuance 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 Issuance Date or to which the Company
conveys, transfers or leases its properties and assets after the Issuance
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 Notes with
respect to Withholding Tax 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 resulting from the payment of such
redemption price.
Transactions with Affiliates
The 11 1/2% Indenture provides that the Company will not, and will 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
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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 clause (a) above 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 or any series of
Affiliate Transactions 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:
(i) 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;
(ii) transactions between or among the Company and/or its Restricted
Subsidiaries;
(iii) transactions permitted by the provisions of the Indenture
described above under the covenant "Restricted Payments;"
(iv) Liens permitted under the Liens covenant 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;
(v) any transaction pursuant to an agreement in effect on the Issuance
Date;
(vi) 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;
(vii) 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
(viii) any tax sharing agreement.
Reports
Whether or not required by the rules and regulations of the Commission, so
long as any 11 1/2% Notes are outstanding, the Company will file with the
Commission and furnish to the holders of 11 1/2% Notes all quarterly and annual
financial information required to be contained in a filing with the Commission
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, as required by the rules and regulations
of the Commission as in effect on the Issuance Date. If and as long as the
11 1/2% Notes are listed on the Luxembourg Stock Exchange, copies of such
reports will also be available at the specified office of the Luxembourg Agent.
The Company does not publish unconsolidated financial reports.
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EVENTS OF DEFAULT AND REMEDIES
The 11 1/2% Indenture provides that each of the following constitutes an
Event of Default:
(i) default for 30 days in the payment when due of interest (and
Additional Amounts, if applicable) on the 11 1/2% Notes;
(ii) default in payment when due of principal on the 11 1/2% Notes;
(iii) failure by the Company to comply with the provisions described
under the covenants "Change of Control," "Restricted Payments" or
"Incurrence of Indebtedness and Issuance of Preferred Stock";
(iv) failure by the Company for 60 days after notice to comply with
certain other covenants and agreements contained in the 11 1/2%
Indenture or the 11 1/2% Notes;
(v) 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 of its
Restricted Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the
Issuance Date, which default
(a) is caused by a failure to pay when due principal or interest on
such Indebtedness within the grace period provided in such
Indebtedness (which failure continues beyond any applicable
grace period) (a "Payment Default") or
(b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates $10 million or more;
(vi) failure by the Company or any Restricted Subsidiary of the Company
to pay final judgments (other than any judgment as to which a
reputable insurance company has accepted full liability)
aggregating in excess of $5 million, which judgments are not
stayed within 60 days after their entry;
(vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Material Subsidiaries; and
(viii) the revocation of a Material License.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of then outstanding 11 1/2% Notes
may declare all the 11 1/2% Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company or any
Material Subsidiary, all outstanding 11 1/2% Notes will become due and payable
without further action or notice. Holders of the 11 1/2% Notes may not enforce
the 11 1/2% Indenture or the 11 1/2% Notes except as provided in the 11 1/2%
Indenture. Subject to certain limitations, holders of a majority in principal
amount of outstanding 11 1/2% Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from holders of the 11 1/2% Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of each class of
11 1/2% Notes then outstanding by notice to the Trustee may on behalf of the
holders of all of the applicable class of 11 1/2% Notes waive any existing
Default or Event of Default and its consequences under the 11 1/2% Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the 11 1/2% Notes.
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The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of the Company,
as such, shall have any liability for any Obligations of the Company under the
11 1/2% Notes or the 11 1/2% Indenture or for any claim based on, in respect of,
or by reason of, such Obligations or their creation. Each holder of the 11 1/2%
Notes by accepting a 11 1/2% Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the 11 1/2%
Notes. Such waiver may not be effective to waive liabilities under the federal
securities laws, and it is the view of the Commission that a waiver of such
liabilities is against public policy.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
If the Company irrevocably deposits, or causes to be deposited, in trust
with the Trustee or the Paying Agent, at any time prior to the stated maturity
of the 11 1/2% Notes or the date of redemption of all the outstanding 11 1/2%
Notes, as trust funds in trust, money or direct noncallable obligations of or
guaranteed by the United States of America in an amount sufficient, in the
opinion of a nationally recognized firm of independent public accountants,
(without reinvestment thereof) to pay timely and discharge the entire principal
of the then outstanding 11 1/2% Notes and all interest due thereon to maturity
or redemption, the 11 1/2% Indenture shall cease to be of further effect as to
all outstanding 11 1/2% Notes ("Defeasance") (except, among other things, as to
(i) remaining rights of registration of transfer and substitution and exchange
of the 11 1/2% Notes, (ii) rights of holders to receive payment of principal of
and interest on the 11 1/2% Notes, and (iii) the rights, obligations and
immunities of the Trustee).
In order to exercise Defeasance:
(i) the Company shall have delivered to the Trustee an Opinion of
Counsel reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been published by,
the Internal Revenue Service, a ruling or
(B) since the date of the 11 1/2% Indenture, there has been a change
in the applicable federal income tax law, in either case to the
effect that, and based thereon, such Opinion of Counsel shall
confirm that the holders of the outstanding 11 1/2% 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;
(ii) no Event of Default shall have occurred and be continuing on the
date of such deposit (other than an Event of Default resulting
from the borrowing of funds to be applied to such deposit) or
insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(iii) such Defeasance shall not result in a breach or violation of, or
constitute a default under, any material agreement or instrument
(other than the 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;
(iv) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
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(v) 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 11 1/2% Notes over
the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or
others;
(vi) the deposit shall not result in the Company, the Trustee or the
trust being subject to the Investment Company Act of 1940;
(vii) holders of the 11 1/2% Notes will have a valid, perfected and
unavoidable (under applicable bankruptcy or insolvency laws),
subject to the passage of time referred to in clause (iv) above,
first priority security interest in the trust funds; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the Defeasance have been
complied with.
UNCLAIMED MONEY, PRESCRIPTION
If money deposited with the Trustee or Paying Agent 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 11 1/2% 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 shall cease. Other than
as set forth in this paragraph, the 11 1/2% Indenture does not provide for any
prescription period for the payment of interest and principal on the 11 1/2%
Notes.
TRANSFER AND EXCHANGE
A holder may transfer or exchange interests in the 11 1/2% Notes in
accordance with procedures described in "Book-Entry; Delivery and Form." The
Registrar and the Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
holder to pay any taxes and fees required by law or permitted by the 11 1/2%
Indenture. The Company is not required to transfer or exchange any 11 1/2% Note
selected for redemption. Also, the Company is not required to transfer or
exchange any 11 1/2% Note for a period of 15 days before a selection of 11 1/2%
Notes to be redeemed.
The registered holder of a 11 1/2% Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the 11 1/2% Indenture
or 11 1/2% Notes may be amended or supplemented with the consent of the holders
of at least a majority in principal amount of the then outstanding 11 1/2% Notes
(including consents obtained in connection with a tender offer or exchange offer
for such 11 1/2% Notes), and any existing default or compliance with any
provision of the 11 1/2% Indenture or 11 1/2% Notes may be waived with the
consent of the holders of a majority in principal amount of the then outstanding
11 1/2% Notes (including consents obtained in connection with a tender offer or
exchange offer for such 11 1/2% Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any 11 1/2% Notes held by a non-consenting holder of 11 1/2%
Notes)
(i) reduce the amount of 11 1/2% Notes whose holders must consent to
an amendment, supplement or waiver,
(ii) reduce the principal of or change the fixed maturity of any
11 1/2% Note or alter the provisions with respect to the
redemption of the 11 1/2% Notes (except for repurchases of the
11 1/2% Notes pursuant to the covenants described above under the
captions "-- Asset Sales" and "-- Change of Control"),
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(iii) reduce the rate of or change the time for payment of interest on
any 11 1/2% Note,
(iv) waive a default in the payment of principal of or interest on any
11 1/2% Notes (except a rescission of acceleration of the 11 1/2%
Notes by the holders of at least a majority in aggregate principal
amount of the 11 1/2% Notes and a waiver of the payment default
that resulted from such acceleration),
(v) make any 11 1/2% Note payable in money other than that stated in
the 11 1/2% Notes,
(vi) make any change in the provisions of the 11 1/2% Indenture
relating to waivers of past Defaults or the rights of holders of
11 1/2% Notes to receive payments of principal of or interest on
the 11 1/2% Notes,
(vii) waive a redemption payment with respect to any 11 1/2% Note, or
(viii) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to holders of the Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such holder, or to comply with requirements of
the Commission in order to maintain the qualification of the Indenture under the
Trust Indenture Act.
Any notice or communication to a holder of 11 1/2% Notes shall be mailed by
first-class mail to such holder's address as shown in the register kept by the
Registrar. If a notice or communication is mailed in the manner provided in the
preceding sentence within the time period prescribed, it is duly given, whether
or not the addressee receives it. In addition, if and as long as the 11 1/2%
Notes are listed on the Luxembourg Stock Exchange, all notices regarding the
11 1/2% Notes shall be published in English in one leading newspaper with
circulation in Luxembourg. It is expected that publication of notices will
normally be made in the Luxembourger Wort in Luxembourg.
GOVERNING LAW
The 11 1/2% Notes and the 11 1/2% Indenture will be governed exclusively by
the laws of the State of New York.
CONCERNING THE TRUSTEE
The 11 1/2% Indenture contains limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The holders of a majority in principal amount of then outstanding 11 1/2%
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee under the 11 1/2%
Indenture, subject to certain exceptions. The 11 1/2% Indenture provides that in
case an Event of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the 11 1/2% Indenture at the request of any holder of 11 1/2% Notes,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
The Chase Manhattan Bank is also the trustee for all of the Existing Notes
and the Convertible Notes.
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LISTING
Application will be made to list the 11 1/2% New Notes on the Luxembourg
Stock Exchange. The legal notice relating to the issue of the Notes and the
Articles of Association of the Company will be registered prior to the listing
with the Registrar of the District Court in Luxembourg, where such documents are
available for inspection and where copies thereof can be obtained upon request.
In addition, if and as long as the 11 1/2% Notes are listed on the Luxembourg
Stock Exchange, an agent for making payments on, and transfers of, 11 1/2% Notes
will be maintained in Luxembourg. The Company has initially designated Chase
Manhattan Bank Luxembourg S.A. as its agent for such purposes.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all terms, as well as any
other capitalized terms used herein for which no definition is provided.
"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, patients, 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 or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Annualized Pro Forma EBITDA" means, with respect to any Person, such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
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"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 the
provisions of the Indenture described under the captions "Change of
Control" or "Merger, Consolidation or Sale of Assets") 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.
"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 which 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).
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"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 two days 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 two days 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.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Ratings Decline.
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"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% Convertible
Subordinated Notes issued pursuant to an indenture dated as of June 12, 1996
also 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) L555 million and (ii) the
amount of the aggregate commitments thereunder as the same may be increased
after March 13, 1998 as contemplated by the Facilities Agreement as amended or
supplemented to March 13, 1998, but in no event greater than L875 million, 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 to the covenant described above under "-- Asset Sales." Indebtedness
that may otherwise be incurred under the 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 of the Indenture shall be deemed to have been incurred on such date in
reliance on the exception provided by clause (a) of the second paragraph of the
covenant described above under "-- Incurrence of Indebtedness and Issuance of
Preferred Stock."
"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
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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.
"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 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
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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.
"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.
"Interest Rate Agreement" means, with respect to 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).
"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.), NTLIH, NTL Group Limited, CableTel Surrey Limited, CableTel
Cardiff Limited, CableTel Glasgow,
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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 of 1933 and the Exchange Act (as such
Regulation is in effect on the date of the Indenture).
"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).
"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 by the "Restricted Payments" covenant), 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
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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 of
the Company or Capital Stock Sales 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.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Old Notes" means the 12 3/4% Notes, the 11 1/2% Deferred Coupon Notes, the
10 3/4% Notes, the 10% Notes, the 9 3/4% Notes and the 9 1/2% Notes.
"Other Qualified Notes" means any outstanding senior indebtedness of the
Company issued pursuant to an indenture having a provision substantially similar
to the Asset Sale Offer provision contained in the Indenture (including, without
limitation, the 12 3/4% Notes, the 11 1/2% Deferred Coupon Notes, the 10 3/4%
Notes, the 10% Notes, the 9 3/4% Notes and the 9 1/2% 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;
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(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 in
the Company (or any Capital Stock Sales 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.
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"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.
"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 the 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).
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"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.
"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.
"Subordinated Debentures" means the debentures exchangeable by the Company
for the Preferred Stock in accordance with the Certificate of Designation
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.
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<PAGE> 84
"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.
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12 3/8% NEW NOTES
GENERAL
The 12 3/8% New Notes will be issued pursuant to an Indenture (the "12 3/8%
Indenture"), dated as of November 6, 1998, between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"). The following summary of certain
provisions of the 12 3/8% Indenture does not purport to be complete and is
qualified in its entirety by reference to the 12 3/8% Indenture, including the
definitions therein of certain terms used below. The definitions of certain
terms used in the following summary are set forth below under "-- Certain
Definitions." In this "Description of Notes," the term "Company" refers to NTL
Incorporated and not any of its Subsidiaries.
The 12 3/8% Old Notes are, and the 12 3/8% New Notes will be, unsecured
obligations of the Company, ranking pari passu in right of payment with all
senior unsecured Indebtedness of the Company and senior in right of payment to
all subordinated Indebtedness of the Company.
The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Notes. As a result,
the 12 3/8% Old Notes are, and the 12 3/8% New Notes will be, effectively
subordinated to all existing and future indebtedness and other liabilities and
commitments of such Subsidiaries with respect to the cash flow and assets of
those Subsidiaries.
Application will be made to list the 12 3/8% New Notes on the Luxembourg
Stock Exchange.
PRINCIPAL, MATURITY AND INTEREST
The 12 3/8% New Notes will be limited in aggregate principal amount at
maturity to $450,000,000. The 12 3/8% New Notes will be issued at a substantial
discount from their principal amount at maturity. Until October 1, 2003, no
interest will accrue on the 12 3/8% New Notes, but the Accreted Value of the
12 3/8% New Notes will increase (representing amortization of original issue
discount) between the date of original issuance and October 1, 2003, on a
semiannual bond equivalent basis using a 360-day year comprised of twelve 30-day
months, such that the Accreted Value of the 12 3/8% New Notes shall be equal to
the full principal amount at maturity of the 12 3/8% New Notes on October 1,
2003. From October 1, 2003, interest on the 12 3/8% New Notes will accrue at the
rate of 12 3/8% per annum and will be payable in cash, semiannually in arrears,
on each April 1 and October 1, commencing April 1, 2004, to holders of record on
the immediately preceding March 15 and September 15. Interest on overdue
principal and (to the extent permitted by law) on overdue installments of
interest will accrue at a rate equal to the rate borne by the 12 3/8% New Notes.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. A reference to a payment of principal in respect of the 12 3/8%
New Notes includes a payment of premium, if any. A reference to a payment of
interest in respect of the 12 3/8% New Notes includes a payment of special
interest, if any.
The Accreted Value of each 12 3/8% Note on each semi-annual accrual date
will be as set forth below:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
- ------------------------ --------------
<S> <C>
April 1, 1999.......................................... $ 582.55
October 1, 1999........................................ $ 618.60
April 1, 2000.......................................... $ 656.88
October 1, 2000........................................ $ 697.52
April 1, 2001.......................................... $ 740.68
October 1, 2001........................................ $ 786.51
April 1, 2002.......................................... $ 835.17
October 1, 2002........................................ $ 886.85
April 1, 2003.......................................... $ 941.73
October 1, 2003........................................ $1,000.00
</TABLE>
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<PAGE> 86
The 12 3/8% Notes will be payable both as to principal and interest (on
presentation of such Notes if in certificated form) at the offices or agencies
of the Company maintained for such purpose within the City and State of New York
or, at the option of the Company, payment of interest may be made by check
mailed to the holders of the 12 3/8% Notes at their respective addresses set
forth in the register of holders of 12 3/8% Notes or, if a holder so requests,
by wire transfer of immediately available funds to an account previously
specified in writing by such holder to the Company and the Trustee. Until
otherwise designated by the Company, the Company's office or agency in New York
will be the offices of the Trustee maintained for such purpose. The Company has
designated Chase Manhattan Bank Luxembourg S.A. to act as paying agent in
Luxembourg if the 12 3/8% New Notes are approved for listing on the Luxembourg
Stock Exchange. The 12 3/8% Notes will be payable on maturity on October 1, 2008
at 100% of their principal amount and will be issued in registered form, without
coupons, and in denominations of $1,000 and integral multiples thereof.
OPTIONAL REDEMPTION
Except as referred to herein under "-- Covenants -- Additional Amounts;
Optional Tax Redemption," the 12 3/8% Notes are not redeemable at the Company's
option prior to October 1, 2003. Thereafter, the 12 3/8% 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 October 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003........................................................ 106.188%
2004........................................................ 104.125%
2005........................................................ 102.063%
2006 and thereafter......................................... 100.000%
</TABLE>
In the case of a redemption of any class of Notes referred to herein under
"-- Covenants -- Additional Amounts; Optional Tax Redemption," redemption of
such Notes shall be made at the redemption prices specified in the Indenture
plus accrued and unpaid interest, if any, to the applicable redemption date.
MANDATORY REDEMPTION AND REPURCHASE
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the 12 3/8% Notes. The Company is required to make a
Change of Control Offer (as defined below) and an Asset Sale Offer (as defined
below) with respect to a repurchase of the 12 3/8% Notes under the circumstances
described under the captions "Change of Control" and "Asset Sales,"
respectively.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control Triggering Event, each holder of
12 3/8% 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
12 3/8% Notes pursuant to the offer described below (the "Change of Control
Offer") at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (or, in the case of
repurchases of 12 3/8% Notes prior to October 1, 2003, at a purchase price equal
to 101% of the Accreted Value thereof as of the date of purchase) (the "Change
of Control Payment"). Within 40 days following any Change of Control Triggering
Event, the Company shall mail a notice to each holder, and, if and as long as
the 12 3/8% Notes are listed on the Luxembourg Stock Exchange, publish a notice
in one leading newspaper with circulation in Luxembourg, stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all 12 3/8% Notes
tendered will be accepted for payment;
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<PAGE> 87
(2) the purchase price and the purchase date, which shall be no earlier
than 30 days nor later than 40 days from the date such notice is
mailed (the "Change of Control Payment Date");
(3) that any 12 3/8% Notes not tendered will continue to accrue interest
(and, if applicable, the Accreted Value of any 12 3/8% Notes not
tendered will continue to increase as provided in such 12 3/8%
Notes);
(4) that, unless the Company defaults in the payment of the Change of
Control Payment, all 12 3/8% Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date (and, if applicable, the Accreted
Value of any 12 3/8% Notes tendered will cease to increase as
provided in such 12 3/8% Notes);
(5) that holders electing to have any 12 3/8% Notes purchased pursuant
to a Change of Control Offer will be required to surrender the
12 3/8% Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the 12 3/8% Notes completed, to the
Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of
Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of 12 3/8% Notes delivered
for purchase, and a statement that such holder is withdrawing his
election to have such 12 3/8% Notes purchased; and
(7) that holders whose 12 3/8% Notes are being purchased only in part
will be issued new 12 3/8% Notes equal in principal amount to the
unpurchased portion of the 12 3/8% Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or
an integral multiple thereof.
The Company will comply with the requirements of Rules 13e-4 and 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the 12 3/8%
Notes in connection with a Change of Control Triggering Event.
On the Change of Control Payment Date, the Company will, to the extent
lawful,
(1) accept for payment 12 3/8% Notes or portions thereof tendered
pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all 12 3/8% Notes or portions thereof
so tendered and
(3) deliver or cause to be delivered to the Trustee the 12 3/8% Notes so
accepted together with an Officers' Certificate stating the 12 3/8%
Notes or portions thereof tendered to the Company. The Paying Agent
shall promptly mail to each holder of 12 3/8% Notes so accepted (or,
if such a holder requests, wire transfer immediately available funds
to an account previously specified in writing by such holder to the
Company and the Paying Agent) payment in an amount equal to the
purchase price for such 12 3/8% Notes, and the Trustee shall
promptly authenticate and mail to each holder a new 12 3/8% Note
equal in principal amount to any unpurchased portion of the 12 3/8%
Notes surrendered, if any; provided that each such new 12 3/8% Note
shall be in a principal amount of $1,000 or an integral multiple
thereof. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
Except as described above with respect to a Change of Control Triggering
Event, the 12 3/8% Indenture does not contain any other provisions that permit
the holders of the 12 3/8% Notes to require that the Company repurchase or
redeem the 12 3/8% Notes in the event of a takeover, recapitalization or similar
restructuring. The Indenture contains covenants which may afford holders of the
12 3/8% Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction,
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including the Change of Control provision described above and the provisions
described under "-- Incurrence of Indebtedness and Issuance of Preferred Stock"
and "-- Merger, Consolidation or Sale of Assets" below. Each such covenant is,
however, subject to certain exceptions which may permit the Company to be
involved in such a highly leveraged transaction that may adversely affect the
holders of the 12 3/8% Notes.
The Change of Control Offer requirement of the 12 3/8% Notes may in certain
circumstances make more difficult or discourage a takeover of the Company, and,
thus, the removal of incumbent management. The Change of Control Offer
requirement, however, is not the result of management's knowledge of any
specific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of anti-takeover provisions. Instead,
the Change of Control Offer requirement is a result of negotiations between the
Company and the Initial Purchasers. Management has not entered into any
agreement or plan involving a Change of Control, although it is possible that
the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control Triggering Event under the 12 3/8%
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
The indentures for the 11 1/2% Notes, in an aggregate principal amount of
$625,000,000, the 9 1/2% Notes, in an aggregate principal amount L125,000,000
($208,337,500), the 10 3/4% Notes, in an aggregate principal amount at maturity
of L300,000,000 ($500,010,000), the 9 3/4% Notes, in an aggregate principal
amount at maturity of $1,300,000,000, the 10% Notes, in an aggregate principal
amount at maturity of $400,000,000, the 12 3/4% Notes, in an aggregate principal
amount at maturity of $277,803,500, and the 11 1/2% Deferred Coupon Notes, in an
aggregate principal amount at maturity of $1,050,000,000, which rank pari passu
with the 12 3/8% Notes, also contain change of control provisions. The
indentures for the Convertible Notes, which are subordinated to the 12 3/8%
Notes, also contain change of control provisions.
The Company's ability to pay cash to the holders of 12 3/8% Notes pursuant
to a Change of Control Offer may be limited by the Company's then existing
financial resources. See "Risk Factors -- Potential Adverse Consequences of
Leverage" and "-- Holding Company Structure; Dependence Upon Cash Flow from
Subsidiaries." The New Credit Facility does, and any future credit agreements or
other agreements relating to indebtedness of the Company may, contain
prohibitions or restrictions on the Company's ability to effect a Change of
Control Payment. In the event a Change of Control Triggering Event occurs at a
time when such prohibitions or restrictions are in effect, the Company could
seek the consent of its lenders to the purchase of Notes and other Indebtedness
containing change of control provisions or could attempt to refinance the
borrowings that contain such prohibition. If the Company does not obtain such a
consent or repay such borrowings, the Company will be effectively prohibited
from purchasing 12 3/8% Notes. In such case, the Company's failure to purchase
tendered 12 3/8% Notes would constitute an Event of Default under the 12 3/8%
Indenture. Moreover, the events that constitute a Change of Control or require
an Asset Sale Offer under the 12 3/8% Indenture constitute events of default
under the Credit Facility and may also constitute events of default under future
debt instruments or credit agreements of the Company or the Company's
Subsidiaries. Such events of default may permit the lenders under such debt
instruments or credit agreements to accelerate the debt and, if such debt is not
paid or repurchased, to enforce their security interests in what may be all or
substantially all of the assets of the Company's Subsidiaries. Any such
enforcement may limit the Company's ability to raise cash to repay or repurchase
the 12 3/8% Notes.
The Company will not be required to make a Change of Control Offer in the
event the Company enters into a transaction with management or their affiliates
who are Permitted Holders. The definition of Change of Control includes a phrase
relating to the sale, lease, transfer, conveyance or other disposition of "all
or substantially all" of the Company's assets. Although there is a developing
body of case law interpreting the phrase "substantially all," there is no
precise established definition of the phrase under applicable law. Accordingly,
the ability of a holder of 12 3/8% Notes to require the Company to repurchase
such 12 3/8% Notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of the Company and its Subsidiaries
to another Person may be uncertain.
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<PAGE> 89
ASSET SALES
The 12 3/8% Indenture provides that 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
covenant 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).
Within 360 days after any Asset Sale, the Company (or the Restricted
Subsidiary, as the case may be) will 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 the 12 3/8%
Indenture.
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 will make
an offer (an "Asset Sale Offer") to all holders of 12 3/8% Notes and Other
Qualified Notes to purchase the maximum principal amount of 12 3/8% 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 12 3/8% Notes and the
Other Qualified Notes that may be purchased out of the Excess Proceeds
(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
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<PAGE> 90
(y) with respect to the 12 3/8% 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 (or, in the case of repurchases of 12 3/8%
Notes prior to October 1, 2003, at a purchase price equal to 100% of
the Accreted Value thereof as of the date of repurchase), in
accordance with the procedures set forth in the 12 3/8% Indenture.
To the extent that the aggregate principal amount or accreted value, as the
case may be, of 12 3/8% 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 12 3/8% Notes and Other Qualified Notes
surrendered by holders thereof exceeds the amount of Excess Proceeds then such
remaining Excess Proceeds will be allocated pro rata according to accreted value
or principal amount, as the case may be, to the 12 3/8% Notes and each issue of
the Other Qualified Notes, and the Trustee will select the 12 3/8% Notes to be
purchased from the amount allocated to the 12 3/8% Notes on the basis set forth
under "Selection and Notice" below. Upon completion of such offers to purchase
each of the 12 3/8% Notes and the Other Qualified Notes, the amount of Excess
Proceeds will be reset at zero.
Notwithstanding the foregoing, 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 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 the Cable Assets exchanged for such
Capital Stock, or
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<PAGE> 91
(iii) issue, sell, lease, transfer, convey or otherwise dispose of
Equity Interests of the Company (or any Capital Stock Sales
Proceeds therefrom) to any Person (including Non-Restricted
Subsidiaries).
SELECTION AND NOTICE
If less than all of the 12 3/8% Notes are to be redeemed at any time,
selection of 12 3/8% Notes for redemption will be made by the Trustee in
compliance with the requirements of any securities exchange on which the 12 3/8%
Notes are listed, or, in the absence of such requirements or if the 12 3/8%
Notes are not so listed, on a pro rata basis, provided that no 12 3/8% Notes of
$1,000 or less shall be redeemed in part. Notice of redemption shall be mailed
by first class mail at least 30 but not more than 60 days before the redemption
date to each holder of 12 3/8% Notes to be redeemed at its registered address.
If any 12 3/8% Note is to be redeemed in part only, the notice of redemption
that relates to such 12 3/8% Note shall state the portion of the principal
amount thereof to be redeemed. A new 12 3/8% Note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original 12 3/8% Note. On and after the redemption
date, interest ceases to accrue (and, if applicable, the Accreted Value of any
12 3/8% Notes tendered will cease to increase as provided in such 12 3/8% Notes)
on 12 3/8% Notes or portions of them called for redemption.
CERTAIN COVENANTS
Restricted Payments
The 12 3/8% Indenture provides that the Company will not, and will 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:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) 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 the next
succeeding paragraph), 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 the 12 3/8%
Indenture is sold for cash or otherwise liquidated or repaid for
cash, the amount credited pursuant to this
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<PAGE> 92
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.
The foregoing provisions will 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 the 12 3/8% 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
(b)(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 the Indenture or the indentures governing the Other
Qualified 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 12 3/8% 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 (b)(y), above or
(B) Refinancing Indebtedness permitted to be incurred under the
"Incurrence of Indebtedness and Issuance of Preferred Stock"
covenant;
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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 is 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 Capital Stock Sale Proceeds for purposes of clause
(b)(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
Designation for the Preferred Stock.
Any Investment in a Subsidiary (other than the issuance, transfer or other
conveyance of Equity Interests of the Company (or any Capital Stock Sales
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.
Not later than the fifth Business Day after making any Restricted Payment
(other than those referred to in sub-clause (vii) of the second paragraph
preceding this paragraph), the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant "Restricted
Payments" were computed, which calculations may be based upon the Company's
latest available financial statements.
Incurrence of Indebtedness and Issuance of Preferred Stock
The 12 3/8% Indenture provides that the Company will not, and will 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 that the Company will not issue any Disqualified Stock and will 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
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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.
The foregoing limitations will not apply to:
(a) the incurrence by the Company or any Restricted Subsidiary of
Indebtedness pursuant to the Credit Facility,
(b) 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,
(c) 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,
(d) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness in an aggregate principal amount not to
exceed $50 million,
(e) the incurrence by the Company or any Restricted Subsidiary of any
Permitted Acquired Debt,
(f) 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 12 3/8% Notes, Existing
Indebtedness or Indebtedness referred to in clauses (a), (b), (c),
(d) or (e) above or Indebtedness incurred pursuant to the preceding
paragraph (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 12 3/8% Notes as and to the extent of the
Indebtedness being extended, refinanced, renewed, replaced or
refunded,
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(g) 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,
(h) Indebtedness under Exchange Rate Contracts, provided that such
Exchange Rate Contracts are related to payment obligations under
Existing Indebtedness or Indebtedness incurred under this paragraph
or the preceding paragraph 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,
(i) 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 this paragraph or the preceding paragraph, and not for
speculation,
(j) 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
(k) 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.
Any redesignation of a Non-Restricted Subsidiary as a Restricted Subsidiary
shall be deemed for purposes of the foregoing covenant 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.
Liens
The 12 3/8% Indenture provides that 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:
(i) Permitted Liens;
(ii) Liens securing Indebtedness and related obligations incurred under
clauses (a), (b), (c), (d), (e), (h), (i) and (k) of the second
paragraph of the "Incurrence of Indebtedness and Issuance of
Preferred Stock" covenant;
(iii) Liens on the assets acquired or leased with the proceeds of
Indebtedness permitted to be incurred under the "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant; and
(iv) Liens securing Refinancing Indebtedness permitted to be incurred
under the "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant;
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
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its Restricted Subsidiaries other than the property or assets subject to the
Liens securing such Indebtedness being refinanced.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The 12 3/8% Indenture provides that the Company will not, and will 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) the 12 3/8% Indenture and the 12 3/8% Notes,
(iii) any agreement covering or relating to Indebtedness permitted
to be incurred under clause (a), (b), (c), (d), (e), (h) or
(i) (but only, in the case of clause (h) or (i), to the extent
contemplated by the then-existing Credit Facility) of the
second paragraph of the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant, 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 the 12 3/8% Indenture and the 12 3/8%
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 the 12 3/8% 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
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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.
Merger, Consolidation or Sale of Assets
The 12 3/8% Indenture provides that the Company may not consolidate or
merge with or into (whether or not the Company is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, another corporation, Person or entity unless
(i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the
United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda
or the Cayman Islands or of the United States, any state thereof or
the District of Columbia;
(ii) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made assumes all the Obligations
(including the due and punctual payment of Additional Amounts (as
defined in the 12 3/8% Indenture) 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 12 3/8% Notes and the 12 3/8% Indenture;
(iii) immediately after such transaction no Default or Event of Default
exists;
(iv) 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
(v) such transaction would not result in the loss of any material
authorization or Material License of the Company or its
Subsidiaries.
Additional Amounts; Optional Tax Redemption
The 12 3/8% Indenture provides that the "Payment of Additional Amounts"
provision therein, relating to United Kingdom, Netherlands, Netherlands
Antilles, Bermuda and Cayman Islands withholding and other United Kingdom,
Netherlands, Netherlands Antilles, Bermuda and Cayman Islands taxes, and the
"Optional Tax Redemption" provision therein, relating to the Company's option to
redeem the 12 3/8% Notes under certain circumstances if Additional Amounts are
payable, apply to the 12 3/8% Notes in certain circumstances. The provisions of
the 12 3/8% Indenture relating to the payment of Additional Amounts will only
apply 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. In such
circumstances, all payments made by the Company on the
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12 3/8% Notes will be made without deduction or withholding, 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 the
12 3/8% Notes, the Company will 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 the 12 3/8% Notes after such deduction or withholding
shall be not less than the amounts specified in the 12 3/8% Notes to which the
holder of such 12 3/8% Notes 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 the 12 3/8% Notes or
the receipt of amounts payable in respect of the Notes 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 had a
permanent establishment therein or
(ii) the presentation of the 12 3/8% Notes (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 the 12 3/8% Notes 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 the
12 3/8% Notes or, if different, the beneficial owner of the interest
payable on the 12 3/8% Notes, with a timely request of the Company
addressed to such holder or beneficial owner to provide information,
documents or other evidence concerning the nationality, 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 12 3/8% Note or withholding from the proceeds of a sale
or exchange of a 12 3/8% 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 12 3/8% 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;
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(f) any tax, assessment or other governmental charge imposed on a holder
that is not the beneficial owner of a 12 3/8% 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 12 3/8% 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 the 12 3/8% Notes 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 the
12 3/8% Notes.
The 12 3/8% 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 in the case of redemption
of Notes prior to October 1, 2003, at a redemption price equal to 100% of the
Accreted Value thereof as of the date of purchase) if after the Issuance 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 Issuance
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
Notes 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 Issuance Date provided, 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,
Netherlands, 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 Issuance 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
12 3/8% 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 12 3/8% 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 Issuance 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 Issuance Date or to which the Company
conveys, transfers or leases its properties and assets after the Issuance
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 Notes with
respect to Withholding Tax 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
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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 resulting from the payment of such
redemption price.
Transactions with Affiliates
The 12 3/8% Indenture provides that the Company will not, and will 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 clause (a) above 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 or any series of
Affiliate Transactions 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:
(i) 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;
(ii) transactions between or among the Company and/or its Restricted
Subsidiaries;
(iii) transactions permitted by the provisions of the Indenture
described above under the covenant "Restricted Payments;"
(iv) Liens permitted under the Liens covenant 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;
(v) any transaction pursuant to an agreement in effect on the Issuance
Date;
(vi) 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;
(vii) 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
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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
(viii) any tax sharing agreement.
Reports
Whether or not required by the rules and regulations of the Commission, so
long as any 12 3/8% Notes are outstanding, the Company will file with the
Commission and furnish to the holders of 12 3/8% Notes all quarterly and annual
financial information required to be contained in a filing with the Commission
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, as required by the rules and regulations
of the Commission as in effect on the Issuance Date. If and as long as the
12 3/8% Notes are listed on the Luxembourg Stock Exchange, copies of such
reports will also be available at the specified office of the Luxembourg Agent.
The Company does not publish unconsolidated financial reports.
EVENTS OF DEFAULT AND REMEDIES
The 12 3/8% Indenture provides that each of the following constitutes an
Event of Default:
(i) default for 30 days in the payment when due of interest (and
Additional Amounts, if applicable) on the 12 3/8% Notes;
(ii) default in payment when due of principal on the 12 3/8% Notes;
(iii) failure by the Company to comply with the provisions described
under the covenants "Change of Control," "Restricted Payments" or
"Incurrence of Indebtedness and Issuance of Preferred Stock";
(iv) failure by the Company for 60 days after notice to comply with
certain other covenants and agreements contained in the 12 3/8%
Indenture or the 12 3/8% Notes;
(v) 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 of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries), whether such
Indebtedness or guarantee now exists, or is created after the
Issuance Date, which default (a) is caused by a failure to pay when
due principal or interest on such Indebtedness within the grace
period provided in such Indebtedness (which failure continues beyond
any applicable grace period) (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which
has been so accelerated, aggregates $10 million or more;
(vi) failure by the Company or any Restricted Subsidiary of the Company to
pay final judgments (other than any judgment as to which a reputable
insurance company has accepted full liability) aggregating in excess
of $5 million, which judgments are not stayed within 60 days after
their entry;
(vii) certain events of bankruptcy or insolvency with respect to the
Company or any of its Material Subsidiaries; and
(viii) the revocation of a Material License.
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If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of then outstanding 12 3/8% Notes
may declare all the 12 3/8% Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company or any
Material Subsidiary, all outstanding 12 3/8% Notes will become due and payable
without further action or notice. Holders of the 12 3/8% Notes may not enforce
the 12 3/8% Indenture or the 12 3/8% Notes except as provided in the 12 3/8%
Indenture. Subject to certain limitations, holders of a majority in principal
amount of outstanding 12 3/8% Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from holders of the 12 3/8% Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest) if it determines
that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of 12 3/8% Notes
then outstanding by notice to the Trustee may on behalf of the holders of all of
the 12 3/8% Notes waive any existing Default or Event of Default and its
consequences under the 12 3/8% Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the 12 3/8% Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the 12 3/8% Indenture, and the Company is required,
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS
No director, officer, employee, incorporator or shareholder of the Company,
as such, shall have any liability for any Obligations of the Company under the
12 3/8% Notes or the 12 3/8% Indenture or for any claim based on, in respect of,
or by reason of, such Obligations or their creation. Each holder of the 12 3/8%
Notes by accepting a 12 3/8% Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the 12 3/8%
Notes. Such waiver may not be effective to waive liabilities under the federal
securities laws, and it is the view of the Commission that a waiver of such
liabilities is against public policy.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
If the Company irrevocably deposits, or causes to be deposited, in trust
with the Trustee or the Paying Agent, at any time prior to the stated maturity
of the 12 3/8% Notes or the date of redemption of all the outstanding 12 3/8%
Notes, as trust funds in trust, money or direct noncallable obligations of or
guaranteed by the United States of America in an amount sufficient, in the
opinion of a nationally recognized firm of independent public accountants,
(without reinvestment thereof) to pay timely and discharge the entire principal
(or, if applicable, all amounts payable in respect of Accreted Value) of the
then outstanding 12 3/8% Notes and all interest due thereon to maturity or
redemption, the 12 3/8% Indenture shall cease to be of further effect as to all
outstanding 12 3/8% Notes ("Defeasance") (except, among other things, as to (i)
remaining rights of registration of transfer and substitution and exchange of
the 12 3/8% Notes, (ii) rights of holders to receive payment of principal of
(or, if applicable, payments in respect of Accreted Value) and interest on the
12 3/8% Notes, and (iii) the rights, obligations and immunities of the Trustee).
In order to exercise Defeasance:
(i) the Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that (A) the Company
has received from, or there has been published by, the Internal
Revenue Service, a ruling or (B) since the date of the applicable
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon, such
Opinion of Counsel shall confirm that the holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such 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;
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(ii) no Event of Default shall have occurred and be continuing on the date
of such deposit (other than an Event of Default resulting from the
borrowing of funds to be applied to such deposit) or insofar as
Events of Default from bankruptcy or insolvency events are concerned,
at any time in the period ending on the 91st day after the date of
deposit;
(iii) such Defeasance shall not result in a breach or violation of, or
constitute a default under, any material agreement or instrument
(other than the 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;
(iv) the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(v) 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 12 3/8% Notes over the other
creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others;
(vi) the deposit shall not result in the Company, the Trustee or the trust
being subject to the Investment Company Act of 1940;
(vii) holders of the 12 3/8% Notes will have a valid, perfected and
unavoidable (under applicable bankruptcy or insolvency laws),
subject to the passage of time referred to in clause (iv) above,
first priority security interest in the trust funds; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the Defeasance have been complied
with.
UNCLAIMED MONEY, PRESCRIPTION
If money deposited with the Trustee or Paying Agent 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 12 3/8% 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 shall cease. Other than
as set forth in this paragraph, the 12 3/8% Indenture does not provide for any
prescription period for the payment of interest and principal on the 12 3/8%
Notes.
TRANSFER AND EXCHANGE
A holder may transfer or exchange interests in the 12 3/8% Notes in
accordance with procedures described in "Book-Entry; Delivery and Form." The
Registrar and the Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require a
holder to pay any taxes and fees required by law or permitted by the 12 3/8%
Indenture. The Company is not required to transfer or exchange any 12 3/8% Note
selected for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of 12 3/8% Notes to
be redeemed.
The registered holder of a 12 3/8% Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraph, the 12 3/8% Indenture
or 12 3/8% Notes may be amended or supplemented with the consent of the holders
of at least a majority in principal amount of the then outstanding 12 3/8% Notes
(including consents obtained in connection with a tender offer or exchange offer
for such 12 3/8% Notes), and any existing default or compliance with any
provision of the 12 3/8% Indenture or 12 3/8% Notes may be waived with the
consent of the holders of a majority in principal amount
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of the then outstanding 12 3/8% Notes (including consents obtained in connection
with a tender offer or exchange offer for such 12 3/8% Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any 12 3/8% Notes held by a non-consenting holder of 12 3/8%
Notes):
(i) reduce the amount of 12 3/8% Notes whose holders must consent to an
amendment, supplement or waiver,
(ii) reduce the principal of or change the fixed maturity of any 12 3/8%
Note or alter the provisions with respect to the redemption of the
12 3/8% Notes (except for repurchases of the 12 3/8% Notes pursuant
to the covenants described above under the captions "-- Asset Sales"
and "-- Change of Control"),
(iii) reduce the rate of or change the time for payment of interest on any
12 3/8% Note,
(iv) waive a default in the payment of principal of or interest on any
12 3/8% Notes (except a rescission of acceleration of the 12 3/8%
Notes by the holders of at least a majority in aggregate principal
amount of the 12 3/8% Notes and a waiver of the payment default that
resulted from such acceleration),
(v) make any 12 3/8% Note payable in money other than that stated in the
12 3/8% Notes,
(vi) make any change in the provisions of the 12 3/8% Indenture relating
to waivers of past Defaults or the rights of holders of 12 3/8% Notes
to receive payments of principal of or interest on the 12 3/8% Notes,
(vii) waive a redemption payment with respect to any 12 3/8% Note or
(viii) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of 12 3/8%
Notes, the Company and the Trustee may amend or supplement the 12 3/8% Indenture
or 12 3/8% Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated 12 3/8% Notes in addition to or in place of certificated 12 3/8%
Notes, to provide for the assumption of the Company's obligations to holders of
the 12 3/8% Notes in the case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the holders of the
12 3/8% Notes or that does not adversely affect the legal rights under the
12 3/8% Indenture of any such holder, or to comply with requirements of the
Commission in order to maintain the qualification of the 12 3/8% Indenture under
the Trust Indenture Act.
Any notice or communication to a holder of 12 3/8% Notes shall be mailed by
first-class mail to such holder's address as shown in the register kept by the
Registrar. If a notice or communication is mailed in the manner provided in the
preceding sentence within the time period prescribed, it is duly given, whether
or not the addressee receives it. In addition, if and as long as the 12 3/8%
Notes are listed on the Luxembourg Stock Exchange, all notices regarding the
12 3/8% Notes shall be published in English in one leading newspaper with
circulation in Luxembourg. It is expected that publication of notices will
normally be made in the Luxembourger Wort in Luxembourg.
GOVERNING LAW
The 12 3/8% Notes and the 12 3/8% Indenture will be governed exclusively by
the laws of the State of New York.
CONCERNING THE TRUSTEE
The 12 3/8% Indenture contains limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
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The holders of a majority in principal amount of then outstanding 12 3/8%
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee under the 12 3/8%
Indenture, subject to certain exceptions. The 12 3/8% Indenture provides that in
case an Event of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the 12 3/8% Indenture at the request of any holder of 12 3/8% Notes,
unless such holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
The Chase Manhattan Bank is also the trustee for all of the Existing Notes
and the Convertible Notes.
LISTING
Application will be made to list the 12 3/8% New Notes on the Luxembourg
Stock Exchange. The legal notice relating to the issue of the Notes and the
Articles of Association of the Company will be registered prior to the listing
with the Registrar of the District Court in Luxembourg, where such documents are
available for inspection and where copies thereof can be obtained upon request.
In addition, if and as long as the 12 3/8% Notes are listed on the Luxembourg
Stock Exchange, an agent for making payments on, and transfers of, 12 3/8% Notes
will be maintained in Luxembourg. The Company has initially designated Chase
Manhattan Bank Luxembourg S.A. as its agent for such purposes.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the 12 3/8% Indenture.
Reference is made to the 12 3/8% Indenture for a full definition of all terms,
as well as any other capitalized terms used herein for which no definition is
provided.
"Accreted Value" means, as of any date of determination prior to October
1, 2003, with respect to any Note, the sum of (a) the initial offering price
(which shall be calculated by discounting the aggregate principal amount at
maturity of such Note, at a rate of 12 3/8% per annum, compounded semiannually
on each April 1 and October 1, from October 1, 2003 to the date of issuance) 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
12 3/8% 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 Note
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.
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"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, patients, 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 or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Annualized Pro Forma EBITDA" means, with respect to any Person, such
Person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four.
"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 the
provisions of the Indenture described under the captions "Change of
Control" or "Merger, Consolidation or Sale of Assets") 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.
"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.
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"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 which 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 two days 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 two days 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
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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.
"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% Convertible
Subordinated Notes issued pursuant to an indenture dated as of June 12, 1996
also between the Company and The Chase Manhattan Bank (formerly known as
Chemical Bank), as trustee.
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"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) L555 million and (ii) the
amount of the aggregate commitments thereunder as the same may be increased
after March 13, 1998 as contemplated by the Facilities Agreement as amended or
supplemented to March 13, 1998, but in no event greater than L875 million, 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 to the covenant described above under "-- Asset Sales." Indebtedness
that may otherwise be incurred under the 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 of the Indenture shall be deemed to have been incurred on such date in
reliance on the exception provided by clause (a) of the second paragraph of the
covenant described above under "-- Incurrence of Indebtedness and Issuance of
Preferred Stock."
"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.
"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) whereof, 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
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(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 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.
"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.
"Interest Rate Agreement" means, with respect to 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.
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"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).
"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.), NTLIH, 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 of 1933 and
the Exchange Act (as such Regulation is in effect on the date of the Indenture).
"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).
"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.
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"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 by the "Restricted Payments" covenant), 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 of
the Company or Capital Stock Sales 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.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Old Notes" means the 12 3/4% Notes, the 11 1/2% Deferred Coupon Notes, the
10 3/4% Notes, the 10% Notes, the 9 3/4% Notes, the 9 1/2% Notes and the 11 1/2%
Notes.
"Other Qualified Notes" means any outstanding senior indebtedness of the
Company issued pursuant to an indenture having a provision substantially similar
to the Asset Sale Offer provision contained in the Indenture (including, without
limitation, the 12 3/4% Notes, the 11 1/2% Deferred Coupon Notes, the 10 3/4%
Notes, the 10% Notes, the 9 3/4% Notes, the 9 1/2% Notes and the 11 1/2% 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,
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(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 in
the Company (or any Capital Stock Sales 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
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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.
"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.
"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 the 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),
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(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.
"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.
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"S&P" means Standard & Poor's Ratings Group and its successors.
"Subordinated Debentures" means the debentures exchangeable by the Company
for the Preferred Stock in accordance with the Certificate of Designation
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.
"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.
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REGISTRATION RIGHTS
The following summary of the registration rights provided in the
Registration Rights Agreements and the Old Notes does not purport to be
complete. It is qualified in its entirety by reference to the terms of the
registration rights set forth in the Registration Rights Agreements and the Old
Notes.
Holders of New Notes are not generally entitled to any registration rights
with respect to such New Notes. Pursuant to the Registration Rights Agreements,
holders of Old Notes are entitled to certain registration rights. Pursuant to
the Registration Rights Agreements, the Company agreed to file with the
Commission a registration statement, including a prospectus, (the "Exchange
Offer Registration Statement") on the appropriate form under the Securities Act
with respect to an offer to exchange each class of the Old Notes for New Notes
registered under the Securities Act with terms substantially identical to those
of each class of the Old Notes. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company will offer to the holders of Transfer
Restricted Securities pursuant to the Exchange Offer, who are able to make
certain representations with respect to the applicable class of Old Notes, the
opportunity to exchange their Transfer Restricted Securities for New Notes of
the applicable class. If (i) with respect to any class of the Old Notes the
Company is not required to file the Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any holder of Transfer
Restricted Notes notifies the Company within the specified time period that (A)
it is prohibited by law or Commission policy from participating in the Exchange
Offer or (B) that it may not resell the Exchange Securities acquired by it in
the 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) that it is a broker-dealer and
owns Old Notes acquired directly from the Company or an affiliate of the
Company, the Company will file with the Commission a shelf registration
statement (a "Shelf Registration Statement") to cover resales of the applicable
Old Notes by the holders thereof who satisfy certain conditions relating to the
provision of information in connection with the Shelf Registration Statement.
The Company will use its best efforts to cause the applicable Registration
Statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Transfer Restricted Notes" means each Old Note
until (i) the date on which such Note has been exchanged by a person other than
a broker-dealer for a New Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of an Old Note for a New Note,
the date on which such New 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 Old Note has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement, (iv) the date
on which such Old 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 Old Note ceases to be
outstanding.
The Registration Rights Agreements provide that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to
January 31, 1999 with respect to the 11 1/2% New Notes, and on or prior to
February 4, 1999 with respect to the 12 3/8% New Notes, (ii) the Company will
use its best efforts to have the Exchange Offer Registration Statement declared
effective by the Commission on or prior to May 1, 1999 with respect to the
11 1/2% New Notes, and on or prior to May 5, 1999 with respect to the 12 3/8%
New Notes, (iii) unless the Exchange Offer would not be permitted by applicable
law or Commission policy, the Company will commence the Exchange Offer and use
its best efforts to issue on or prior to June 10, 1999, 11 1/2% New Notes in
exchange for all 11 1/2% Old Notes tendered prior thereto in the Exchange Offer
and to issue on or prior to June 14, 1999, 12 3/8% New Notes in exchange for all
12 3/8% Old Notes tendered prior thereto in the Exchange Offer and (iv) if
obligated to file the Shelf Registration Statement, the Company will use its
best efforts to file the Shelf Registration Statement with the Commission as
promptly as practicable after such filing obligation arises and to cause the
Shelf Registration to be declared effective by the Commission on or prior to
June 10, 1999 with respect to the 11 1/2% New Notes, and on or prior to June 14,
1999 with respect to the 12 3/8% New Notes. If, with respect to any class of the
Notes (a) the Company fails to file the Exchange Offer Registration
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Statement on or before the date specified for such filing, (b) the Exchange
Offer Registration Statement is not declared effective on or prior to May 1,
1999 with respect to the 11 1/2% New Notes, and on or prior to May 5, 1999 with
respect to the 12 3/8% New Notes or (c) the Company fails to consummate the
Exchange Offer, or a Shelf Registration Statement is not declared effective,
within the specified time frames (each such event referred to in clauses (a)
through (c) above a "Registration Default"), then the Company will pay special
interest pursuant to provisions of the Old Notes to each holder of the
applicable Old Notes. Special interest will accrue from and including (i)
February 1, 1999 with respect to the 11 1/2% Notes and February 5, 1999 with
respect to the 12 3/8% Notes, in the case of clause (i) above, (ii) May 2, 1999
with respect to the 11 1/2% Notes and May 6, 1999 with respect to the 12 3/8%
Notes, in the case of clause (ii) above, (iii) June 11, 1999 with respect to the
11 1/2% Notes and June 15, 1999 with respect to the 12 3/8% Notes, in the case
of clause (iii) above or (iv) June 11, 1999 with respect to the 11 1/2% Notes
and June 15, 1999 with respect to the 12 3/8% Notes, in the case of clause (iv)
above (each such period referred to in clauses (i)-(iv) above an "Accrual
Period"), at a rate per annum equal to 0.50% of the principal amount of the
11 1/2% Old Notes or the Accreted Value of the 12 3/8% Old Notes, as applicable
(determined daily). The amount of the special interest will increase by an
additional 0.50% of the principal amount of the 11 1/2% Old Notes or the
Accreted Value of the 12 3/8% Old Notes, as applicable 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 of the 11 1/2% Old Notes or the Accreted Value of the 12 3/8%
Old Notes, as applicable (determined daily). All accrued special interest will
be paid by the Company on each Interest Payment Date to the applicable Global
Note holder by wire transfer of immediately available funds or by federal funds
check and to holders of Certificated Securities by wire transfer to the accounts
specified by them or by mailing checks to their registered addresses if no such
accounts have been specified. Following the cure of all Registration Defaults,
the accrual of special interest will cease.
In the event that a Shelf Registration Statement is declared effective
pursuant to the terms of a 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) November
2, 2000 with respect to the 11 1/2% Old Notes or November 6, 2000 with respect
to the 12 3/8% Old Notes or (iii) the date as of which all of the Transfer
Restricted Notes are sold pursuant to the Shelf Registration Statement, special
interest pursuant to provisions of the Notes shall accrue at a rate per annum
equal to 0.50% of the principal amount of the 11 1/2% Old Notes or the Accreted
Value of the 12 3/8% Old Notes, as applicable (determined daily) (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 of each year, to the holders of record on the immediately preceding March 15
and September 15, respectively. The Company will be permitted to suspend use of
the prospectus that is part of any Shelf Registration Statement during certain
periods of time and in certain circumstances relating to pending corporate
developments and public filings with Commission and similar events.
Special interest on the Old Notes, if any, will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
Holders of Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
special interest pursuant to provisions of the Old Notes, as set forth above.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of the material U.S. federal income tax
consequences of an exchange of Old Notes for the New Notes and the ownership of
the New Notes. It deals only with Notes held as capital assets by initial
holders of Old Notes, and does not deal with special situations, such as those
of dealers in securities, financial institutions, insurance companies and
holders whose "functional currency" is not the U.S. dollar, or special rules
with respect to straddle or "hedging" transactions. The discussion below is
based upon the Internal Revenue Code of 1986, as amended (the "Code") and
regulations, rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified (including
retroactively) so as to result in federal income tax consequences different from
those discussed below. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING
THE TAX CONSEQUENCES THAT MAY BE SPECIFIC TO THEM OF THE EXCHANGE OF OLD NOTES
FOR NEW NOTES AND THE OWNERSHIP OF THE NEW NOTES, AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN LAWS.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any political subdivision
thereof or therein, (iii) an estate or trust described in Section 7701(a)(30) of
the Code, or (iv) a person whose worldwide income or gain is otherwise subject
to U.S. federal income taxation on a net income basis. As used herein, the term
"Non-U.S. Holder" means a holder of a Note that is not a U.S. Holder.
EXCHANGE OF NOTES
There will be no federal income tax consequences to holders exchanging Old
Notes for New Notes pursuant to the Exchange Offer since the Exchange Offer will
be by operation of the original terms of the Old Notes, pursuant to a unilateral
act by the Company, and will not result in any material alteration in the terms
of the Old Notes. Each exchanging holder will have the same adjusted tax basis
and holding period in the New Notes as it had in the Old Notes immediately
before the exchange.
TAXATION OF NOTES -- U.S. HOLDERS
Payments of Interest. Payments of Interest on the 11 1/2% Notes generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or received (in accordance with the U.S. Holder's method of
accounting for federal income tax purposes).
If the Company meets the Foreign Active Business Requirement discussed
below, interest, including OID as defined below, paid on the Notes may be
treated as foreign source income. Due to the factual nature of the issue,
however, it is not certain that the Company will meet such requirement.
Original Issue Discount. Because the 12 3/8% Old Notes were issued with
original issue discount ("OID"), the 12 3/8% New Notes issued in exchange for
the 12 3/8% Old Notes will also bear OID that each U.S. Holder of a 12 3/8% New
Note generally will be required to include in income as it accrues on a yield-
to-maturity basis over the term of the 12 3/8% New Note in advance of cash
payments attributable to such income (regardless of whether the holder is a cash
or accrual basis taxpayer). The amount of OID with respect to a 12 3/8% New Note
will equal the excess of the stated redemption price at maturity of such 12 3/8%
New Note over its issue price. The stated redemption price at maturity will
include all payments required to be made on the 12 3/8% New Note, whether
denominated as principal or interest (other than payments subject to remote or
incidental contingencies). The issue price of the 12 3/8% New Notes equals the
issue price of the 12 3/8% Old Notes, which was $55.505 per $1,000 principal
amount at maturity.
A U.S. Holder of a debt instrument that bears OID is required to include in
gross income an amount equal to the sum of the daily portions of OID for each
day during the taxable year in which such holder holds the debt instrument. The
daily portions of OID are determined by allocating to each day in an accrual
period the pro rata portion of the OID that is allocable to the accrual period.
The amount of OID
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that is allocable to an accrual period with respect to 12 3/8% New Notes
generally will be equal to the product of the adjusted issue price of such notes
at the beginning of the accrual period (the issue price of the 12 3/8% New Notes
determined as described above, generally increased by all prior accruals of OID
and decreased by the amount of payments made on such 12 3/8% New Notes) and the
12 3/8% New Notes' yield-to-maturity (the discount rate, which, when applied to
all payments under the 12 3/8% New Notes and 12 3/8% Old Notes, results in a
present value equal to the issue price of such 12 3/8% New Notes). In the case
of the final accrual period, the allocable OID generally is the difference
between the amount payable at maturity and the adjusted issue price at the
beginning of the accrual period. All payments on a 12 3/8% Note generally will
be viewed first as a payment of previously accrued OID (to the extent thereof),
with payments considered made from the earliest accrual period, and then as a
payment of principal.
The Company will furnish annually to the Internal Revenue Service (the
"IRS") and to U.S. Holders (other than with respect to certain exempt holders,
including, in particular, corporations) information with respect to the OID
accruing while the 12 3/8% Notes were held by the U.S. Holders.
Under certain circumstances described above, the Company will be required
to pay special interest on the Discount Notes if it fails to comply with certain
of its obligations under the Registration Rights Agreement. Although not free
from doubt, such additional amount should be taxable to a U.S. Holder as
ordinary income at the time it accrues or is received in accordance with such
holder's regular method of accounting. It is possible, however, that the IRS may
take a different position, in which case the timing and the amount of income on
the Discount Notes may be different.
Disposition of Notes. A U.S. Holder will generally recognize gain or loss
upon the sale, exchange, retirement or other disposition of New Notes equal to
the difference between the amount realized on the disposition (other than
amounts attributable to accrued but unpaid interest) and the U.S. Holder's
adjusted tax basis in the New Notes. A U.S. Holder's adjusted tax basis in a New
Note will generally be the cost of the Old Note, (and, in the case of 12 3/8%
New Notes) increased by any OID previously included in income by such holder and
decreased by any amount received on the Note that is not treated as ordinary
interest income. Such gain or loss generally would be capital gain or loss. In
the case of a U.S. Holder who is an individual, such capital gain will be
subject to tax at a maximum 20% rate if the holding period for the New Note
(which includes the holding period of the Old Note) is more than one year.
TAXATION OF NOTES -- NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a New Note that is a Non-U.S. Holder.
Subject to the discussion of backup withholding below, payments of interest
(including OID) on a New Note to any Non-U.S. Holder will generally not be
subject to U.S. federal income or withholding tax, provided that (1) the holder
is not (i) a direct or indirect owner of 10% or more of the total voting power
of all voting stock of the Company, (ii) a controlled foreign corporation
related to the Company through stock ownership or (iii) a foreign tax-exempt
organization or a foreign private foundation for U.S. federal income tax
purposes, (2) such interest payments are not effectively connected with the
conduct by the Non-U.S. Holder of a trade or business within the United States
and (3) the Company or its paying agent receives (i) from the Non-U.S. Holder, a
properly completed Form W-8 (or substitute Form W-8) under penalties of perjury
which provides the Non-U.S. Holder's name and address and certifies that the
Non-U.S. Holder of the Note is a Non-U.S. Holder or (ii) from a security
clearing organization, bank or other financial institution that holds the Notes
in the ordinary course of its trade or business (a "financial institution") on
behalf of the Non-U.S. Holder, certification under penalties of perjury that
such a Form W-8 (or substitute Form W-8) has been received by it, or by another
such financial institution, from the Non-U.S. Holder, and a copy of the Form W-8
(or substitute Form W-8) is furnished to the payor.
A Non-U.S. Holder that does not qualify for exemption from withholding
under the preceding paragraph generally will be subject to withholding of U.S.
federal income tax at the rate of 30% (or lower applicable treaty rate) on
payments of interest (including OID) on the New Notes unless the Foreign Active
Business Requirement is met, as described below.
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If the payments of interest (including OID) on a New Note are effectively
connected with the conduct by a Non-U.S. Holder of a trade or business in the
United States, such payments will be subject to U.S. federal income tax on a net
basis at the rates applicable to United States persons generally (and, with
respect to corporate holders, may also be subject to a 30% branch profits tax).
If payments are subject to U.S. federal income tax on a net basis in accordance
with the rules described in the preceding sentence, such payments will not be
subject to United States withholding tax so long as the holder provides the
Company or its paying agent with a properly executed Form 4224.
In addition, if the Company can show to the satisfaction of the IRS that at
least 80% of the gross income from all sources for the 3-year period ending with
the close of the Company's taxable year preceding the interest payment (or such
period as may be applicable) is "active foreign business income," (the "Foreign
Active Business Requirement") then such interest would be treated as foreign
source income that is not subject to U.S. withholding. Active foreign business
income is generally gross income of a corporation derived from sources outside
the U.S., or is attributable to income so derived by a subsidiary of the
corporation, which is attributable to the active conduct of a trade or business
in the foreign jurisdiction by the corporation (or subsidiary). It is uncertain
whether the Company would meet this test for treating interest income as
non-U.S. source.
Non-U.S. Holders should consult any applicable income tax treaties, which
may provide for a lower rate of withholding tax exemption from or reduction of
branch profits tax, or other rules different from those described above.
Sale, Exchange or Redemption of Notes. Subject to the discussion
concerning backup withholding, any gain realized by a Non-U.S. Holder on the
sale, exchange, retirement or other disposition of a New Note generally will not
be subject to a U.S. federal income tax, unless (i) such gain is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business within
the United States, (ii) the Non-U.S. Holder is an individual who is present in
the United States for 183 days or more in the taxable year of the disposition
and certain other conditions are satisfied, or (iii) the Non-U.S. Holder is
subject to tax pursuant to the provisions of U.S. tax law applicable to certain
U.S. expatriates.
Federal Estate Tax. New Notes held (or treated as held) by an individual
who is a Non-U.S. Holder at the time of his or her death will not be subject to
U.S. federal estate tax provided that (i) the individual does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the Company and (ii) income on the Notes was not effectively connected with the
conduct by such Non-U.S. Holder of a trade or business within the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments (including OID) with respect to the New Notes and the proceeds
upon the sale or other disposition of the New Notes may be subject to the
information reporting and possible U.S. backup withholding at a 31% rate. Backup
withholding will not apply to U.S. Holders who furnish a correct taxpayer
identification number and provide other certification or who are otherwise
exempt from backup withholding. Copies of those information returns may also be
made available, under the provisions of a specific treaty or agreement, to the
tax authorities of the country in which the Non-U.S. Holder resides.
The regulations provide that backup withholding (which generally is a
withholding tax imposed at the rate of 31% on payments to persons that fail to
furnish certain required information) and information reporting will not apply
to payments made in respect to the New Notes by the Company to a Non-U.S.
Holder, if the holder certifies as to its non-U.S. status under penalties of
perjury or otherwise establishes an exemption (provided that neither the Company
nor its paying agent has actual knowledge that the holder is a U.S. person or
that the condition of any other exemption are not, if fact, satisfied).
The payment of the proceeds from the disposition of New Notes to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner certifies
as to its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a
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U.S. person or that the conditions of any other exemption are not, if fact,
satisfied. The payment of the proceeds from the disposition of a New Note to or
through a non-U.S. office of a non-U.S. broker that is not a U.S. related person
will not be subject to information reporting or backup withholding. For this
purpose, a "U.S. related person" is (i) a "controlled foreign corporation" for
U.S. federal income tax purposes or (ii) a foreign person 50% or more of whose
gross income from all sources for the three-year period ending with the close of
its taxable year preceding the payment (or for such part of the period that the
broker has been in existence) is derived from activities that are effectively
connected with the conduct of a U.S. trade or business.
In the case of the payment of proceeds from the disposition of New Notes to
or through a non-U.S. office of a broker that is a U.S. related person, the
regulations require information reporting on the payment unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder and the
broker has no knowledge to the contrary. Backup withholding will not apply to
payments made through foreign offices of a broker that is a U.S. person or a
U.S. related person (absent actual knowledge that the payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's federal income tax liability, provided that the requisite procedures
are followed.
The Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general, the
final regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. The final regulations are
generally effective for payments made after December 31, 1999, subject to
certain transition rules. Non-U.S. Holders should consult their own tax advisors
with respect to the impact, if any, of the final regulations.
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PLAN OF DISTRIBUTION
Each broker-dealer who holds Old Notes for its own account as a result of
market-making activities or other trading activities and who receives New Notes
in exchange for Old Notes pursuant to the Exchange Offer may be a statutory
underwriter and must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company acknowledges and each holder, other than a
broker-dealer, must acknowledge that it is not engaged in, does not intend to
engage in, and has no arrangement or understanding with any person to
participate in a distribution of New Notes. We have 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.
We will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
state that by acknowledging that it will deliver and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, we 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.
We have agreed to pay all expenses incident to the 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 Securities Act.
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BOOK-ENTRY; DELIVERY AND FORM
THE EXCHANGE
New Notes exchanged for Old Notes through the Book-Entry Transfer Facility
may be represented by one or more Global Notes (the "Global New Notes"). The
Global New Notes will be deposited on the date of the closing of the Exchange
Offer (the "Closing Date") with the Trustee as custodian of DTC and pursuant to
a FAST Balance Certificate Agreement between the Trustee or the Registrar, as
the case may be, and DTC and registered in the name of Cede & Co., as nominee of
DTC (such nominee being referred to herein as the "Global Security Holder").
New Notes exchanged for Old Notes which are in the form of registered
definitive certificates (the "Certificated Notes") will be issued in the form of
Certificated Notes. Such Certificated Notes may, unless the Global New Notes has
previously been exchanged for Certificated Notes, be exchanged for an interest
in the Global New Notes representing the principal amount at maturity of New
Notes being transferred.
DEPOSITORY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold notes for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between the Participants through electronic book-entry
changes in accounts of the Participants. The Participants include securities
brokers and dealers (including the Initial Purchasers), banks, trust companies,
clearing corporations and certain other organizations. Access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own notes held
by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interest and transfer of ownership interest of each
actual purchaser of each note held by or on behalf of DTC are recorded on the
records of the Participants and the Indirect Participants.
Euroclear and CEDEL hold securities for participating organizations and
facilitate the clearance and settlement of securities transactions between their
respective Participants through electronic book-entry changes in accounts of
such Participants. Euroclear and CEDEL provide to their Participants, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
Euroclear and CEDEL interface with domestic securities markets. Euroclear and
CEDEL Participants and financial institutions such as Initial Purchasers,
securities brokers and dealers, banks, trust companies and certain other
organizations. Indirect access to Euroclear or CEDEL is also available to others
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodian relationship with a Euroclear or CEDEL Participant, either
directly or indirectly.
DTC has also advised the Company that pursuant to procedures established by
it, (i) upon deposit of the Global New Notes, DTC will credit the accounts of
Participants with portions of the principal amount of the Global New Notes
representing the New Notes and (ii) ownership of such interests in the Global
New Notes will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in the Global New Notes).
Investors in a Global New Note may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and CEDEL) which are Participants in such
system. Euroclear and CEDEL will hold interests in a Global New Note on behalf
of their participants through their respective depositories, which in turn will
hold such interests in the Global New Note customers' securities accounts in
their respective names on the books of DTC. The Morgan Guaranty Trust Company,
Brussels office, will initially act as depository for Euroclear, and Citibank,
N.A., will initially act as depository for CEDEL. All interests in a Global New
Note, including those held through Euroclear or CEDEL, may be subject to the
procedures and requirements of DTC. Those interests held through Euroclear or
CEDEL may also be subject to the procedures and requirements of such system.
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The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global New Note to such persons may be
limited to that extent. Because DTC can act only on behalf of the Participants,
which in turn act on behalf of the Indirect Participants and certain banks, the
ability of a person having beneficial interests in a Global New Note to pledge
such interests to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interests, may be affected by the
lack of a physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NEW NOTES WILL
NOT HAVE NEW NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY
OF NEW NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS OF NEW NOTES UNDER THE INDENTURES FOR ANY PURPOSE.
Payments in respect of the principal of (and premium, if any) and interest
on a Global New Note will be made through one or more paying agents (the "Paying
Agent") appointed under the Indentures (which will initially include the
Trustee) and will be payable to DTC or its nominee in its capacity as the
registered holder under the applicable Indenture. Under the terms of the
Indentures, the Company and the Trustee will treat the persons in whose names
the New Notes, including the Global New Notes representing the New Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, none of the Company,
the Trustee, any Transfer Agent or any agent of the Company, the Trustee, any
Transfer Agent has or will have any responsibility or liability for (i) any
aspect or accuracy of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Notes, or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect Participant's
records relating to the beneficial ownership interests in the Global New Notes,
or (ii) any other matter relating to the actions and practices of DTC or any of
the Participants or the Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of notes such as the New Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security as
shown on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of New Notes will be governed by standing
instructions and customary practices and will not be the responsibility of any
of DTC, the Trustee, the Registrar, the Transfer Agent or the Company. None of
the Company, the Registrar, the Transfer Agent or the Trustee will be liable for
any delay by DTC or any of the Participants in identifying the beneficial owners
of the Notes, and the Company, the Registrar, the Transfer Agent and the Trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee as the registered owner of the Global Notes for all purposes.
Except for trades involving only Euroclear and CEDEL participants,
interests in the Global Notes will trade in DTC's Same-Day Funds Settlement
System and secondary market trading activity in such interests will therefore
settle in immediately available funds, subject in all cases to the rules and
procedures of DTC and the Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures and will be settled in same-day funds. Transfers between
accountholders in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Cross-market transfers between the account holders in DTC, on the one hand,
and account holders in Euroclear or CEDEL, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or CEDEL, as
the case may be, by its respective depository; however, such cross-market
transactions will require delivery of instructions to Euroclear or CEDEL, as the
case may be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such system.
Euroclear or CEDEL, as the case may be, will, if the transaction meets its
settlement requirements, deliver instructions to its respective depository to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant Global Note in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds
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settlement applicable to DTC. Euroclear and CEDEL account holders may not
deliver instructions directly to the depositories for Euroclear or CEDEL.
Because of time zone differences, the securities account of a Euroclear or
CEDEL account holder purchasing an interest in a Global Note from an account
holder in DTC will be credited, and any such crediting will be reported to the
relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear or CEDEL) immediately
following the settlement date of DTC. Cash received in Euroclear or CEDEL as a
result of sales of interests in a Global New Note by or through a Euroclear or
CEDEL account holder to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or CEDEL
cash account only as of the business day for Euroclear or CEDEL following DTC's
settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes only at the direction of one or more Participants
to whose account with DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if any of the events described under "-- Exchange of Book Entry Notes
for Certificated Notes" occurs, DTC reserves the right to exchange the Global
New Notes for Notes in certificated form and to distribute such New Notes to its
Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interests in the Global New Notes among account
holders in DTC and account holders of Euroclear and CEDEL, they are under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of the Company, the Registrar,
the Transfer Agent or the Trustee nor any agent of the Company, the Registrar,
the Transfer Agent or the Trustee will have any responsibility for the
performance by DTC, Euroclear or CEDEL or their respective participants,
indirect participants or account holders of their respective obligations under
the rules and procedures governing their operations.
Exchange of Book-Entry Notes for Certificated Notes
A Global New Note is exchangeable for definitive New Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depository for the Global New Note and the Company
thereupon fails to appoint a successor depository within 90 days or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of the New Notes in certificated form or (iii) there shall have
occurred and be continuing a Default or an Event of Default with respect to the
New Notes. In all cases, certificated Notes delivered in exchange for any Global
Note or beneficial interests therein will be registered in the names, and issued
in any approved denominations, requested by or on behalf of the depository (in
accordance with its customary procedures).
If certificated New Notes are issued and a holder of a certificated New
Note claims that the Note has been lost, destroyed or wrongfully taken or if
such New Note is mutilated and is surrendered to the Trustee (or, as long as the
New Notes are listed on the Luxembourg Stock Exchange, at the specified office
of the transfer agent in Luxembourg), the Company shall issue and the Trustee
shall authenticate a replacement New 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 New Note is replaced. The Company may charge for its expenses in
replacing a New Note.
In case any such mutilated, destroyed, lost or stolen New Note has become
or is about to become due and payable, or is about to be purchased by the
Company pursuant to the provisions of the Indenture, the Company in its
discretion may, instead of issuing a new New Note, pay or purchase such New
Note, as the case may be.
122
<PAGE> 127
LEGAL MATTERS
The validity of the issuance of the New Notes will be passed upon for the
Company by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, special
counsel for the Company.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997, as set forth in their report, which
is included in this prospectus. Our consolidated financial statements are
included in reliance on their report, given on their authority as experts in
accounting and auditing.
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 of Comcast UK
Cable Partners Limited and subsidiaries included herein have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
also included herein and have been so included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 of Birmingham
Cable Corporation Limited and Cable London PLC included herein have been audited
by Deloitte & Touche, independent auditors, as stated in their reports, which
are also included herein and have been so included in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
The combined financial statements of ComTel UK Finance, B.V. and its
subsidiaries as of and for the year ended December 31, 1997, and the combined
financial statements of Telecential as of and for the 16 months ended December
31, 1996, included herein have been audited by Deloitte & Touche, independent
auditors, as stated in their reports, which are also included herein.
The combined financial statements as of and for the year ended December 31,
1996 of ComTel UK Finance B.V. included herein have been included in reliance on
the report of Coopers & Lybrand, independent Chartered Accountants.
ENFORCEABILITY OF CIVIL LIABILITIES
A substantial majority of the assets of the Company are located outside the
United States. As a result, it may not be possible for holders of the Notes to
realize in the United States upon judgments of courts of the United States
predicated upon the civil liability under the federal securities laws of the
United States. The United States and England do not currently have a treaty
providing for the reciprocal recognition and enforcement of judgments (other
than arbitration awards) in civil and commercial matters. Therefore, a final
judgment for the payment of a fixed debt or sum of money rendered by any United
States court based on civil liability, whether or not predicated solely upon the
United States federal securities laws, would not automatically be enforceable in
England. In order to enforce in England a United States judgment, proceedings
must be initiated by way of common law action before a court of competent
jurisdiction in England. An English court will, subject to what is said below,
normally order summary judgment on the basis that there is no defense to the
claim for payment and will not reinvestigate the merits of the original dispute.
In such an action, an English court will treat the United States judgment as
creating a valid debt upon which the judgment creditor could bring an action for
payment, as long as (i) the United States court had jurisdiction over the
original proceeding, (ii) the judgment is final and conclusive on the merits,
(iii) the judgment does not contravene English public policy, (iv) the judgment
must not be for a tax, penalty or a judgment arrived at by doubling, trebling or
otherwise multiplying a sum assessed as compensation for the loss or damage
sustained and (v) the judgment has not been obtained by fraud or in breach of
the principles of natural justice. Based on the foregoing, there can be no
assurance that Holders of Notes will be able to enforce in England judgments in
civil and commercial matters obtained in any United States court. There is doubt
as to whether an English court would impose civil liability in an original
action predicated solely upon the United States federal securities laws brought
in a court of competent jurisdiction in England.
123
<PAGE> 128
GENERAL INFORMATION
CLEARING SYSTEMS
The International Security Identification Number ("ISIN") for the 11 1/2%
New Notes is and the Common Code is . The ISIN for the
12 3/8% New Notes is and the Common Code is .
AUTHORIZATION
The issue of the 11 1/2% New Notes was authorized by a resolution of the
Board of Directors of the Company on October 26, 1998. The issue of the 12 3/8%
New Notes was authorized by a resolution of the Board of Directors of the
Company on October 30, 1998.
AVAILABLE DOCUMENTS, FINANCIAL REPORTS AND INFORMATION
Copies of the Indentures and the Registration Rights Agreements referred to
herein will, so long as the Notes are listed on the Luxemburg Stock Exchange, be
available for inspection during normal business hours at the specified office of
the Luxembourg Agent.
A copy of the Certificate of Incorporation and By-laws of the Company will
be available for inspection during normal business hours at the specified office
of the Luxembourg Agent.
Whether or not required by the rules and regulations of the Commission, so
long as the Notes are outstanding, the Company will file with the Commission and
furnish to holders of Notes all quarterly and annual financial information
required to be contained in a filing with the Commission 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 or Results of
Operations and Financial Condition" and, with respect to the annual information
only, a report thereon by the Company's certified independent public
accountants, in each case, as required by the rules and regulations of the
Commission as in effect on November 6, 1998.
In compliance with Forms 10-Q and 10-K, the Company currently publishes
audited annual consolidated financial reports and unaudited quarterly
consolidated financial reports. As long as the Notes are listed on the
Luxembourg Stock Exchange, copies of such reports or any other reports the
Company is required to furnish to holders of the Notes in accordance with the
preceding paragraph, will be available at the specified office of the listing,
paying and transfer agent in Luxembourg. The Company does not publish
unconsolidated financial reports.
Copies of reports, proxy statements and other information concerning the
Company filed by the Company with the Commission will, as long as the Notes are
listed on the Luxembourg Stock Exchange, be available at the specified office of
the listing, paying and transfer agent in Luxembourg.
MATERIAL ADVERSE CHANGE
Except as disclosed in this Prospectus, there has been no material adverse
change in the financial position of the Company since September 30, 1998.
124
<PAGE> 129
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NTL INCORPORATED AND SUBSIDIARIES
Report of Independent Auditors.............................. F-4
Consolidated Balance Sheets as of December 31, 1997 and
December 31, 1996......................................... F-5
Consolidated Statements of Operations for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-6
Consolidated Statement of Shareholders' Equity (Deficiency)
for the Years Ended December 31, 1997, December 31, 1996
and December 31, 1995..................................... F-7
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-8
Notes to Consolidated Financial Statements.................. F-9
Condensed Consolidated Balance Sheet as of September 30,
1998 (Unaudited).......................................... F-29
Condensed Consolidated Statements of Operations for the Nine
Months Ended September 30, 1998 and 1997 (Unaudited)...... F-30
Condensed Consolidated Statement of Shareholders'
(Deficiency) for the Nine Months Ended September 30, 1998
(Unaudited)............................................... F-31
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1998 and 1997 (Unaudited)...... F-32
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................... F-33
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
Independent Auditors' Report................................ F-41
Consolidated Balance Sheet as of December 31, 1997 and
December 31, 1996......................................... F-42
Consolidated Statement of Operations for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-43
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-44
Consolidated Statement of Shareholders' Equity for the Years
Ended December 31, 1997, December 31, 1996 and December
31, 1995.................................................. F-45
Notes to Consolidated Financial Statements.................. F-46
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS
LIMITED) AND SUBSIDIARIES
Condensed Consolidated Balance Sheet as of September 30,
1998 (Unaudited).......................................... F-60
Condensed Consolidated Statement of Operations and
Accumulated Deficit for the Nine Months Ended September
30, 1998 and 1997 (Unaudited)............................. F-61
Condensed Consolidated Statement of Cash Flows for the Nine
Months Ended September 30, 1998 and 1997 (Unaudited)...... F-62
Notes to Condensed Consolidated Financial Statements
(Unaudited)............................................... F-63
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
Independent Auditors' Report................................ F-69
Consolidated Balance Sheet as of December 31, 1997 and
December 31, 1996......................................... F-70
</TABLE>
F-1
<PAGE> 130
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Statement of Operations for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-71
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-72
Consolidated Statement of Shareholders' Equity for the Years
Ended December 31, 1997, December 31, 1996 and December
31, 1995.................................................. F-73
Notes to Consolidated Financial Statements.................. F-74
CABLE LONDON PLC AND SUBSIDIARIES
Independent Auditors' Report................................ F-81
Consolidated Balance Sheet as of December 31, 1997 and
December 31, 1996......................................... F-82
Consolidated Statement of Operations for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-83
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1997, December 31, 1996 and December 31,
1995...................................................... F-84
Consolidated Statement of Shareholders' (Deficiency) Equity
for the Years Ended December 31, 1997, December 31, 1996
and December 31, 1995..................................... F-85
Notes to Consolidated Financial Statements.................. F-86
COMTEL UK FINANCE B.V.
AUDITED COMBINED FINANCIAL STATEMENTS
Independent Auditors' Report................................ F-93
Report of Independent Accountants........................... F-94
Combined Statements of Operations for each of the years in
the two year period ended December 31, 1997............... F-95
Combined Balance Sheets as of December 31, 1996 and 1997.... F-96
Combined Statements of Shareholders' Equity for each of the
years in the two year period ended December 31, 1997...... F-97
Combined Statements of Cash Flows for each of the years in
the two year period ended December 31, 1997............... F-98
Notes to the Combined Financial Statements.................. F-99
COMBINED FINANCIAL STATEMENTS
Combined Statements of Operations for each of the six month
periods ended June 30, 1997 and June 30, 1998............. F-106
Combined Balance Sheets as of June 30, 1998................. F-107
Combined Statement of Shareholders' Equity for the six month
period ended June 30, 1998................................ F-108
Combined Statements of Cash Flows for each of the six month
periods ended June 30, 1997 and June 30, 1998............. F-109
Notes to the Unaudited Combined Financial Statements........ F-110
</TABLE>
F-2
<PAGE> 131
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
AUDITED COMBINED FINANCIAL STATEMENTS
Independent Auditors' Report................................ F-112
Combined Statement of Operations for the sixteen month
period ended December 31, 1996............................ F-113
Combined Balance Sheet as of December 31, 1996.............. F-114
Combined Statement of Shareholders' Equity for the sixteen
month period ended December 31, 1996...................... F-115
Combined Statement of Cash Flows for the sixteen month
period ended December 31, 1996............................ F-116
Notes to the Combined Financial Statements.................. F-117
</TABLE>
F-3
<PAGE> 132
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. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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.
ERNST & YOUNG LLP
New York, New York
March 20, 1998
F-4
<PAGE> 133
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
============== ==============
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-5
<PAGE> 134
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-6
<PAGE> 135
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-7
<PAGE> 136
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 noncompetition 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)
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> 137
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.
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.
F-9
<PAGE> 138
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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.
F-10
<PAGE> 139
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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. The Company is currently evaluating the effect that
the adoption will have on its financial statements.
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.
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
F-11
<PAGE> 140
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
5. FIXED ASSETS
Fixed assets consists of:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
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
============== ==============
</TABLE>
6. INTANGIBLE ASSETS
Intangible assets consists of:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
F-12
<PAGE> 141
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
In May 1996, an indirect wholly-owned subsidiary of the Company, NTL
Investment Holdings Limited ("NTLIH"), acquired NTL Group Limited for payments
of approximately L204,000,000 at closing, L17,100,000 in October 1996 and
L35,000,000 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 L256,100,000
($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:
<TABLE>
<S> <C>
Total revenue................................. $ 289,638,000
Net loss...................................... (265,180,000)
Basic and diluted net loss per share.......... (8.31)
</TABLE>
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-13
<PAGE> 142
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.
(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
F-14
<PAGE> 143
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
(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-15
<PAGE> 144
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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 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
L165,000,000 comprised of: (i) a long-term loan facility of L140,000,000 and
(ii) a revolving credit facility of L25,000,000. One of the Lenders also
made available to NTLIH a secured loan facility of L60,000,000 (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 L140,138,000 ($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 L555,000,000,
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 L480,000,000
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 (L75,000,000) is conditional upon the execution of contracts to
provide digital television transmission services to certain third parties. Chase
has provided a portion of the L555,000,000 facility in the form of a
L350,000,000 facility to the Company on the same terms as to restrictions,
covenants, guarantees and security as the L555,000,000 facility. As of March 20,
1998, L10,000,000 ($16,517,000) is outstanding under the L350,000,000 facility.
The principal amount outstanding under the L350,000,000 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
L350,000,000 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 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
F-16
<PAGE> 145
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 L300,000,000 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.
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").
F-17
<PAGE> 146
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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, 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, including $2,916,000 for severance and related costs, $324,000
for lease exit costs and $2,201,000 for penalties associated with the
cancellation of contractual obligations, and 118 employees had been terminated.
There was no other adjustment to the liability.
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.
F-18
<PAGE> 147
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. INCOME TAXES
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------
1997 1996 1995
------------ ---------- -----------
<S> <C> <C> <C>
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)
============ ========== ===========
</TABLE>
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 income tax purposes. Significant components of
the deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------
1997 1996
------------- -------------
<S> <C> <C>
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
============= =============
</TABLE>
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.
F-19
<PAGE> 148
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The reconciliation of income taxes computed at U.S. federal statutory rates
to income tax expense is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------------
1997 1996 1995
------------- ------------ ------------
<S> <C> <C> <C>
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)
============= ============ ============
</TABLE>
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.
F-20
<PAGE> 149
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In connection with this agreement, on July 31, 1991, CCI distributed to its
shareholders the stock of the Company.
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-21
<PAGE> 150
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 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
F-22
<PAGE> 151
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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
F-23
<PAGE> 152
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
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)
</TABLE>
F-24
<PAGE> 153
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (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-
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER 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-
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OF OPTIONS LIFE PRICE OF 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.
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.
F-25
<PAGE> 154
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of net pension costs are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
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 $195,226,000 $166,195,000
securities............................................
Projected benefit obligation............................ 204,340,000 170,795,000
------------ ------------
Excess of projected benefit obligation over (9,114,000) (4,600,000)
assets...........................................
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>
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:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31:
-----------------------
<S> <C>
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
============
</TABLE>
F-26
<PAGE> 155
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 L2,500 ($4,200) per license. The ITC requires an annual
license fee ranging from L1,300 ($2,200) to L7,900 ($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 L14,400,000
($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.
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 L104,188
($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
F-27
<PAGE> 156
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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:
<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-28
<PAGE> 157
NTL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
--------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 459,443,000
Marketable securities..................................... 138,326,000
Accounts receivable -- trade, less allowance for doubtful
accounts of $22,193,000................................ 130,958,000
Cash held in escrow....................................... 156,403,000
Other..................................................... 34,651,000
--------------
Total current assets........................................ 919,781,000
Fixed assets, net........................................... 3,134,655,000
Intangible assets, net...................................... 456,304,000
Other assets, net of accumulated amortization of
$32,957,000............................................... 111,498,000
--------------
Total assets................................................ $4,622,238,000
==============
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY)
Current liabilities:
Accounts payable.......................................... $ 125,293,000
Accrued expenses and other................................ 169,127,000
Interest payable.......................................... 10,615,000
Accrued construction costs................................ 62,008,000
Deferred revenue.......................................... 53,079,000
Current portion of long-term debt......................... 148,781,000
--------------
Total current liabilities................................... 568,903,000
Long-term debt.............................................. 3,885,489,000
Commitments and contingent liabilities
Deferred income taxes....................................... 72,061,000
Senior redeemable exchangeable preferred stock -- $0.01 par
value, plus accreted dividends; liquidation preference
$121,000,000; less unamortized discount of $3,211,000;
issued and outstanding 121,000 shares..................... 120,044,000
Shareholders' (deficiency):
Series preferred stock -- $0.01 par value; authorized
10,000,000 shares:
Series A -- liquidation preference $125,590,00; issued and outstanding 125,000 shares... 1,000
Common stock -- $0.01 par value; authorized 400,000,000
shares; issued and outstanding 41,392,000 shares........ 414,000
Additional paid-in capital................................ 844,368,000
Accumulated other comprehensive income.................... 184,115,000
(Deficit)................................................. (1,053,157,000)
--------------
(24,259,000)
--------------
Total liabilities and shareholders' (deficiency)............ $4,622,238,000
==============
</TABLE>
See accompanying notes.
F-29
<PAGE> 158
NTL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
REVENUES
Local telecommunications and television..................... $ 214,545,000 $ 114,593,000
National and international telecommunications............... 166,845,000 130,217,000
Broadcast transmission and other............................ 100,825,000 96,818,000
Other telecommunications.................................... 2,375,000 6,745,000
------------- -------------
484,590,000 348,373,000
COSTS AND EXPENSES
Operating expenses.......................................... 243,476,000 217,087,000
Selling, general and administrative expenses................ 192,070,000 122,934,000
Franchise fees.............................................. 18,729,000 17,608,000
Corporate expenses.......................................... 11,797,000 13,394,000
Nonrecurring charges........................................ -- 20,537,000
Depreciation and amortization............................... 156,785,000 108,254,000
------------- -------------
622,857,000 499,814,000
------------- -------------
Operating (loss)............................................ (138,267,000) (151,441,000)
OTHER INCOME (EXPENSE)
Interest and other income................................... 39,796,000 23,347,000
Interest expense............................................ (226,422,000) (152,095,000)
Foreign currency transaction (losses) gains................. (6,973,000) 912,000
------------- -------------
(Loss) before income taxes and extraordinary item........... (331,866,000) (278,277,000)
Income tax benefit.......................................... -- 21,485,000
------------- -------------
(Loss) before extraordinary item............................ (331,866,000) (256,792,000)
(Loss) from early extinguishment of debt.................... (4,239,000) --
------------- -------------
Net (loss).................................................. $(336,105,000) $(256,792,000)
============= =============
Basic and diluted net (loss) per common share:
(Loss) before extraordinary item.......................... $ (9.17) $ (8.26)
Extraordinary item........................................ (.12) --
------------- -------------
Net (loss)................................................ $ (9.29) $ (18.26)
============= =============
</TABLE>
See accompanying notes.
F-30
<PAGE> 159
NTL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIENCY)
(UNAUDITED)
<TABLE>
<CAPTION>
SERIES SERIES COMMON STOCK --
PREFERRED STOCK PREFERRED STOCK $0.01 PAR VALUE
------------------- ------------------------ ------------------------
SHARES PAR SHARES PAR SHARES PAR
------ -------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997........................ 780 $ -- 32,210,000 $322,000
Exercise of stock options......................... 221,000 2,000
Exercise of warrants.............................. 53,000
Accreted dividends on
preferred stock.................................
Accretion of discount on
preferred stock.................................
Conversion of 7 1/4% Convertible
Subordinated Notes.............................. 6,958,000 70,000
Conversion of Series Preferred
Stock........................................... (780) 1,950,000 20,000
Preferred Stock issued for
acquisition..................................... 125,000 $ 1,000
Comprehensive income..............................
Net loss for the nine months
ended September 30, 1998........................
Currency translation adjustment...................
Total.....................................
---- -------- ----------- -------- ----------- --------
Balance, September 30, 1998....................... -- $ -- 125,000 $ 1,000 41,392,000 $414,000
==== ======== =========== ======== =========== ========
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
PAID-IN COMPREHENSIVE COMPREHENSIVE
CAPITAL INCOME INCOME (DEFICIT)
---------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1997................... $538,054,000 $117,008,000 $ (717,052,000)
Exercise of stock options.................... 4,526,000
Exercise of warrants......................... 410,000
Accreted dividends on
preferred stock............................ (11,587,000)
Accretion of discount on
preferred stock............................ (233,000)
Conversion of 7 1/4% Convertible
Subordinated Notes......................... 186,942,000
Conversion of Series Preferred
Stock...................................... (20,000)
Preferred Stock issued for
acquisition................................ 126,276,000
Comprehensive income.........................
Net loss for the nine months ended September
30, 1998................................... $(336,105,000) (336,105,000)
Currency translation adjustment.............. 67,107,000 67,107,000
------------
Total................................ $(268,998,000)
----------- ============ ----------- ---------------------------
Balance, September 30, 1998.................. $844,368,000 $184,115,000 $ (1,053,157,000)
=========== =========== ===========================
</TABLE>
See accompanying notes.
F-31
<PAGE> 160
NTL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Net cash (used in) operating activities..................... $ (27,656,000) $ (62,899,000)
INVESTING ACTIVITIES
Acquisition of subsidiary, net of cash acquired............. (829,698,000) --
Purchase of fixed assets.................................... (464,944,000) (354,919,000)
Payment of deferred purchase price.......................... -- (57,064,000)
Increase in other assets.................................... (10,397,000) (2,073,000)
Proceeds from sale of assets................................ 1,312,000 --
Purchase of marketable securities........................... (297,918,000) (459,504,000)
Proceeds from sales of marketable securities................ 168,650,000 423,410,000
-------------- -------------
Net cash (used in) investing activities..................... (1,432,995,000) (450,150,000)
FINANCING ACTIVITIES
Proceeds from borrowings and sale of preferred stock, net of
financing costs........................................... 2,093,602,000 490,556,000
Principal payments.......................................... (66,040,000) (13,043,000)
Cash placed in escrow....................................... (221,427,000) --
Proceeds from exercise of stock options and warrants........ 4,938,000 1,264,000
-------------- -------------
Net cash provided by financing activities................... 1,811,073,000 478,777,000
Effect of exchange rate changes on cash..................... 10,119,000 (21,212,000)
-------------- -------------
Increase in cash and cash equivalents....................... 360,541,000 (55,484,000)
Cash and cash equivalents at beginning of period............ 98,902,000 445,884,000
-------------- -------------
Cash and cash equivalents at end of period.................. $ 459,443,000 $ 390,400,000
============== =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest exclusive of
amounts capitalized....................................... $ 79,112,000 $ 47,808,000
Income taxes paid........................................... 335,000 31,000
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Accretion of dividends and discount on senior redeemable
exchangeable preferred stock.............................. $ 11,820,000 $ 8,660,000
Conversion of Convertible Notes, net of unamortized deferred
financing costs of $4,738,000............................. 187,012,000 --
Preferred stock issued for acquisition...................... 126,277,000 --
</TABLE>
See accompanying notes.
F-32
<PAGE> 161
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine months
ended September 30, 1998 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1998. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
In March 1998, the Company issued debt denominated in British pounds
sterling. Interest expense has been translated using the average exchange rate
for the period and the debt balance has been translated using the current
exchange rate at the balance sheet date. Foreign currency gains and losses
arising from exchange rate fluctuations are included in the results of
operations.
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income." Comprehensive loss for the
three months ended September 30, 1998 and 1997 was $(81,135,000) and
$(131,354,000), respectively. Comprehensive loss for the nine months ended
September 30, 1998 and 1997 was $(268,998,000) and $(341,547,000), respectively.
In June 1997, the Financial Accounting Standards Board (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
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 is
assessing whether changes in reporting will be required in adopting this new
standard. The Company will adopt SFAS No. 131 for fiscal year ending December
31, 1998.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in years
beginning after June 15, 1999. Management does not anticipate that the adoption
of SFAS No. 133 will have a significant effect on earnings or the financial
position of the Company.
Certain prior year amounts have been reclassified to conform to the 1998
presentation.
NOTE B -- COMTEL ACQUISITION
Pursuant to an acquisition agreement (the "ComTel Agreement") with Vision
Networks III B.V., a wholly-owned subsidiary of Royal PTT Nederland NV (KPN),
the Company acquired the operations of ComTel Limited and Telecential
Communications (collectively, "ComTel") for a total of 550 million pounds
sterling completed in two stages. In the first stage, in June 1998, the Company
acquired certain of the ComTel properties for 275 million pounds sterling in
cash. In the second stage, in September 1998, the Company acquired the remaining
ComTel properties for 200 million pounds sterling in cash and 75 million pounds
sterling in preferred stock. The Company financed the cash portion of the
transaction through a bank loan, completed through an amendment to the Company's
existing bank facility with The Chase Manhattan Bank.
The ComTel acquisition has been accounted for as a purchase, and,
accordingly, the net assets and results of operations of the acquired businesses
have been included in the consolidated financial statements
F-33
<PAGE> 162
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE B -- COMTEL ACQUISITION (CONTINUED)
from the dates of acquisition. The purchase price of 550 million pounds sterling
plus the return of cash acquired of 31 million pounds sterling and costs
incurred of 3 million pounds sterling (an aggregate of 584 million pounds
sterling ($993 million)) exceeded the estimated fair value of the net tangible
assets acquired by 64 million pounds sterling ($109 million), which is
classified as license acquisition costs. The assets acquired and liabilities
assumed have been recorded at their estimated fair values, which are subject to
further adjustment based upon appraisals and other analyses.
The pro forma unaudited consolidated results of operations for the nine
months ended September 30, 1998 and 1997 assuming consummation of the ComTel
acquisition as of January 1, 1997 are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Total revenue................................. $ 581,454,000 $ 433,924,000
(Loss) before extraordinary item.............. (379,296,000) (316,572,000)
Net (loss).................................... (383,535,000) (316,572,000)
Basic and diluted net (loss) per common share:
(Loss) before extraordinary item............ (10.44) (10.13)
Net (loss).................................. (10.55) (10.13)
</TABLE>
NOTE C -- AMALGAMATION WITH COMCAST UK CABLE PARTNERS LIMITED
Effective October 29, 1998, the Company, NTL (Bermuda) Limited, a wholly
owned subsidiary of the Company, and Comcast UK Cable Partners Limited
("Partners") consummated a transaction pursuant to the Agreement of Plan of
Amalgamation, dated February 4, 1998, as amended, whereby NTL (Bermuda) Limited
(the "Amalgamated Company") acquired all of the outstanding common stock of
Partners. Shareholders of Partners received 0.3745 shares of common stock of the
Company in consideration for each of their shares of common stock of Partners
(an aggregate of approximately 18,700,000 shares of the Company's common stock).
The Amalgamated Company has executed a First Supplemental Indenture relating to
Partners' 11.20% Senior Discount Debentures due 2007, which provides for the
assumption by the Amalgamated Company of the Debentures. As of September 30,
1998, Partners had 241 million pounds sterling ($409 million) of Debentures
outstanding.
Pursuant to existing arrangements between Partners and Telewest
Communications plc ("Telewest"), a co-owner of interests in Cable London PLC
("Cable London") and Birmingham Cable Corporation Limited ("Birmingham Cable"),
Telewest had certain rights to acquire either or both of Partners' interests in
these systems as a result of the Amalgamation. On August 14, 1998, Partners and
the Company entered into an agreement with Telewest, pursuant to which, Partners
sold its 27.5% ownership interest in Birmingham Cable to Telewest for
125 million pounds sterling, plus 5 million pounds sterling for certain
subordinated debt and fees. In addition, Partners and Telewest agreed within a
certain time period to rationalize their joint ownership of Cable London
pursuant to an agreed procedure (the "Shoot-out"). Between April 29 and July 29,
1999, the Amalgamated Company can notify Telewest of the price at which it is
willing to sell its 50% ownership interest in Cable London to Telewest.
Following such notification, Telewest at its option will be required at that
price to either purchase the Amalgamated Company's 50% ownership interest in
Cable London or sell its 50% ownership interest in Cable London to the
Amalgamated Company. If the Amalgamated Company fails to give notice to Telewest
by July 29, 1999, it will be deemed to have delivered an offer notice for 100
million pounds sterling. The sale or purchase by the Company as per the Cable
London Shoot-out is expected to be completed by November 1999.
F-34
<PAGE> 163
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE C -- AMALGAMATION WITH COMCAST UK CABLE PARTNERS LIMITED (CONTINUED)
The Company required consents from holders of some of its Notes to modify
certain indenture provisions in order to proceed with the Amalgamation. In
October 1998, the Company paid $11,333,000 in consent payments and issued
warrants to purchase 766,000 shares of common stock at an exercise price of
$43.39 per share in lieu of additional consent payments of $10,080,000. The
warrants expire in 2008.
NOTE D -- PROPOSED DIAMOND ACQUISITION
In June 1998, the Company entered into an acquisition agreement (the
"Diamond Agreement") with Diamond Cable Communications, plc ("Diamond").
Pursuant to the Diamond Agreement, Diamond shareholders will receive 0.25 shares
of the Company's common stock for each Diamond ordinary share. Diamond has
approximately 60.7 million fully diluted shares outstanding, and the total
consideration for the transaction will be approximately 15.2 million shares,
subject to adjustment. Based on the closing price of the Company's common stock
on the date of the Diamond Agreement, the purchase price implies a total Diamond
equity value of approximately $630 million. The closing of the Diamond Agreement
is subject to shareholder approval, bond consents and customary closing
conditions.
NOTE E -- FIXED ASSETS
Fixed assets consist of:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
(UNAUDITED)
<S> <C>
Operating equipment......................................... $ 2,667,113,000
Other equipment............................................. 282,678,000
Construction-in-progress.................................... 530,850,000
-------------------------
3,480,641,000
Accumulated depreciation.................................... (345,986,000)
-------------------------
$ 3,134,655,000
=========================
</TABLE>
NOTE F -- INTANGIBLE ASSETS
Intangible assets consist of:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
(UNAUDITED)
<S> <C>
License acquisition costs, net of accumulated amortization
of $60,048,000 (1998)..................................... $219,112,000
Goodwill, net of accumulated amortization of $27,324,000
(1998).................................................... 237,192,000
-----------
$456,304,000
===========
</TABLE>
F-35
<PAGE> 164
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- LONG-TERM DEBT
Long-term debt consists of:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
(UNAUDITED)
<S> <C>
10 7/8% Senior Deferred Coupon Notes........................ $ 148,781,000
12 3/4% Series A Senior Deferred Coupon Notes............... 229,652,000
11 1/2% Series B Senior Deferred Coupon Notes............... 809,150,000
10% Series B Senior Notes................................... 400,000,000
9 1/2% Senior Sterling Notes, less unamortized discount of
$669,000.................................................. 211,693,000
10 3/4% Senior Deferred Coupon Sterling Notes............... 316,445,000
9 3/4% Senior Deferred Coupon Notes......................... 845,172,000
7% Convertible Subordinated Notes........................... 275,000,000
Subsidiary bank loan........................................ 798,377,000
-------------------------
4,034,270,000
Less current portion........................................ 148,781,000
-------------------------
$ 3,885,489,000
=========================
</TABLE>
10 7/8% NOTES REDEMPTION: In June 1998, the Company provided to the
Trustee of its 10 7/8% Senior Deferred Coupon Notes due 2003 a notice that it
would redeem the 10 7/8% Notes on October 15, 1998. Pending such redemption, the
Company deposited in trust with the Trustee $218.6 million to pay the redemption
price (including principal) on the 10 7/8% Notes. In July 1998, the Company
purchased a portion of the 10 7/8% Notes with an accreted value of $62.3 million
for cash of $65 million. The Company recorded an extraordinary loss from the
early extinguishment of this portion of the 10 7/8% Notes of $4,239,000. In
October 1998, the Company redeemed the remainder of the 10 7/8% Notes with an
accreted value of $148,781,000 at September 30, 1998 using cash held in escrow
of $152.6 million. The Company recorded an extraordinary loss from the early
extinguishment of the 10 7/8% Notes of approximately $7.9 million in the fourth
quarter of 1998.
ISSUANCE OF NEW NOTES: In March 1998, the Company issued 125 million
pounds sterling aggregate principal amount of 9 1/2% Senior Notes due 2008 (the
"Sterling Senior Notes"), 300 million pounds sterling aggregate principal amount
of 10 3/4% Senior Deferred Coupon Notes due 2008 (the "Sterling Deferred Coupon
Notes") and $1.3 billion 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 99.67% or 124.6 million pounds
sterling, 58.62% or 175.9 million pounds sterling and 61.724% or $802.4 million,
respectively. The Company received net proceeds of 121.2 million pounds
sterling, 170.6 million pounds sterling and $778.3 million, 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
aggregate of the discounts, commissions and other fees incurred of $39.5 million
is included in deferred financing costs.
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 million 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 $1.3 billion 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 on October 1, 1998 and
semiannually thereafter.
F-36
<PAGE> 165
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- LONG-TERM DEBT (CONTINUED)
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.
BANK LOAN PAYABLE AND REFINANCING: In connection with the ComTel
acquisition, the Company borrowed an aggregate of 475 million pounds sterling
($798 million) under its credit facility from The Chase Manhattan Bank. The
effective interest rate on the amounts borrowed at September 30, 1998 was
9.776%. The bank loan was due on January 31, 1999, subject to extension to June
30, 1999.
In November 1998, the Company issued $625,000,000 aggregate principal
amount of 11 1/2% Senior Notes due 2008 (the "11 1/2% Notes") and $450,000,000
aggregate principal amount at maturity of 12 3/8% Senior Deferred Coupon Notes
due 2008 (the "12 3/8% Notes"). The 11 1/2% Notes and the 12 3/8% Notes were
issued at 100% or $625,000,000 and 55.505% or $249,773,000, respectively. The
Company received net proceeds of $607,031,000 and $241,967,000 after discounts
and commissions, from the issuance of the 11 1/2% Notes and the 12 3/8% Notes,
respectively. The proceeds from these notes were used to repay the bank loan and
the remaining $50,000,000 was added to short term investments. The Company
recorded an extraordinary loss from the early extinguishment of debt of
approximately $19.5 million in the fourth quarter of 1998 as a result of the
repayment.
The 11 1/2% Notes accrue interest at 11 1/2% per annum, payable
semiannually beginning on April 1, 1999. The 11 1/2% Notes may be redeemed, at
the Company's option, in whole or in part, at any time on or after October 1,
2003 at a redemption price of 105.75% that declines annually to 100% in 2006, in
each case together with accrued and unpaid interest to the date of redemption.
The original issue discount on the 12 3/8% Notes accretes at a rate of
12 3/8%, compounded semiannually, to an aggregate principal amount of
$450,000,000 by October 1, 2003. Interest will thereafter accrue at 12 3/8% per
annum, payable semiannually beginning on April 1, 2004. The 12 3/8% Notes may be
redeemed, at the Company's option, in whole or in part, at any time on or after
October 1, 2003 at a redemption price of 106.188% that declines annually to 100%
in 2006, in each case together with accrued and unpaid interest to the date of
redemption.
NOTE H -- SERIES PREFERRED STOCK
In May 1998, the 780 outstanding shares of 5% Non-Voting Convertible
Preferred Stock, Series A were converted into 1,950,000 shares of Common Stock.
On September 21, 1998, the Company issued 125,280 shares of 9.9% Non-voting
Mandatorily Redeemable Preferred Stock, Series A (the "PIK Preferred Stock") in
connection with the ComTel acquisition. The PIK Preferred Stock was valued at
75,000,000 pounds sterling ($126,277,000), the fair market value on the date of
issuance. Each share of PIK Preferred Stock has a stated value of $1,000.
Cumulative dividends accrue at 9.9% of the stated value per share. Dividends are
payable when and if declared by the Board of Directors and may be paid, in the
sole discretion of the Board, in cash, in shares of common stock, in shares of
Convertible Preferred Stock or through any combination of the foregoing.
F-37
<PAGE> 166
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE H -- SERIES PREFERRED STOCK (CONTINUED)
As of September 30, 1998, accrued and unpaid dividends were $310,000. On
December 22, 1999, all outstanding shares of the PIK Preferred Stock shall be
redeemed for $1,000 per share together with accrued and unpaid dividends, at the
Company's option, in cash, in shares of common stock, in shares of Convertible
Preferred Stock or through any combination of the foregoing.
NOTE I -- GRANT OF STOCK OPTIONS
In March 1998, options to purchase approximately 7,800,000 shares of Common
Stock were granted to officers, non-employee directors and employees at an
exercise price of $36.50 per share. Officers and senior management employees
were granted options to purchase 3,260,000 shares and 2,765,000 shares,
respectively. These employees will not be granted any further options in 1998 to
2001 inclusive. These options will vest beginning January 1, 1999 through
January 1, 2004. The non-employee directors were granted options to purchase an
aggregate of 450,000 shares which vest on the same schedule. Supervisory
employees were granted options to purchase an aggregate of approximately
1,000,000 shares which are exercisable as to 20% of the shares subject thereto
on the date of grant and an additional 20% each January 1 thereafter, while the
optionee remains an employee of the Company. Finally, each employee who is not
included in the groups described above and who had at least one year of service
as of March 1, 1998 was granted an option to purchase 100 shares which are
exercisable on a 20% per year schedule.
Beginning in March 1998 and in each year thereafter, each employee who is
not otherwise granted options and has completed at least one year of employment
will be granted an option to purchase 100 shares of the Company's Common Stock
each year. The exercise price for these options will be at the fair market value
of the Company's Common Stock on the date of issuance, and these options will
vest on a 20% per year schedule. It is anticipated that approximately 1,850,000
options will be granted each year in 1999, 2000 and 2001 to supervisory and
other employees.
NOTE J -- RESTRUCTURING CHARGES
In September 1997, the Company announced a reorganization of certain of its
operations. Restructuring costs of $15,811,000 were recorded in September 1997
consisting of employee severance and related costs of $6,688,000 for
approximately 280 employees to be terminated, lease exit costs of $6,509,000 and
penalties of $2,614,000 associated with the cancellation of contractual
obligations. As of September 30, 1998, $8,029,000 of the provision has been
used, including $4,493,000 for severance and related costs, $1,400,000 for lease
exit costs and $2,136,000 for penalties associated with the cancellation of
contractual obligations. As of September 30, 1998, 137 employees had been
terminated. There was no other adjustment to the liability through September 30,
1998.
F-38
<PAGE> 167
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE K -- NET LOSS PER COMMON SHARE
The following table sets forth the computation of basic and diluted net
loss per common share:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Numerator:
Loss before extraordinary item.............................. $(331,866,000) $(256,792,000)
Preferred stock dividend.................................... (11,587,000) (8,453,000)
------------- -------------
(343,453,000) (265,245,000)
Extraordinary item.......................................... (4,239,000) --
------------- -------------
Loss available to common shareholders....................... $(347,692,000) $(265,245,000)
------------- -------------
Denominator for basic net loss per common share............. 37,436,000 32,101,000
Effect of dilutive securities............................... -- --
------------- -------------
Denominator for diluted net loss per common share........... 37,436,000 32,101,000
------------- -------------
Basic and diluted net loss per common share:
Loss before extraordinary item............................ $ (9.17) $ (8.26)
Extraordinary item........................................ (.12) --
------------- -------------
Net loss.................................................. $ (9.29) $ (8.26)
============= =============
</TABLE>
The shares issuable upon the exercise of stock options and warrants and
upon the conversion of convertible securities are excluded from the calculation
of net loss per common share as their effect would be antidilutive.
NOTE L -- COMMITMENTS AND CONTINGENT LIABILITIES
As of September 30, 1998, the Company was committed to pay approximately
$176,300,000 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 ("CATV"), telephone and telecommunications
business. The initial terms of the Company's licenses was 15 or 23 years for the
DTI licenses and 15 years for the ITC licenses. The Company's licenses expire in
2005 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 ($13,400) per license based on the
number of homes in the licensed area, which is subject to adjustment annually.
The provision of the Company's transmission and distribution services is
governed by the Telecommunications Act and the Wireless Telegraphy Act 1949. The
Company 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.
The Company 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's license fees paid in the nine months ended
September 30, 1998 were $1,628,000.
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 ($24,500,000) (subject to adjustments for inflation). The fee for 1998
is 14,951,661 pounds sterling. Such payments are
F-39
<PAGE> 168
NTL INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE L -- COMMITMENTS AND CONTINGENT LIABILITIES -- (CONTINUED)
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 approximately $18,600,000 in license fees in the nine
months ended September 30, 1998.
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 January 1998, in the
amount of 104,188 pounds sterling ($177,000). 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. The Company paid $129,000 in the nine months ended
September 30, 1998.
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 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.
F-40
<PAGE> 169
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Comcast UK Cable Partners Limited
We have audited the accompanying consolidated balance sheet of Comcast UK
Cable Partners Limited (a company incorporated in Bermuda) and subsidiaries as
of December 31, 1997 and 1996, and the related consolidated statements of
operations, shareholders' equity and of cash flows for each of the three years
in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Comcast UK Cable Partners
Limited and subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
February 27, 1998
F-41
<PAGE> 170
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN L000'S, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. L 37,372 L 63,314
Short-term investments.................................... 61,466
Accounts receivable, less allowance for doubtful accounts
of L2,598 and L1,338................................... 4,255 2,922
Other current assets...................................... 5,419 5,359
--------- ---------
Total current assets................................... 47,046 133,061
--------- ---------
INVESTMENTS IN AFFILIATES................................... 61,363 69,472
--------- ---------
PROPERTY AND EQUIPMENT...................................... 315,702 232,112
Accumulated depreciation.................................. (33,000) (13,765)
--------- ---------
Property and equipment, net............................... 282,702 218,347
--------- ---------
DEFERRED CHARGES............................................ 60,770 60,867
Accumulated amortization.................................. (13,985) (8,379)
--------- ---------
Deferred charges, net..................................... 46,785 52,488
--------- ---------
FOREIGN EXCHANGE PUT OPTIONS AND OTHER, net................. 7,958 11,002
--------- ---------
L 445,854 L 484,370
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses..................... L 23,605 L 23,086
Current portion of long-term debt......................... 1,683 1,463
Foreign exchange call options............................. 4,086
Due to affiliates......................................... 920 676
--------- ---------
Total current liabilities.............................. 26,208 29,311
--------- ---------
LONG-TERM DEBT, less current portion........................ 234,010 202,626
--------- ---------
FOREIGN EXCHANGE CALL OPTIONS............................... 2,688 3,079
--------- ---------
LONG-TERM DEBT, due to shareholder.......................... 11,272 10,322
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred shares, L.01 par value -- authorized, 10,000,000
shares; issued none....................................
Class A common shares, L.01 par value -- authorized,
50,000,000 shares; issued, 37,231,997.................. 372 372
Class B common shares, L.01 par value -- authorized,
50,000,000 shares; issued, 12,872,605.................. 129 129
Additional capital........................................ 358,548 358,548
Accumulated deficit....................................... (187,373) (120,017)
--------- ---------
Total shareholders' equity............................. 171,676 239,032
--------- ---------
L 445,854 L 484,370
========= =========
</TABLE>
See notes to consolidated financial statements.
F-42
<PAGE> 171
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(AMOUNTS IN L000'S, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Service income........................................... L 55,603 L 31,358 L 1,530
Consulting fee income.................................... 1,059 1,070 1,313
-------- -------- --------
56,662 32,428 2,843
-------- -------- --------
COSTS AND EXPENSES
Operating................................................ 19,624 12,211 683
Selling, general and administrative...................... 30,850 25,073 7,815
Management fees.......................................... 3,204 2,997 3,105
Depreciation and amortization............................ 25,588 16,700 3,049
-------- -------- --------
79,266 56,981 14,652
-------- -------- --------
OPERATING LOSS............................................. (22,604) (24,553) (11,809)
OTHER (INCOME) EXPENSE
Interest expense......................................... 25,243 23,627 3,539
Investment income........................................ (7,259) (12,555) (11,758)
Equity in net losses of affiliates....................... 21,359 18,432 23,677
Exchange losses (gains) and other........................ 5,409 (13,482) 1,695
-------- -------- --------
44,752 16,022 17,153
-------- -------- --------
NET LOSS................................................... (L67,356) (L40,575) (L28,962)
======== ======== ========
NET LOSS PER SHARE......................................... (L 1.34) (L .84) (L .70)
======== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING....... 50,105 48,216 41,245
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-43
<PAGE> 172
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN L000'S)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................. (L67,356) (L40,575) (L28,962)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization.......................... 25,588 16,700 3,049
Amortization on foreign exchange contracts............. 2,770 2,752 (75)
Non-cash interest expense.............................. 24,684 23,209 3,539
Non-cash investment income............................. (2,521) (2,854) (5,016)
Exchange losses (gains)................................ 2,852 (18,857) 944
Equity in net losses of affiliates..................... 21,359 18,432 23,677
Other.................................................. 991 (199) 619
Increase in accounts receivable, other current assets
and other............................................ (3,447) (1,154) (2,658)
Increase in accounts payable and accrued expenses...... 519 1,045 10,002
Increase (decrease) in due to affiliates............... 244 (1,548) (4,628)
-------- -------- ---------
Net cash provided by (used in) operating
activities........................................ 5,683 (3,049) 491
-------- -------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings............................... 192,542
Repayments of debt..................................... (1,633) (1,711)
Debt acquisition costs................................. (6,089)
Purchase of foreign exchange put options............... (13,855)
Proceeds from sales of foreign exchange call options... 2,125 3,415
Other.................................................. (53)
-------- -------- ---------
Net cash (used in) provided by financing
activities........................................ (1,633) 414 175,960
-------- -------- ---------
INVESTING ACTIVITIES
Acquisition, net of cash acquired...................... (10,373)
Proceeds from sales (purchases) of short-term
investments, net..................................... 61,466 (4,226) (43,141)
Capital contributions and loans to affiliates.......... (8,713) (10,667) (25,829)
Capital expenditures................................... (82,125) (70,624) (45,308)
Additions to deferred charges.......................... (620) (392) (59)
-------- -------- ---------
Net cash used in investing activities............. (29,992) (96,282) (114,337)
-------- -------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS............ (25,942) (98,917) 62,114
CASH AND CASH EQUIVALENTS, beginning of year................ 63,314 162,231 100,117
======== ======== =========
CASH AND CASH EQUIVALENTS, end of year...................... L 37,372 L 63,314 L 162,231
======== ======== =========
</TABLE>
See notes to consolidated financial statements.
F-44
<PAGE> 173
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
A COMMON B COMMON
--------------- --------------- ADDITIONAL ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------ ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995........... 28,372 L284 12,873 L129 L287,450 (L 50,480) L237,383
Net loss...................... (28,962) (28,962)
Other......................... (53) (53)
------ ---- ------ ---- -------- --------- --------
BALANCE, DECEMBER 31, 1995......... 28,372 284 12,873 129 287,397 (79,442) 208,368
Net loss...................... (40,575) (40,575)
Shares issued in connection
with SingTel Transaction.... 8,860 88 71,151 71,239
------ ---- ------ ---- -------- --------- --------
BALANCE, DECEMBER 31, 1996......... 37,232 372 12,873 129 358,548 (120,017) 239,032
Net loss...................... (67,356) (67,356)
------ ---- ------ ---- -------- --------- --------
BALANCE, DECEMBER 31, 1997......... 37,232 L372 12,873 L129 L358,548 (L187,373) L171,676
====== ==== ====== ==== ======== ========= ========
</TABLE>
See notes to consolidated financial statements.
F-45
<PAGE> 174
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. BUSINESS
Comcast UK Cable Partners Limited and subsidiaries (the "Company"), a
Bermuda company incorporated in 1992, was formed to develop, construct, manage
and operate the interests of Comcast Corporation ("Comcast") in the United
Kingdom ("UK") cable and telecommunications industry. The Company is a
controlled subsidiary of Comcast U.K. Holdings, Inc. ("Holdings"), a Delaware
corporation indirectly wholly owned by Comcast. As of December 31, 1997, the
Company has interests in four operations (the "Partners Operating Companies"):
Birmingham Cable Corporation Limited ("Birmingham Cable"), in which the Company
owns a 27.5% interest, Cable London PLC ("Cable London"), in which the Company
owns a 50.0% interest, Cambridge Holding Company Limited ("Cambridge Cable"), in
which the Company owns a 100% interest and two companies holding the franchises
for Darlington and Teesside, England ("Teesside"), in which the Company owns a
100% interest. The Company also owns a 100% interest in Comcast UK Holdings
Limited ("UK Holdings"), a company incorporated in Bermuda in December 1997.
On February 4, 1998, the Company entered into a definitive agreement to
amalgamate (the "NTL Transaction") with a wholly owned Bermuda subsidiary of NTL
Incorporated ("NTL"). NTL is an alternative telecommunications company in the UK
and is listed on Nasdaq. The NTL Transaction is expected to close in 1998,
subject to, among other things, the receipt of required Bermuda and UK
regulatory approvals, the approval of the Company's and NTL's shareholders, the
consent of the Company's and NTL's bondholders, the consent of certain NTL bank
lenders and other customary closing matters. Comcast, through Holdings, is the
sole holder of the multiple-voting Class B Common Shares of the Company and has
agreed to vote for the transaction, assuring its approval by the Company's
shareholders. Upon consummation of the NTL Transaction, the Company would become
a wholly owned subsidiary of NTL.
Except in the circumstances described below, the Company's shareholders
will receive 0.3745 shares of NTL common stock for each of the Company's Class A
Common Shares or Class B Common Shares. If the average closing price of the NTL
common stock for a specified period of time prior to the Company's shareholders
meeting to approve the NTL Transaction (the "Average Price") is less than
$26.70, the Company will have the option to terminate the NTL Transaction,
subject to the right of NTL to adjust the exchange ratio such that one share of
the Company's Class A Common Shares or Class B Common Shares will be exchanged
for a number of shares of NTL common stock equal to $10.00 (based on the Average
Price).
Pursuant to existing arrangements between the Company and Telewest
Communications plc ("Telewest"), a co-owner of interests in Cable London and
Birmingham Cable, Telewest has certain rights (the "Telewest Rights") to acquire
either or both of the Company's interests in these systems as a result of the
NTL Transaction. However, as described in the following paragraphs, the
consummation of the NTL Transaction is not dependent on the resolution of the
Telewest Rights.
If the Telewest Rights have been exercised prior to the closing of the NTL
Transaction, the Company's shareholders may receive (at the option of NTL), in
lieu of a portion of the consideration allocable to the interest subject to the
exercised Telewest Rights, the per share proceeds from the sale of the interest
to Telewest (net of taxes on gain on sale), payable in cash or shares of NTL
common stock valued at the greater of $30.00 per share or the Average Price at
closing (the "Exercise Consideration").
Similarly, if at closing either of the Telewest Rights have not been
exercised and have not been waived or otherwise expired, the Company's
shareholders may receive (at the option of NTL), shares of a new class of NTL
preferred stock equal to a portion of the consideration allocable to the
interest subject to the unexercised Telewest Rights. Any shares of NTL preferred
stock would have the same voting and
F-46
<PAGE> 175
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
dividend rights as shares of NTL common stock, would be subject to redemption as
described below, and would be expected to be listed for trading on Nasdaq. If
following closing the Telewest Rights are exercised, the NTL preferred stock
will be redeemed for the Exercise Consideration (based on the Average Price at
the time of exercise). If the Telewest Rights are resolved without being
exercised, the NTL preferred stock will be redeemed for NTL common stock on a
one-for-one basis.
Of the consideration to be received by the Company's shareholders in the
NTL Transaction, the parties have allocated 31% to the Company's interest in
Cable London and 17% to the Company's interest in Birmingham Cable. However, if
either or both of the Telewest Rights are exercised, the actual consideration to
be received by the Company's shareholders may be materially different from the
portion of the consideration (the "allocable portion") which has been allocated
by the parties to the Company's respective interests in Cable London and
Birmingham Cable, depending on, among other things, the value of these
interests, as finally determined, whether NTL exercises its option to deliver
the Exercise Consideration in lieu of the allocable portion and, the amount of
any taxes payable by the Company on the sale of these interests.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
Subsidiaries of the Company maintain their books and records in accordance
with accounting principles generally accepted in the UK. The consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles as practiced in the United States ("US") and are stated in
UK pounds sterling ("UK Pound"). There were no significant differences between
accounting principles followed for UK purposes and generally accepted accounting
principles practiced in the US. The UK Pound exchange rate as of December 31,
1997 and 1996 was US $1.65 and US $1.71, respectively.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and all wholly owned subsidiaries. All significant intercompany accounts and
transactions among the consolidated entities have been eliminated.
Management's 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Values
The estimated fair value amounts presented in these notes to consolidated
financial statements have been determined by the Company using available market
information and appropriate methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value. The
estimates presented herein are not necessarily indicative of the amounts that
the Company could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts. Such fair value estimates are based on
pertinent information available to management as of December 31, 1997 and 1996,
and have not been comprehensively revalued for purposes of these consolidated
financial statements since such dates.
F-47
<PAGE> 176
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
The carrying value of the amounts due to affiliates and long-term debt due to
shareholder approximates fair value as of December 31, 1997 and 1996.
Cash Equivalents and Short-term Investments
Cash equivalents consist principally of commercial paper, time deposits and
money market funds with maturities of three months or less when purchased.
Short-term investments as of December 31, 1996 consist principally of commercial
paper and corporate floating rate notes with maturities greater than three
months when purchased. The carrying amounts of the Company's cash equivalents
and short-term investments, classified as available for sale securities,
approximate their fair values.
Investments in Affiliates
Investments in entities in which the Company has the ability to exercise
significant influence over the operating and financial policies of the investee
are accounted for under the equity method. Equity method investments are
recorded at original cost and adjusted periodically to recognize the Company's
proportionate share of the investees' net income or losses after the date of
investment, additional contributions made and dividends received. The
differences between the Company's recorded investments and its proportionate
interests in the book value of the investees' net assets are being amortized to
equity in net losses of affiliates over the remaining original lives of the
related franchises of eight years.
Prematurity Period
The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its cable telecommunications systems in Teesside
and Cambridge Cable under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 51, "Financial Reporting by Cable Television Companies."
Under SFAS No. 51, during the period while the systems are partially under
construction and partially in service (the "Prematurity Period"), costs of cable
telecommunications plant, including materials, direct labor and construction
overhead are capitalized. Subscriber-related costs and general and
administrative costs are expensed as incurred. Costs incurred in anticipation of
servicing a fully operating system that will not vary regardless of the number
of subscribers are partially expensed and partially capitalized, based upon the
percentage of average actual or estimated subscribers, whichever is greater, to
the total number of subscribers expected at the end of the Prematurity Period
(the "Fraction").
During the Prematurity Period, depreciation and amortization of system
assets is determined by multiplying the depreciation and amortization of the
total capitalized system assets expected at the end of the Prematurity Period by
the Fraction. At the end of the Prematurity Period, depreciation and
amortization of system assets is based on the remaining undepreciated cost at
that date.
As of December 31, 1997, two of the Company's five franchise areas which
are under construction have completed their Prematurity Period. The remaining
Prematurity Periods are expected to terminate at various dates in 1998 and 1999.
Property and Equipment
Property and equipment, which consists principally of system assets, is
shown at historical cost less accumulated depreciation. Improvements that extend
asset lives are capitalized; other repairs and maintenance charges are expensed
as incurred. The cost and related accumulated depreciation applicable to assets
sold or retired are removed from the accounts and the gain or loss on
disposition is recognized as a component of depreciation expense.
F-48
<PAGE> 177
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
System assets
Prior to the Prematurity Period, no depreciation is provided on system
assets. During the Prematurity Period, depreciation is provided in accordance
with SFAS No. 51.
Depreciation of system assets is provided by the straight-line method over
estimated useful lives as follows:
<TABLE>
<S> <C>
Plant....................................................... 15-40 years
Network..................................................... 15 years
Subscriber equipment........................................ 6-10 years
Switch...................................................... 10 years
Computers................................................... 4 years
</TABLE>
Non-system assets
Depreciation of non-system assets is provided by the straight-line method
over estimated useful lives as follows:
<TABLE>
<S> <C>
Buildings................................................... 40 years
Fixtures, fittings and equipment............................ 5 years
Vehicles.................................................... 4 years
Computers................................................... 4 years
</TABLE>
Leased Assets
Assets held under capital leases are treated as if they had been purchased
outright and the corresponding liability is included in long-term debt. Capital
lease payments include principal and interest, with the interest portion being
expensed. Payments on operating leases are expensed on a straight-line basis
over the lease term.
Deferred Charges
Deferred charges consist primarily of franchise acquisition costs
attributable to obtaining, developing and maintaining the franchise licenses of
Teesside and Cambridge Cable, debt acquisition costs relating to the sale of
approximately $517.3 million principal amount at maturity of the Company's
11.20% Senior Discount Debentures Due 2007 (the "2007 Discount
Debentures" -- see Note 7) and goodwill arising from the SingTel Transaction
(see Note 4). Franchise acquisition costs are being amortized on a straight-
line basis over the remaining original lives of the related franchises of 12 to
15 years. Debt acquisition costs are being amortized on a straight-line basis
over the term of the 2007 Discount Debentures of 12 years. Goodwill is being
amortized on a straight-line basis over the remaining original lives of the
related franchises of 11 years.
Valuation of Long-Lived Assets
The Company periodically evaluates the recoverability of its long-lived
assets, including property and equipment and deferred charges, using objective
methodologies. Such methodologies include evaluations based on the cash flows
generated by the underlying assets or other determinants of fair value.
F-49
<PAGE> 178
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Revenue Recognition
Service income is recognized as service is provided. Credit risk is managed
by disconnecting services to subscribers who are delinquent.
Stock-Based Compensation
Effective January 1, 1996, the Company adopted the provisions of SFAS No.
123, "Accounting for Stock-Based Compensation," which encourages, but does not
require, companies to record compensation cost for stock-based compensation
plans at fair value. The Company has elected to continue to account for
stock-based compensation in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations,
as permitted by SFAS No. 123. Compensation expense for stock options is measured
as the excess, if any, of the quoted market price of the Company's stock at the
date of grant over the amount an employee must pay to acquire the stock.
Compensation expense for stock appreciation rights is recorded annually based on
changes in quoted market prices of the Company's stock or other determinants of
fair value at the end of the year (see Note 8).
Income Taxes
The Company is exempt from US federal, state and local income taxes. At the
present time, no income, profit, capital or capital gains taxes are levied in
Bermuda and, accordingly, no provision for such taxes has been recorded by the
Company. In the event that such taxes are levied, the Company has received an
undertaking from the Bermuda Government exempting it from all such taxes until
March 2016.
The Company's wholly owned subsidiaries recognize deferred tax assets and
liabilities for temporary differences between the financial reporting basis and
the tax basis of their assets and liabilities and expected benefits of utilizing
net operating loss carryforwards. The impact on deferred taxes of changes in tax
rates and laws, if any, applied to the years during which temporary differences
are expected to be settled, are reflected in the financial statements in the
period of enactment.
Derivative Financial Instruments
The Company uses derivative financial instruments, principally foreign
exchange option contracts ("FX Options"), to manage its exposure to fluctuations
in foreign currency exchange rates. Written FX Options are marked-to-market on a
current basis in the Company's consolidated statement of operations (see Note
6).
Those instruments that have been entered into by the Company to hedge
exposure to foreign currency exchange rate risks are periodically examined by
the Company to ensure that the instruments are matched with underlying
liabilities, reduce the Company's risks relating to foreign currency exchange
rates, and, through market value and sensitivity analysis, maintain a high
correlation to the underlying value of the hedged item. For those instruments
that do not meet the above criteria, variations in their fair value are
marked-to-market on a current basis in the Company's consolidated statement of
operations.
The Company does not hold or issue any derivative financial instruments for
trading purposes and is not a party to leveraged instruments (see Notes 6 and
7). The credit risks associated with the Company's derivative financial
instruments are controlled through the evaluation and monitoring of the
creditworthiness of the counterparties. Although the Company may be exposed to
losses in the event of nonperformance by the counterparties, the Company does
not expect such losses, if any, to be significant.
F-50
<PAGE> 179
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Net Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings per Share," which was adopted by the Company effective
for the year ended December 31, 1997, as required by the statement. For the
years ended December 31, 1997, 1996 and 1995, the Company's potential common
shares have an antidilutive effect on the loss per share and, therefore, have
not been used in determining the total weighted average number of common shares
outstanding. Diluted loss per share for 1997, 1996 and 1995 is antidilutive and,
therefore, has not been presented.
Reclassifications
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to those classifications used in 1997.
3. TEESSIDE ACQUISITION
In June 1994, the Company acquired all of the outstanding shares of two
companies that owned Teesside, which comprise an area containing approximately
254,000 homes. The construction of Teesside's cable telecommunications network
commenced in the third quarter of 1994. Teesside added its initial cable and
telephony subscribers in June 1995.
4. SINGTEL TRANSACTION
In March 1996, the Company completed the acquisition (the "SingTel
Transaction") of Singapore Telecom International Pte. Limited's ("Singapore
Telecom") 50% interest in Cambridge Cable, pursuant to the terms of a Share
Exchange Agreement executed by the parties in December 1995. In exchange for
Singapore Telecom's 50% interest in Cambridge Cable and certain loans made to
Cambridge Cable, with accrued interest thereon, the Company issued approximately
8.9 million of its Class A Common Shares and paid approximately L11.8 million to
Singapore Telecom. The Company accounted for the SingTel Transaction under the
purchase method. As a result of the SingTel Transaction, the Company owns 100%
of Cambridge Cable and Cambridge Cable was consolidated with the Company
effective March 31, 1996.
The following unaudited pro forma information for the years ended December
31, 1996 and 1995 has been presented as if the SingTel Transaction had occurred
on January 1, 1995. This unaudited pro forma information is based on historical
results of operations adjusted for acquisition costs and, in the opinion of
management, is not necessarily indicative of what results would have been had
the Company owned 100% of Cambridge Cable since January 1, 1995 (in thousands,
except per share data).
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
--------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues.................................................... L 38,651 L 22,859
Net loss.................................................... (42,300) (37,616)
Net loss per share.......................................... (.84) (.75)
</TABLE>
5. INVESTMENTS IN AFFILIATES
The Company has historically invested in three affiliates (the "Equity
Investees," which term excludes Cambridge Cable as of, and subsequent to March
31, 1996 -- see Note 4): Birmingham Cable, Cable London and Cambridge Cable. The
Equity Investees operate integrated cable communications, residential telephony
and business telecommunications systems in their respective major metropolitan
areas
F-51
<PAGE> 180
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
under exclusive cable television licenses and non-exclusive telecommunications
licenses. As of December 31, 1997, the Company's ownership interest in the
Equity Investees is as follows:
<TABLE>
<S> <C>
Birmingham Cable............................................ 27.5%
Cable London................................................ 50.0%
</TABLE>
The Company also has a 16.4% interest in Cable Programme Partners-1 Limited
Partnership ("CPP-1") which previously developed and distributed cable
programming in the UK. During 1995, CPP-1 sold its only channel and has wound
down its operations to a minimal level of activity. The carrying value of the
Company's investment in CPP-1 has been reduced to zero and the Company has no
future funding commitments to CPP-1.
Included in investments in affiliates as of December 31, 1997 and 1996, are
loans to Cable London of L28.5 million and L22.5 million and accrued interest of
L6.0 million and L3.6 million, respectively. The loans accrue interest at a rate
of 2% above the published base lending rate of Barclays Bank PLC (9.25%
effective rate as of December 31, 1997) and are subordinate to Cable London's
revolving bank credit facility. Of these loans, L21.0 million as of December 31,
1997 and 1996 are convertible into ordinary shares of Cable London at a per
share conversion price of L2.00. Also included in investments in affiliates as
of December 31, 1997 are loans to Birmingham Cable of L1.9 million and accrued
interest of L133,000. The Birmingham Cable loans accrue interest at a fixed rate
of 7.80% and are subordinate to Birmingham Cable's credit facility. Loans to
Cambridge Cable and related accrued interest have been eliminated in
consolidation subsequent to the SingTel Transaction (see Note 4).
In February 1995, a subsidiary of Birmingham Cable issued 175,000
cumulative L1.00 redeemable five year term preference shares for a paid up value
of L175.0 million. Also in February 1995, Birmingham Cable entered into a L175.0
million five year revolving credit facility (the "Birmingham Facility") which
provided for conversion into a five year term loan on March 31, 2000. In March
1997, the terms of the Birmingham Facility were amended to extend the maturity
of the term loan to December 31, 2005 and to amend the required cash flow levels
(as defined) and certain other terms. Interest rates on the Birmingham Facility
are at the London Interbank Offered Rate ("LIBOR") plus 5/8% to 2 1/4%.
In July 1997, the preference shareholder exercised its option to require
Birmingham Cable to purchase its shareholding. Birmingham Cable funded the
redemption of the preference shares with the proceeds from the Birmingham
Facility and restricted cash and settled its five year L175.0 million interest
rate exchange agreement with Barclays Bank PLC. The balance of the Birmingham
Facility will be used, subject to certain restrictions, for capital expenditures
and working capital requirements relating to the build-out of its systems. The
preference shares had an effective dividend rate, including Advanced Corporation
Tax ("ACT"), of 8.00%.
The Birmingham Facility contains restrictive covenants which limit
Birmingham Cable's ability to enter into arrangements for the acquisition and
sale of property and equipment, investments, mergers and the incurrence of
additional debt. Certain of these covenants require that certain minimum build
requirements, financial ratios and cash flow levels be maintained and contain
restrictions on dividend payments. Birmingham Cable's three principal
shareholders' (including the Company) right to receive consulting fee payments
from Birmingham Cable has been subordinated to the banks under the Birmingham
Facility. The payment of consulting fees is restricted until Birmingham Cable
meets certain financial ratio tests under the Birmingham Facility. Birmingham
Cable has pledged the shares of its material subsidiaries to secure the
Birmingham Facility. Upon a change of control, all amounts due under the
Birmingham Facility become immediately due and payable. The consummation of the
NTL Transaction will not result in a change of control as defined in the
Birmingham Facility.
F-52
<PAGE> 181
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
In May 1997, Cable London entered into a L170.0 million revolving credit
facility (the "London Revolver") with various banks, which converts into a five
year term loan on June 30, 2001. Interest rates on the London Revolver are at
LIBOR plus 1/2% to 2 3/8%. In May 1997, Cable London repaid all amounts
outstanding under its existing credit facility with proceeds from borrowings
under the London Revolver. The balance of the London Revolver will be used,
subject to certain restrictions, for capital expenditures and working capital
requirements relating to the build-out of its systems.
The London Revolver contains restrictive covenants which limit Cable
London's ability to enter into arrangements for the acquisition and sale of
property and equipment, investments, mergers and the incurrence of additional
debt. Certain of these covenants require that certain financial ratios and cash
flow levels be maintained and contain certain restrictions on dividend payments.
The Company's right to receive consulting fee payments from Cable London has
been subordinated to the banks under the London Revolver. The payment of
consulting fees is restricted until Cable London meets certain financial ratio
tests under the London Revolver. In addition, the Company's shares in Cable
London have been pledged to secure the London Revolver. Upon a change of
control, all amounts due under the London Revolver become immediately due and
payable. The consummation of the NTL Transaction will not result in a change of
control as defined in the London Revolver.
Although the Company is not contractually committed to make any additional
capital contributions or advances to any of the Equity Investees, it currently
intends to fund its share of the amounts necessary for capital expenditures and
to finance operating deficits. Failure to do so could dilute the Company's
ownership interests in the Equity Investees.
F-53
<PAGE> 182
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Summarized financial information for affiliates accounted for under the
equity method for 1997, 1996 and 1995, is as follows:
<TABLE>
<CAPTION>
BIRMINGHAM CABLE CAMBRIDGE
CABLE LONDON CABLE(1) CPP-1(2) COMBINED
---------- -------- --------- -------- ---------
L000 L000 L000 L000 L000
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Results of operations
Service income........................... L 67,166 L 52,816 L L L 119,982
Operating, selling, general and
administrative expenses............... (56,564) (45,787) (102,351)
Depreciation and amortization............ (26,427) (19,740) (46,167)
Operating loss........................... (15,825) (12,711) (28,536)
Net loss................................. (30,826) (25,168) (55,994)
Company's equity in net loss............. (8,616) (12,743) (21,359)
AT DECEMBER 31, 1997
Financial position
Current assets........................... 11,424 10,340 21,764
Noncurrent assets........................ 248,611 185,353 433,964
Current liabilities...................... 22,293 22,902 45,195
Noncurrent liabilities................... 165,413 173,038 338,451
YEAR ENDED DECEMBER 31, 1996
Results of operations
Service income........................... 52,472 40,091 6,401 98,964
Operating, selling, general and
administrative expenses............... (44,476) (39,135) (6,366) (89,977)
Depreciation and amortization............ (19,690) (14,862) (2,168) (36,720)
Operating loss........................... (11,694) (13,906) (2,133) (27,733)
Net loss................................. (20,378) (21,241) (4,419) (46,038)
Company's equity in net loss............. (5,671) (10,551) (2,210) (18,432)
AT DECEMBER 31, 1996
Financial position
Current assets........................... 70,531 10,217 80,748
Noncurrent assets........................ 255,115 159,906 415,021
Current liabilities...................... 33,628 85,183 118,811
Noncurrent liabilities................... 188,863 60,831 249,694
YEAR ENDED DECEMBER 31, 1995
Results of operations
Service income........................... 39,004 30,277 20,585 1,088 90,954
Operating, selling, general and
administrative expenses............... (35,894) (33,238) (26,273) (5,673) (101,078)
Depreciation and amortization............ (14,455) (10,847) (7,150) (34) (32,486)
Operating loss........................... (11,345) (13,808) (12,838) (4,619) (42,610)
Net loss................................. (14,279) (17,675) (20,398) (5,388) (57,740)
Company's equity in net loss............. (3,922) (8,657) (10,200) (898) (23,677)
</TABLE>
- ---------------
(1) 1996 results of operations information for Cambridge Cable is for the three
months ended March 31, 1996 (see Note 4).
(2) 1995 results of operations information for CPP-1 is for the six months ended
June 30, 1995.
F-54
<PAGE> 183
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
6. FOREIGN CURRENCY RISK MANAGEMENT
The Company is exposed to market risk including changes in foreign currency
exchange rates. To manage the volatility relating to this exposure, the Company
enters into various derivative transactions pursuant to the Company's policies
in areas such as counterparty exposure and hedging practices. Positions are
monitored using techniques including market value and sensitivity analyses.
The Company has entered into certain FX Options as a normal part of its
foreign currency risk management efforts. During 1995, the Company entered into
certain foreign exchange put option contracts ("FX Puts") which may be settled
only on November 16, 2000. These FX Puts are used to limit the Company's
exposure to the risk that the eventual cash outflows related to net monetary
liabilities denominated in currencies other than its functional currency (the UK
Pound) (principally the 2007 Discount Debentures -- see Note 7) are adversely
affected by changes in exchange rates. As of December 31, 1997 and 1996, the
Company had L250.0 million notional amount of FX Puts to purchase US dollars at
an exchange rate of $1.35 per L1.00 (the "Ratio"). The FX Puts provide a hedge,
to the extent the exchange rate falls below the Ratio, against the Company's net
monetary liabilities denominated in US dollars since gains and losses realized
on the FX Puts are offset against foreign exchange gains or losses realized on
the underlying net liabilities. Premiums paid for the FX Puts of L13.9 million
are included in foreign exchange put options and other in the Company's
consolidated balance sheet, net of related amortization. These premiums are
being amortized over the terms of the related contracts of five years. As of
December 31, 1997 and 1996, the FX Puts had carrying values of L8.0 million and
L10.7 million, respectively. The estimated fair value of the FX Puts was L3.2
million as of both December 31, 1997 and 1996. The difference between the
carrying amount and the estimated fair value of the FX Puts was not significant
as of December 31, 1995.
In 1995, in order to reduce hedging costs, the Company sold foreign
exchange call option contracts ("FX Calls") to exchange L250.0 million notional
amount and received L3.4 million. These contracts may only be settled on their
expiration dates. Of these contracts, L200.0 million notional amount, with an
exchange ratio of $1.70 per L1.00, expired unexercised in November 1996 while
the remaining contract, with a L50.0 million notional amount and an exchange
ratio of $1.62 per L1.00, has a settlement date in November 2000. In the fourth
quarter of 1996, in order to continue to reduce hedging costs, the Company sold
additional FX Calls for L2.1 million, to exchange L200.0 million notional amount
at an average exchange ratio of $1.75 per L1.00. These contracts expired
unexercised in the fourth quarter of 1997. The FX Calls are marked-to-market on
a current basis in the Company's consolidated statement of operations.
As of December 31, 1997 and 1996, the estimated fair value of the
liabilities related to the FX Calls, as recorded in the Company's consolidated
balance sheet, was L2.7 million and L7.2 million, respectively. Changes in fair
value between measurement dates relating to the FX Calls resulted in exchange
gains of L4.5 million during the year ended December 31, 1997 and exchange
losses of L1.3 million during the year ended December 31, 1996 in the Company's
consolidated statement of operations. There were not significant exchange gains
or losses relating to these contracts for the year ended December 31, 1995.
7. LONG-TERM DEBT
2007 Discount Debentures
In November 1995, the Company received net proceeds of approximately $291.1
million (L186.9 million) from the sale of its 2007 Discount Debentures in a
public offering ($517.3 million principal at maturity). Interest accretes on the
2007 Discount Debentures at 11.20% per annum compounded semi-annually from
November 15, 1995 to November 15, 2000, after which date interest will be paid
in cash on each May 15 and November 15 through November 15, 2007. The accreted
value of the 2007 Discount Debentures was L229.2 million and L198.1 million as
of December 31, 1997 and 1996, respectively.
F-55
<PAGE> 184
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
The 2007 Discount Debentures contain restrictive covenants which limit the
Company's ability to enter into arrangements for the sale of assets, mergers,
the incurrence of additional debt and the payment of dividends. The Company was
in compliance with such restrictive covenants as of December 31, 1997.
Consummation of the NTL Transaction (see Note 1) is subject to consent of the
Company's bondholders.
UK Holdings Credit Facility
On December 23, 1997, UK Holdings entered into a loan agreement (the "UK
Holdings Agreement") with a consortium of banks to provide financing under a
credit facility (the "UK Holdings Credit Facility") up to a maximum of L200.0
million. Under the terms of the UK Holdings Agreement, borrowings under the UK
Holdings Credit Facility are guaranteed by Teesside and Cambridge Cable.
On January 14, 1998, UK Holdings borrowed L75.0 million under Tranche A of
the UK Holdings Credit Facility. Of this initial borrowing, L50.4 million was
paid to the Company as a dividend and L17.8 million was used to fund capital
expenditures and working capital requirements at Cambridge Cable and Teesside.
Amounts available under the UK Holdings Credit Facility will be reduced each
quarter in varying amounts beginning March 31, 2000 and continuing through
December 31, 2000. The UK Holdings Credit Facility bears interest at a rate per
annum equal to LIBOR plus 1/2% to 2 1/4%.
The UK Holdings Credit Facility contains restrictive covenants which limit
UK Holdings' ability to enter into arrangements for the acquisition and sale of
property and equipment, investments, mergers and the incurrence of additional
debt. Certain of these covenants require that certain financial ratios and cash
flow levels be maintained and contain certain restrictions on dividend payments.
The Company's right to receive consulting fee payments from Cambridge Cable and
Teesside has been subordinated to the banks under the UK Holdings Credit
Facility. In addition, the Company's shares in UK Holdings have been pledged to
secure the UK Holdings Credit Facility.
The consummation of the NTL Transaction will result in a change in control,
as defined in the UK Holdings Credit Facility. Upon a change in control, all
amounts outstanding under the UK Holdings Credit Facility will become
immediately due and payable.
Other
As of December 31, 1997 and 1996, Cambridge Cable has two outstanding bank
loans totaling L505,000 and L533,000, respectively, which are included in
long-term debt. These bank loans are secured by Cambridge Cable's land and
buildings in Cambridge and Bishop Stortford and are payable in quarterly
installments through April 2000 and bear interest at a weighted average fixed
rate of 9.35%. Also included in long-term debt are capital lease obligations of
Cambridge Cable and Teesside (see Note 12).
Maturities of long-term debt outstanding, including long-term debt, due to
shareholder (see Note 9), as of December 31, 1997 for the four years after 1998
are as follows (in L000's):
<TABLE>
<S> <C>
1999........................................................ L12,658
2000........................................................ 665
2001........................................................ 528
2002........................................................ 498
</TABLE>
The Company's long-term debt, excluding long-term debt due to shareholder,
had estimated fair values of L259.6 million and L219.7 million as of December
31, 1997 and 1996, respectively. The estimated fair value of the Company's
publicly traded debt is based on quoted market prices for that debt. Interest
rates that are currently available to the Company for issuance of debt with
similar terms and remaining maturities are used to estimate fair value for debt
issues for which quoted market prices are not available.
F-56
<PAGE> 185
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
8. STOCK OPTION/SAR PLANS
The Company implemented a Stock Appreciation Rights ("SARs") plan during
1995 for certain outside directors under which the terms of the SARs granted are
determined by the Compensation Committee of the Board of Directors (the "SAR
Plan"). Under the SAR Plan, eligible participants are entitled to receive a cash
payment from the Company equal to 100% of the excess, if any, of the fair market
value of a share of the Company's Class A Common Shares at the time of exercise
over the fair market value of such a share at the grant date. Under the SAR
Plan, a total of 50,000 SARs may be granted. The SARs have a term of ten years
from the date of grant and are immediately exercisable. No SARs were granted in
1997. A total of 6,000 and 15,000 SARs were granted in 1996 and 1995,
respectively and 14,000 SARs were outstanding at December 31, 1997, all
exercisable. The fair value of the Company's Class A Common Stock at the grant
date of the SARs was $12.63 and $16.25 for 1996 and 1995 grants, respectively.
Compensation expense recorded during the year ended December 31, 1996 was not
significant. No compensation expense was recognized during the years ended
December 31, 1997 and December 31, 1995 as the exercise price of the SARs was
not less then the fair value of a share of the Company's Class A Common Shares.
The Company implemented a qualified stock option plan during 1995 for
certain employees, officers and directors, under which the option prices and
other terms are determined by the Compensation Committee of the Board of
Directors (the "Option Plan"). Under the Option Plan, not more than 250,000 of
the Company's Class A Common Shares may be issued pursuant to the plan upon
exercise of qualified stock options. All options must be granted within ten
years from the date of adoption of the Option Plan, with options becoming
exercisable over four years from the date of grant. A total of 20,250 options,
with an exercise price of $12.63, were granted in 1996 and are outstanding (none
exercisable) at December 31, 1997. No options were granted in 1997 or 1995. No
compensation expense has been recognized under the Option Plan as the exercise
price of the grants was not less than the fair market value of the shares at the
grant date. The fair value of the options granted in 1996 was not significant.
9. RELATED PARTY TRANSACTIONS
Comcast U.K. Consulting, Inc. ("UK Consulting"), a wholly owned subsidiary
of the Company, earns consulting fee income under consulting agreements with the
Equity Investees. The consulting fee income is generally based on a percentage
of gross revenues or a fixed amount per dwelling unit in the Equity Investees'
franchise areas.
The Company's right to receive consulting fee payments from Birmingham
Cable and Cable London has been subordinated to the banks under their credit
facilities. Accordingly, a portion of these fees have been classified as
long-term receivables and are included in investments in affiliates in the
Company's consolidated balance sheet. In addition, the Company's shares in Cable
London have been pledged to secure amounts outstanding under the London
Revolver.
Management fee expense is incurred under agreements between the Company on
the one hand, and Comcast, the Company's controlling shareholder, and Comcast UK
Cable Partners Consulting, Inc. ("Comcast Consulting"), an indirect wholly owned
subsidiary of Comcast, on the other, whereby Comcast and Comcast Consulting
provide consulting services to the Equity Investees on behalf of the Company and
management services to the Company. Such management fees are based on Comcast's
and Comcast Consulting's cost of providing such services. As of December 31,
1997 and 1996, due to affiliates consists primarily of this management fee and
operating expenses paid by Comcast and its affiliates on behalf of the Company.
F-57
<PAGE> 186
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Investment income includes L2.5 million, L2.9 million and L5.0 million of
interest income in 1997, 1996 and 1995, respectively, relating to the loans to
Birmingham Cable, Cable London and Cambridge Cable described in Note 5.
Long-term debt, due to shareholder consists of 9% Subordinated Notes
payable to Holdings (the "Notes") which are due in 1999. During the years ended
December 31, 1997, 1996 and 1995, interest expense on the Notes was L950,000,
L870,000 and L800,000, respectively.
In management's opinion, the foregoing transactions were entered into on
terms no more or less favorable than those with non-affiliated parties.
10. INCOME TAXES
The Company's wholly owned subsidiaries have a deferred tax asset arising
from the carryforward of net operating losses and the differences between the
book and tax basis of property. However, a valuation allowance has been recorded
to fully reserve the deferred tax asset as its realization is uncertain.
Significant components of deferred income taxes are as follows (in L000's):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net operating loss carryforwards (carried forward
indefinitely)............................................. L 14,382 L 13,485
Differences between book and tax basis of property.......... 7,959 1,024
Other....................................................... 321 170
Less: Valuation allowance................................... (22,662) (14,679)
-------- --------
L -- L --
======== ========
</TABLE>
11. STATEMENT OF CASH FLOWS -- SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of approximately L559,000 and
L418,000 during the years ended December 31, 1997 and 1996, respectively. There
were no cash interest payments made during the year ended December 31, 1995.
The Company's wholly owned subsidiaries incurred capital lease obligations
of L2.1 million, L1.2 million and L490,000 during the years ended December 31,
1997, 1996 and 1995, respectively.
12. COMMITMENTS AND CONTINGENCIES
Certain of the Company's facilities and equipment are held under operating
or capital leases which expire through 2008.
A summary of assets held under capital lease are as follows (in L000's):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1996
------- ------
<S> <C> <C>
Land, buildings and equipment............................... L10,735 L8,605
Less: Accumulated depreciation.............................. (3,165) (834)
------- ------
L 7,570 L7,771
======= ======
</TABLE>
F-58
<PAGE> 187
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Future minimum rental payments under lease commitments with an initial or
remaining term of more than one year of December 31, 1997 are as follows (in
L000's):
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- ---------
<S> <C> <C>
1998........................................................ L 2,191 L 1,580
1999........................................................ 1,753 969
2000........................................................ 902 283
2001........................................................ 706 63
2002........................................................ 629 63
Thereafter.................................................. 1,731 36
------- -------
Total minimum rental commitments............................ L 7,912 L 2,994
=======
Less: Amount representing interest.......................... (1,874)
-------
Present value of minimum rental commitments................. 6,038
Less: Current portion of capital lease obligations.......... (1,660)
-------
Long-term portion of capital lease obligations.............. L 4,378
=======
</TABLE>
Operating lease expense for the years ended December 31, 1997, 1996 and
1995 was L1.7 million, L1.5 million and L328,000, respectively.
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company.
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER(1) QUARTER QUARTER(2) YEAR
-------- ---------- -------- ---------- --------
(L000, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1997
Revenues............................ L 12,351 L 13,350 L 14,241 L 16,720 L 56,662
Operating loss...................... (6,543) (6,364) (5,679) (4,018) (22,604)
Equity in net losses of
affiliates........................ (5,152) (5,162) (5,195) (5,850) (21,359)
Net loss............................ (20,540) (13,108) (20,682) (13,026) (67,356)
Net loss per share.................. (.41) (.26) (.41) (.26) (1.34)
1996
Revenues............................ L 2,334 L 9,452 L 10,090 L 10,552 L 32,428
Operating loss...................... (3,765) (6,128) (7,398) (7,262) (24,553)
Equity in net losses of
affiliates........................ (5,698) (3,942) (4,166) (4,626) (18,432)
Net loss............................ (11,987) (11,292) (14,571) (2,725) (40,575)
Net loss per share.................. (.28) (.22) (.30) (.04) (.84)
</TABLE>
- ---------------
(1) The Company began consolidating Cambridge Cable effective March 31, 1996.
(2) The fourth quarter of 1996 net loss includes L12.9 million of foreign
currency exchange rate gains resulting from fluctuations in the foreign
currency exchange rate.
F-59
<PAGE> 188
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
(UNAUDITED)
(IN L000'S,
EXCEPT SHARE DATA)
<S> <C>
CURRENT ASSETS
Cash and cash equivalents................................. L 86,363
Accounts receivable, less allowance for doubtful accounts
of L3,204.............................................. 4,075
Other current assets...................................... 5,932
---------
Total current assets.............................. 96,370
---------
INVESTMENTS IN AFFILIATES................................... 50,307
---------
PROPERTY AND EQUIPMENT...................................... 364,693
Accumulated depreciation.................................. (51,205)
---------
Property and equipment, net............................... 313,488
---------
DEFERRED CHARGES............................................ 58,785
Accumulated amortization.................................. (14,587)
---------
Deferred charges, net..................................... 44,198
---------
FOREIGN EXCHANGE PUT OPTIONS, net........................... 5,886
---------
L 510,249
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses..................... L 25,783
Accrued interest.......................................... 271
Current portion of long-term debt......................... 94,941
Notes payable to Comcast U.K. Holdings, Inc. ............. 12,037
Other..................................................... 809
---------
Total current liabilities......................... 133,841
---------
LONG-TERM DEBT, less current portion........................ 246,677
---------
FOREIGN EXCHANGE CALL OPTION................................ 2,562
---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred shares, L0.1 par value -- authorized 10,000,000
shares; issued, none................................... --
Class A common shares, L.01 par value -- authorized
50,000,000 shares; issued, 37,231,997.................. 372
Class B common shares, L.01 par value -- authorized
50,000,000 shares; issued, 12,872,605.................. 129
Additional capital........................................ 358,548
Accumulated deficit....................................... (231,880)
---------
Total shareholders' equity........................ 127,169
---------
L 510,249
=========
</TABLE>
See notes to condensed consolidated financial statements.
F-60
<PAGE> 189
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
AND ACCUMULATED DEFICIT
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1998 1997
--------- ---------
(IN L000'S, EXCEPT PER
SHARE DATA)
<S> <C> <C>
REVENUES
Service income............................................ L 55,692 L 39,166
Consulting fee income..................................... 840 776
--------- ---------
56,532 39,942
--------- ---------
COSTS AND EXPENSES
Operating................................................. 18,147 14,484
Selling, general and administrative....................... 26,089 22,720
Management fees........................................... 2,174 2,494
Depreciation and amortization............................. 22,952 18,830
--------- ---------
69,362 58,528
--------- ---------
OPERATING LOSS.............................................. (12,830) (18,586)
OTHER (INCOME) EXPENSE
Interest expense.......................................... 26,751 18,706
Investment income......................................... (6,752) (5,807)
Equity in net losses of affiliates........................ 15,916 15,509
Exchange (gains) losses and other......................... (4,238) 7,336
--------- ---------
31,677 35,744
--------- ---------
NET LOSS.................................................... (44,507) (54,330)
ACCUMULATED DEFICIT
Beginning of period.................................... (187,373) (120,017)
--------- ---------
End of period.......................................... L(231,880) L(174,347)
========= =========
NET LOSS PER SHARE.......................................... L (.89) L (1.08)
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DURING
THE PERIOD................................................ 50,105 50,105
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
F-61
<PAGE> 190
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1998 1997
-------- --------
L000 L000
<S> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................. (L44,507) (L54,330)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization.......................... 22,952 18,830
Amortization on foreign exchange contracts............. 2,072 2,072
Non-cash interest expense.............................. 20,168 18,300
Non-cash investment income............................. (2,181) (1,825)
Exchange (gains) losses................................ (7,211) 7,116
Equity in net losses of affiliates..................... 15,916 15,509
(Increase) decrease in account receivable and other
current assets........................................ (333) 150
Increase in accounts payable and accrued expenses and
accrued interest...................................... 2,449 3,177
-------- --------
Net cash provided by operating activities......... 9,325 8,999
-------- --------
FINANCING ACTIVITIES
Repayments of debt........................................ (1,567) (1,111)
Proceeds from borrowings.................................. 93,000
Deferred financing costs.................................. (1,634)
Net transactions with affiliates.......................... (1,020) (1,517)
-------- --------
Net cash provided by (used in) financing
activities...................................... 88,779 (2,628)
-------- --------
INVESTING ACTIVITIES
Proceeds from sales of short-term investments, net........ 45,805
Capital contributions and loans to affiliates............. (1,768) (8,670)
Capital expenditures...................................... (47,012) (59,709)
Deferred charges.......................................... (333) (687)
-------- --------
Net cash used in investing activities............. (49,113) (23,261)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ 48,991 (16,890)
CASH AND CASH EQUIVALENTS, beginning of period.............. 37,372 63,314
-------- --------
CASH AND CASH EQUIVALENTS, end of period.................... L 86,363 L 46,424
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
F-62
<PAGE> 191
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1997 has been
condensed from the audited consolidated balance sheet as of that date. The
condensed consolidated balance sheet as of September 30, 1998, the condensed
consolidated statement of operations and accumulated deficit for the nine months
ended September 30, 1998 and 1997, and the condensed consolidated statement of
cash flows for the nine months ended September 30, 1998 and 1997 have been
prepared by NTL (Bermuda) Limited (formerly Comcast UK Cable Partners Limited)
(the "Company") and have not been audited by the Company's independent auditors.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows as of September 30, 1998 and for all
periods presented have been made.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1997 Annual Report on Form 10-K filed with the Securities and Exchange
Commission. The results of operations for the periods ended September 30, 1998
are not necessarily indicative of operating results for the full year.
Reclassifications
Certain reclassifications have been made to the prior year condensed
consolidated financial statements to conform to those classifications used in
1998.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("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 has adopted SFAS No. 130, which
had no effect on the consolidated financial statements.
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 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 is assessing whether changes in reporting will be required
upon the adoption of this new standard. The Company will adopt SFAS No. 131 for
fiscal year ending December 31, 1998.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement, which establishes
accounting and reporting standards for derivatives and hedging activities, is
effective for fiscal years beginning after June 15, 1999. Upon the adoption of
SFAS No. 133, all derivatives are required to be recognized in the statement of
financial position as either assets or liabilities and measured at fair value.
The Company is currently evaluating the impact the adoption of SFAS No. 133 will
have on its financial position and results of operations.
F-63
<PAGE> 192
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
3. AMALGAMATION WITH NTL
Effective October 29, 1998, NTL Incorporated ("NTL"), NTL (Bermuda)
Limited, a wholly owned subsidiary of NTL, and Comcast UK Cable Partners Limited
("Partners") consummated a transaction (the "Amalgamation") pursuant to the
Agreement and Plan of Amalgamation, dated February 4, 1998, as amended, among
the same (the "Amalgamation Agreement"), whereby NTL (Bermuda) Limited
amalgamated with Partners, such that the separate existence of NTL (Bermuda)
Limited and Partners continued in the form of the company that resulted from the
Amalgamation and which is a wholly owned subsidiary of NTL (the "Amalgamated
Company"). Under the terms of the Amalgamation Agreement, shareholders of
Partners received 0.3745 shares of common stock of NTL in consideration for each
of their shares of common stock of Partners. Accordingly, as a result of the
Amalgamation, shareholders of Partners received a total of approximately
18,700,000 shares of NTL common stock, representing approximately 31.2% of the
shares of NTL common stock outstanding after giving effect to the consummation
of the Amalgamation.
The Amalgamated Company shall operate under the name "NTL (Bermuda)
Limited". Effective as of the Amalgamation, (i) the memorandum of association of
NTL (Bermuda) Limited shall be the memorandum of the Amalgamated Company until
thereafter changed or amended as provided therein or by applicable law, (ii) the
bye-laws of NTL (Bermuda) Limited, as in effect immediately prior to the
Amalgamation, shall be the bye-laws of the Amalgamated Company until thereafter
changed or amended as provided therein or by applicable law and (iii) the
persons serving as directors and officers of NTL (Bermuda) Limited immediately
prior to the Amalgamation shall be the directors and officers, respectively, of
the Amalgamated Company until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal.
Immediately following the Amalgamation, the Amalgamated Company and Bank of
Montreal Trust Company, as trustee, executed a First Supplemental Indenture (the
"First Supplemental Indenture") relating to Partner's 11.20% Senior Discount
Debentures due 2007 (the "Debentures"), which provides for the assumption by the
Amalgamated Company of the liabilities and the obligations of Partners under the
Indenture, dated as of November 15, 1995, governing the Debentures (together
with the First Supplemental Indenture, the "Indenture") and the Debentures
issued pursuant thereto. The First Supplemental Indenture likewise provides that
the Amalgamated Company shall succeed to, and be substituted for, and may
exercise every right and power of, Partners under the Indenture and the
Debentures.
Pursuant to existing arrangements between Partners and Telewest
Communications plc ("Telewest"), a co-owner of interests in Cable London PLC
("Cable London") and Birmingham Cable Corporation Limited ("Birmingham Cable"),
Telewest had certain rights to acquire either or both of Partner's interests in
these systems (see Note 4) as a result of the Amalgamation. On August 14, 1998,
Partners and NTL entered into an agreement (the "Telewest Agreement") with
Telewest relating to Partner's ownership interests in Birmingham Cable,
Partner's and Telewest's respective ownership interests in Cable London and
certain other related matters. Pursuant to the Telewest Agreement, Partners sold
its 27.5% ownership interest in Birmingham Cable to Telewest for L125 million,
plus L5 million for certain subordinated debt and fees. Partners and Telewest
have also agreed within a certain time period to rationalize their joint
ownership of Cable London pursuant to an agreed procedure (the "Shoot-out").
Between April 29 and July 29, 1999, the Amalgamated Company can notify Telewest
of the price at which it is willing to sell its 50% ownership interest in Cable
London to Telewest. Following such notification, Telewest at its option will be
required at that price to either purchase the Amalgamated Company's 50%
ownership interest in Cable London or sell its 50% ownership interest in Cable
London
F-64
<PAGE> 193
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
3. AMALGAMATION WITH NTL (CONTINUED)
to the Amalgamated Company. If the Amalgamated Company fails to give notice to
Telewest during the Shoot-out period, it will be deemed to have given a notice
to Telewest offering to sell its Cable London interest for L100 million. The
sale or purchase by the Company as per the Cable London Shoot-out is expected to
be completed by November 1999.
4. INVESTMENTS IN AFFILIATES
The Company has invested in two affiliates: Birmingham Cable and Cable
London (together, the "Equity Investees"). The Equity Investees operate
integrated cable communications, residential telephony and business
telecommunications systems in their respective major metropolitan areas under
exclusive cable television licenses and non-exclusive telecommunications
licenses. As of September 30, 1998, the Company's ownership interest in the
Equity Investees is as follows:
<TABLE>
<S> <C>
Birmingham Cable............................................ 27.5%
Cable London................................................ 50.0%
</TABLE>
Included in investments in affiliates as of September 30, 1998 and December
31, 1997, are loans to Cable London of L28.5 million and accrued interest of
L8.0 million and L6.0 million, respectively. The loans accrue interest at a rate
of 2% above the published base lending rate of Barclays Bank plc (9.5% effective
rate as of September 30, 1998) and are subordinate to Cable London's credit
facility. Of these loans, L21.0 million as of September 30, 1998 and December
31, 1997, are convertible into ordinary shares of Cable London at a per share
conversion price of L2.00. Also included in investments in affiliates as of
September 30, 1998 and December 31, 1997, are loans to Birmingham Cable of L3.7
million and L1.9 million and accrued interest of (UK Pound)320,000 and L133,000,
respectively. The Birmingham Cable loans accrue interest at a fixed rate of 7.8%
and are subordinate to Birmingham Cable's credit facility.
As described in Note 3, the Company sold its interest in Birmingham Cable
in October 1998 for L125 million, plus L5 million for certain subordinated debt
and fees. The Company will record a gain on the sale of Birmingham Cable of
approximately L110 million in the fourth quarter of 1998. Also, the Company and
Telewest have agreed to the Cable London Shoot-out pursuant to which the Company
will either sell its interest in Cable London to Telewest or Telewest will sell
its interest in Cable London to the Company. The sale or purchase by the Company
as per the Cable London Shoot-out is expected to be completed by November 1999.
Although the Company is not contractually committed to make any additional
capital contributions or advances to Cable London, it currently intends to fund
its share of the amounts necessary for capital expenditures and to finance
operating deficits. Failure to do so could dilute the Company's ownership
interest in Cable London.
F-65
<PAGE> 194
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
4. INVESTMENTS IN AFFILIATES (CONTINUED)
Summarized financial information for affiliates accounted for under the
equity method is as follows:
<TABLE>
<CAPTION>
BIRMINGHAM CABLE
CABLE LONDON COMBINED
---------- -------- --------
L000 L000 L000
<S> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 1998
Results of operations
Service income.................................. L 57,385 L 48,926 L106,311
Operating, selling, general and administrative
expenses..................................... (43,690) (38,244) (81,934)
Depreciation and amortization................... (20,717) (16,611) (37,328)
Operating loss.................................. (7,022) (5,929) (12,951)
Net loss........................................ (25,067) (17,523) (42,590)
Company's equity in net loss.................... (7,010) (8,906) (15,916)
AT SEPTEMBER 30, 1998
Financial position
Current assets.................................. 14,858 8,774 23,632
Noncurrent assets............................... 244,384 190,803 435,187
Current liabilities............................. 26,570 19,899 46,469
Noncurrent liabilities.......................... 185,410 197,448 382,858
NINE MONTHS ENDED SEPTEMBER 30, 1997
Results of operations
Service income.................................. 49,146 38,162 87,308
Operating, selling, general and administrative
expenses..................................... (42,411) (34,007) (76,418)
Depreciation and amortization................... (18,031) (13,930) (31,961)
Operating loss.................................. (11,296) (9,775) (21,071)
Net loss........................................ (21,715) (18,625) (40,340)
Company's equity in net loss.................... (6,077) (9,432) (15,509)
</TABLE>
5. LONG-TERM DEBT
UK Holdings Credit Facility In December 1997, Comcast UK Holdings Limited
("UK Holdings"), a wholly owned subsidiary of the Company, entered into a loan
agreement (the "UK Holdings Agreement") with a consortium of banks to provide
financing under a credit facility (the "UK Holdings Credit Facility") up to a
maximum of L200.0 million. Under the terms of the UK Holdings Agreement,
borrowings under the UK Holdings Credit Facility are guaranteed by Cambridge
Holding Company Limited ("Cambridge Cable") and two companies holding the
franchises for Darlington and Teesside, England ("Teesside"). Cambridge Cable
and Teesside are wholly owned subsidiaries of the Company.
Final maturity of the UK Holdings Credit Facility is January 31, 2001. The
UK Holdings Credit Facility bears interest at a rate per annum equal to the
London Interbank Offered Rate ("LIBOR") plus 1/2% to 2 1/4%. As of September
30, 1998 the Company's effective weighted average interest rate on the UK
Holdings Credit Facility was 9.33%.
The consummation of the Amalgamation resulted in a change in control, as
defined in the UK Holdings Credit Facility, and all amounts outstanding
thereunder became immediately due and payable. The Company repaid the
approximately L100 million outstanding on October 29, 1998 using proceeds from
the sale of the Birmingham Cable interest. The banks have agreed to suspend the
UK Holdings Credit
F-66
<PAGE> 195
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
5. LONG-TERM DEBT (CONTINUED)
Facility for 90 days pending the renegotiation of the facility. The amount
outstanding under the UK Holdings Credit Facility of L93 million as of September
30, 1998 is classified as current on the Company's condensed consolidated
balance sheet as of that date.
6. RELATED PARTY TRANSACTIONS
Comcast U.K. Consulting, Inc., a wholly owned subsidiary of the Company,
earned consulting fee income under consulting agreements with the Equity
Investees. The consulting fee income was generally based on a percentage of
gross revenues or a fixed amount per dwelling unit in the Equity Investees'
franchise areas. The consulting agreements were terminated pursuant to the
Telewest Agreement.
The Company's right to receive consulting fee payments from the Equity
Investees was subordinated to the banks under their credit facilities.
Accordingly, these fees have been classified as long-term receivables and are
included in investments in affiliates in the Company's condensed consolidated
balance sheet. In addition, the Company's shares in Cable London have been
pledged to secure amounts outstanding under Cable London's revolving credit
facility.
Management fee expense was incurred under agreements between the Company on
the one hand, and Comcast Corporation ("Comcast"), the Company's former
controlling shareholder, and Comcast UK Cable Partners Consulting, Inc.
("Comcast Consulting"), an indirect wholly owned subsidiary of Comcast, on the
other, whereby Comcast and Comcast Consulting provided consulting services to
the Equity Investees on behalf of the Company and management services to the
Company. Such management fees were based on Comcast's and Comcast Consulting's
cost of providing such services. As of September 30, 1998 and December 31, 1997,
other current liabilities consists primarily of this management fee and
operating expenses paid by Comcast and its affiliates on behalf of the Company.
For the nine and three months ended September 30, 1998 and 1997, investment
income includes L2.2 million, L1.8 million, L754,000 and L676,000 of interest
income, respectively, relating to the loans to the Equity Investees.
For the nine and three months ended September 30, 1998 and 1997, investment
income includes L2.2 million, L1.8 million, (UK Pound)754,000 and L676,000 of
interest income, respectively, relating to the loans to the Equity Investees.
Long-term debt due to shareholder consists of 9% Subordinated Notes payable
to Comcast U.K. Holdings, Inc. which are due in September 1999. For the nine and
three months ended September 30, 1998 and 1997, the Company recorded L765,000,
L700,000, L262,000 and L239,000, respectively, of interest expense relating to
such notes.
In management's opinion, the foregoing transactions were entered into on
terms no more or less favorable than those with non-affiliated parties.
7. CONTINGENCIES
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company.
F-67
<PAGE> 196
NTL (BERMUDA) LIMITED (FORMERLY COMCAST UK CABLE PARTNERS LIMITED)
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
8. STATEMENT OF CASH FLOWS -- SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of L6.3 million, L406,000, L2.5
million and L136,000 during the nine and three months ended September 30, 1998
and 1997, respectively.
The Company's wholly owned subsidiaries incurred capital lease obligations
of L2.2 million, L1.5 million, L486,000 and L852,000 during the nine and three
months ended September 30, 1998 and 1997, respectively.
F-68
<PAGE> 197
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Birmingham Cable Corporation Limited
We have audited the accompanying consolidated balance sheet of Birmingham
Cable Corporation Limited (a company incorporated in the United Kingdom) and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, shareholders' equity and of cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Birmingham Cable Corporation
Limited and subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE
Birmingham, England
February 27, 1998 (March 16, 1998 as to Note 3)
F-69
<PAGE> 198
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN L000'S, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. L 2,254 L 7,689
Restricted cash........................................... 53,000
Accounts receivable, less allowance for doubtful accounts
of L4,834 and L2,360................................... 6,326 4,809
Interest receivable....................................... 2,016
Other current assets...................................... 2,844 3,017
-------- --------
Total current assets................................... 11,424 70,531
-------- --------
RESTRICTED CASH............................................. 22,000
-------- --------
PROPERTY AND EQUIPMENT...................................... 310,111 269,665
Accumulated depreciation.................................. (74,214) (49,961)
-------- --------
Property and equipment, net............................... 235,897 219,704
-------- --------
DEFERRED CHARGES............................................ 18,112 16,890
Accumulated amortization.................................. (5,398) (3,479)
-------- --------
Deferred charges, net..................................... 12,714 13,411
-------- --------
L260,035 L325,646
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses..................... L 18,997 L 24,381
Accrued interest.......................................... 1,611 7,398
Current portion of capital lease obligations.............. 1,685 1,849
-------- --------
Total current liabilities.............................. 22,293 33,628
-------- --------
LONG-TERM DEBT.............................................. 140,000
-------- --------
CAPITAL LEASE OBLIGATIONS, less current portion............. 13,539 11,625
-------- --------
LONG-TERM DEBT, due to shareholders......................... 7,492
-------- --------
OTHER LIABILITIES........................................... 4,382 2,238
-------- --------
COMMITMENTS AND CONTINGENCIES
PREFERENCE SHARES........................................... 175,000
-------- --------
SHAREHOLDERS' EQUITY
Ordinary shares, L1.00 par value -- authorized, 60,000,000
shares; issued, 51,073,486............................. 51,073 51,073
Additional capital........................................ 112,399 112,399
Accumulated deficit....................................... (91,143) (60,317)
-------- --------
Total shareholders' equity............................. 72,329 103,155
-------- --------
L260,035 L325,646
======== ========
</TABLE>
See notes to consolidated financial statements.
F-70
<PAGE> 199
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN L000'S)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
SERVICE INCOME.............................................. L 67,166 L 52,472 L 39,004
-------- -------- --------
COSTS AND EXPENSES
Operating................................................. 28,942 20,912 16,358
Selling, general and administrative....................... 27,622 23,564 19,536
Depreciation and amortization............................. 26,427 19,690 14,455
-------- -------- --------
82,991 64,166 50,349
-------- -------- --------
OPERATING LOSS.............................................. (15,825) (11,694) (11,345)
INTEREST EXPENSE............................................ 17,500 17,202 13,993
INVESTMENT INCOME........................................... (2,499) (8,518) (11,059)
-------- -------- --------
NET LOSS.................................................... L(30,826) L(20,378) L(14,279)
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-71
<PAGE> 200
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN L000'S)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................................... L (30,826) L(20,378) L (14,279)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization....................... 26,427 19,690 14,455
Non-cash interest expense........................... 492
Decrease (increase) in accounts receivable, interest
receivable and other current assets............... 672 4,939 (7,438)
(Decrease) increase in accounts payable and accrued
expenses, accrued interest and other
liabilities....................................... (9,027) 10,559 6,469
--------- -------- ---------
Net cash (used in) provided by operating
activities..................................... (12,262) 14,810 (793)
--------- -------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings............................... 140,000 175,000
Loans from shareholders................................ 7,000
Debt acquisition costs................................. (2,977)
Redemption of preference shares........................ (175,000)
Repayment of capital leases............................ (2,316) (1,161) (220)
--------- -------- ---------
Net cash (used in) provided by financing
activities........................................ (30,316) (1,161) 171,803
--------- -------- ---------
INVESTING ACTIVITIES
Restricted cash........................................ 75,000 39,000 (114,000)
Capital expenditures................................... (36,635) (56,492) (47,999)
Deferred charges....................................... (1,222) (991) (601)
--------- -------- ---------
Net cash provided by (used in) investing
activities..................................... 37,143 (18,483) (162,600)
--------- -------- ---------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS......... (5,435) (4,834) 8,410
CASH AND CASH EQUIVALENTS, beginning of year............. 7,689 12,523 4,113
--------- -------- ---------
CASH AND CASH EQUIVALENTS, end of year................... L 2,254 L 7,689 L 12,523
========= ======== =========
</TABLE>
See notes to consolidated financial statements.
F-72
<PAGE> 201
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN L000'S)
<TABLE>
<CAPTION>
ORDINARY ADDITIONAL ACCUMULATED
SHARES CAPITAL DEFICIT TOTAL
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995....................... L51,073 L112,399 L(25,660) L137,812
Net loss..................................... (14,279) (14,279)
------- -------- -------- --------
BALANCE, DECEMBER 31, 1995..................... 51,073 112,399 (39,939) 123,533
Net loss..................................... (20,378) (20,378)
------- -------- -------- --------
BALANCE, DECEMBER 31, 1996..................... 51,073 112,399 (60,317) 103,155
Net loss..................................... (30,826) (30,826)
------- -------- -------- --------
BALANCE, DECEMBER 31, 1997..................... L51,073 L112,399 L(91,143) L 72,329
======= ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-73
<PAGE> 202
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. BUSINESS
Birmingham Cable Corporation Limited, a company incorporated in the United
Kingdom ("UK"), and subsidiaries (the "Company") is principally engaged in the
development, construction, management and operation of cable telecommunications
systems. The Company holds two franchises in Birmingham/Solihull and Wythall,
England.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Company maintains its books and records in accordance with accounting
principles generally accepted in the UK. The consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
as practiced in the United States ("US") and are stated in UK pounds sterling
("UK Pound"). There were no significant differences between accounting
principles followed for UK purposes and generally accepted accounting principles
practiced in the US. The UK Pound exchange rate as of December 31, 1997 and 1996
was US $1.65 and US $1.71, respectively.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and all wholly owned subsidiaries. All significant intercompany accounts and
transactions among the consolidated entities have been eliminated.
Management's 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Values
The estimated fair value amounts presented in these notes to consolidated
financial statements have been determined by the Company using available market
information and appropriate methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value. The
estimates presented herein are not necessarily indicative of the amounts that
the Company could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts. Such fair value estimates are based on
pertinent information available to management as of December 31, 1997 and 1996,
and have not been comprehensively revalued for purposes of these consolidated
financial statements since such dates.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash as of December 31, 1996 included
cash held on deposit as part of a L175.0 million financing arrangement entered
into by the Company in 1995. In July 1997 this arrangement was restructured and
the restricted cash was used, together with proceeds from the Birmingham
Facility, to redeem the preference shares (see Note 3).
F-74
<PAGE> 203
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Prematurity Period
The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its cable telecommunications systems under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 51,
"Financial Reporting by Cable Television Companies."
Under SFAS No. 51, during the period while the systems are partially under
construction and partially in service (the "Prematurity Period"), costs of cable
telecommunications plant, including materials, direct labor and construction
overhead are capitalized. Subscriber-related costs and general and
administrative costs are expensed as incurred. Costs incurred in anticipation of
servicing a fully operating system that will not vary regardless of the number
of subscribers are partially expensed and partially capitalized, based upon the
percentage of average actual or estimated subscribers, whichever is greater, to
the total number of subscribers expected at the end of the Prematurity Period
(the "Fraction").
During the Prematurity Period, depreciation and amortization of system
assets is determined by multiplying the depreciation and amortization of the
total capitalized system assets expected at the end of the Prematurity Period by
the Fraction. At the end of the Prematurity Period, depreciation and
amortization of system assets is based on the remaining undepreciated cost at
that date.
As of December 31, 1997, all of the Company's seven discrete build areas
have completed their Prematurity Period.
Property and Equipment
Property and equipment, which consists principally of system assets, is
shown at historical cost less accumulated depreciation. Improvements that extend
asset lives are capitalized; other repairs and maintenance charges are expensed
as incurred. The cost and related accumulated depreciation applicable to assets
sold or retired are removed from the accounts and the gain or loss on
disposition is recognized as a component of depreciation expense.
System assets
Prior to the Prematurity Period, no depreciation is provided on system
assets. During the Prematurity Period, depreciation is provided in accordance
with SFAS No. 51.
Depreciation of system assets is provided by the straight-line method over
estimated useful lives as follows:
<TABLE>
<S> <C>
Plant....................................................... 15-40 years
Network..................................................... 15 years
Subscriber equipment........................................ 6-10 years
Switch...................................................... 10 years
Computers................................................... 4 years
</TABLE>
F-75
<PAGE> 204
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Non-system assets
Depreciation of non-system assets is provided by the straight-line method
over estimated useful lives as follows:
<TABLE>
<S> <C>
Buildings................................................... 40 years
Leasehold buildings......................................... term of lease
Fixtures, fittings and equipment............................ 5 years
Computers................................................... 4 years
Vehicles.................................................... 4 years
</TABLE>
Leased Assets
Assets held under capital leases are treated as if they had been purchased
outright and the corresponding liability is included in capital lease
obligations. Capital lease payments include principal and interest, with the
interest portion being expensed. Payments on operating leases are expensed on a
straight-line basis over the lease term.
Deferred Charges
Deferred charges consist primarily of franchise acquisition and development
costs directly attributable to obtaining, developing and maintaining the
franchise licenses. Franchise acquisition and development costs have been
allocated evenly between each build area and are amortized, by build area, on a
straight-line basis, over the lives of the franchises of 15 to 23 years.
Valuation of Long-Lived Assets
The Company periodically evaluates the recoverability of its long-lived
assets, including property and equipment and deferred charges, using objective
methodologies. Such methodologies include evaluations based on the cash flows
generated by the underlying assets or other determinants of fair value.
Revenue Recognition
Service income is recognized as service is provided. Credit risk is managed
by disconnecting services to subscribers who are delinquent.
Income Taxes
The Company recognizes deferred tax assets and liabilities for temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities and expected benefits of utilizing net
operating loss carryforwards. The impact on deferred taxes of changes in tax
rates and laws, if any, applied to the years during which temporary differences
are expected to be settled, are reflected in the financial statements in the
period of enactment.
Derivative Financial Instruments
The Company uses interest rate exchange agreements ("Swaps"), to manage its
exposure to fluctuations in interest rates. Swaps are matched with either fixed
or variable rate debt and periodic cash payments are accrued on a settlement
basis as an adjustment to interest expense.
Those instruments that have been entered into by the Company to hedge
exposure to interest rate risks are periodically examined by the Company to
ensure that the instruments are matched with
F-76
<PAGE> 205
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
underlying liabilities, reduce the Company's risks relating to interest rates
and, through market value and sensitivity analysis, maintain a high correlation
to the interest expense or underlying value of the hedged item.
The Company does not hold or issue any derivative financial instruments for
trading purposes and is not a party to any leveraged instruments (see Note 3).
The credit risks associated with the Company's derivative financial instruments
are controlled through the evaluation and monitoring of the creditworthiness of
the counterparties. Although the Company may be exposed to losses in the event
of nonperformance by the counterparties, the Company does not expect such
losses, if any, to be significant.
Reclassifications
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to those classifications used in 1997.
3. LONG-TERM DEBT AND PREFERENCE SHARES
In February 1995, a subsidiary of the Company issued 175,000 cumulative
L1.00 redeemable five year term preference shares for a paid up value of L175.0
million. Also in February 1995, the Company entered into a L175.0 million five
year revolving credit facility (the "Birmingham Facility") which provided for
conversion into a five year term loan on March 31, 2000. In March 1997, the
terms of the Birmingham Facility were amended to extend the maturity of the term
loan to December 31, 2005 and to amend the required cash flow levels (as
defined) and certain other terms. Interest rates on the Birmingham Facility are
at the London Interbank Offered Rate ("LIBOR") plus 5/8% to 2 1/4%.
In July 1997, the preference shareholder exercised its option to require
the Company to purchase its shareholding. The Company funded the redemption of
the preference shares with the proceeds from the Birmingham Facility and
restricted cash and settled its five year L175.0 million interest rate exchange
agreement with Barclays Bank PLC. The balance of the Birmingham Facility will be
used, subject to certain restrictions, for capital expenditures and working
capital requirements relating to the build-out of its systems. The preference
shares had an effective dividend rate, including Advanced Corporation Tax
("ACT"), of 8.00%.
The Birmingham Facility contains restrictive covenants which limit the
Company's ability to enter into arrangements for the acquisition and sale of
property and equipment, investments, mergers and the incurrence of additional
debt. Certain of these covenants require that certain minimum build
requirements, financial ratios and cash flow levels be maintained and contain
restrictions on dividend payments. The Company's three principal shareholders'
right to receive consulting fee payments from the Company has been subordinated
to the banks under the Birmingham Facility. The payment of consulting fees is
restricted until the Company meets certain financial ratio tests under the
Birmingham Facility. The Company has pledged the shares of its material
subsidiaries to secure the Birmingham Facility. Upon a change of control, all
amounts due under the Birmingham Facility become immediately due and payable. On
February 4, 1998, Comcast UK Cable Partners Limited ("Comcast UK"), one the
Company's principal shareholders, entered into a definitive agreement to
amalgamate (the "NTL Transaction") with a wholly owned subsidiary of NTL
Incorporated. The consummation of the NTL Transaction will not result in a
change of control as defined in the Birmingham Facility.
The Company enters into Swaps as a normal part of its risk management
efforts to limit its exposure to adverse fluctuations in interest rates. Using
Swaps, the Company agrees to exchange, at specified intervals, the difference
between fixed and variable interest amounts calculated by reference to an agreed
upon notional amount. In conjunction with the Birmingham Facility, a subsidiary
of the Company and
F-77
<PAGE> 206
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Barclays Bank PLC entered into a five year L175.0 million Swap, whereby the
subsidiary receives fixed interest at a rate of 8.83% and pays floating rate
interest at the six month LIBOR. The L175.0 million Swap was settled in July
1997 along with the redemption of the preference shares (see above). In
addition, a subsidiary of the Company entered into a second series of five year
Swaps with three banks. Under the agreements, the subsidiary pays fixed rate
interest at 9.20% and receives floating rate interest at six month LIBOR, based
upon the outstanding notional amount of the Swaps. As of December 31, 1997 and
1996, the notional amount outstanding on the second series of Swaps was L149.0
million and L106.0 million, respectively, and increased to L160.0 million on
January 2, 1998. The notional amounts of interest rate agreements are used to
measure interest to be paid or received and do not represent the amount of
exposure to credit loss. While Swaps represent an integral part of the Company's
interest rate risk management program, their incremental effect on interest
expense for the years ended December 31, 1997, 1996 and 1995 was not
significant. The estimated amount to settle the Company's Swaps was a liability
of L7.5 million and a receivable of L168,000 as of December 31, 1997 and 1996,
respectively.
On March 16, 1998, the Company's shareholders loaned L7.0 million to the
Company in the form of Junior Subordinated Debt, as defined in the Birmingham
Facility. The proceeds from this borrowing were used to settle the Swaps
described above. Additionally, on March 16, 1998 a subsidiary of the Company
entered into a L160.0 million notional amount two year Swap with three banks.
Under the terms of this Swap, the subsidiary pays fixed rate interest at 7.23%
and receives floating rate interest at six month LIBOR, based upon the notional
amount.
Maturities of long-term debt outstanding as of December 31, 1997 for the
four years after 1998 are as follows (L000's):
<TABLE>
<S> <C>
1999............................................... L
2000............................................... 7,000
2001............................................... 14,000
2002............................................... 21,000
</TABLE>
The differences between the carrying amounts and estimated fair value of
the Company's long-term debt was not significant as of December 31, 1997 and
1996. Interest rates that are currently available to the Company for debt with
similar terms and remaining maturities are used to estimate fair value for debt
issues for which quoted market prices are not available.
4. LONG-TERM DEBT, DUE TO SHAREHOLDERS
As of December 31, 1997, the Company had outstanding loans from
shareholders of L7.0 million and accrued interest thereon of L492,000. The loans
from shareholders bear interest at a fixed rate of 7.8% and are payable on
demand. Under the terms of the Birmingham Facility, however, principal and
interest on the loans from shareholders cannot be paid until the Birmingham
Facility is repaid. Thus, the loans from shareholders and accrued interest
thereon have been classified as long-term in the Company's consolidated balance
sheet. The carrying value of the loans from shareholders approximates fair value
as of December 31, 1997 and 1996.
5. RELATED PARTY TRANSACTIONS
The Company has consulting agreements with Comcast U.K. Consulting, Inc.
("Comcast Consulting") and Telewest Communications Group Ltd., subsidiaries of
two of the Company's principal shareholders, Comcast UK and Telewest
Communications plc ("Telewest"), respectively. The Company also has a consulting
agreement with General Cable, the Company's other principal shareholder. The
Company pays a fee to Telewest each year as a contribution to the operating
expenses and capital
F-78
<PAGE> 207
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
expenditures of Telewest's Network Service Center, which provides telephony
support to the Company. The Company has a telephony interconnect agreement with
Telewest, whereby certain telephony traffic is routed via Telewest. These
interconnect costs are included in "other" below.
A summary of related party charges included in the Company's consolidated
financial statements is as follows (in L000's):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1996 1995 1997
------ ------ ------
<S> <C> <C> <C>
Consulting fees.......................................... L1,511 L1,326 L1,070
Network Service Center fees.............................. 711 814 680
Other.................................................... 1,151 109 6
------ ------ ------
L3,373 L2,249 L1,756
====== ====== ======
</TABLE>
As of December 31, 1997 and 1996, accounts payable and accrued expenses
include L1.4 million and L2.3 million, respectively, payable to the Company's
three principal shareholders, principally for consulting fees and normal
operating expenses paid by the shareholders and their affiliates on behalf of
the Company. As of December 31, 1997 and 1996, other long-term liabilities
includes L3.9 million and L1.3 million, respectively, of consulting fees payable
to the Company's three principal shareholders as payment is restricted under the
Birmingham Facility.
In management's opinion, the foregoing transactions were entered into on
terms no more or less favorable than those with non-affiliated third parties.
6. INCOME TAXES
The Company has a deferred tax asset arising from the carryforward of net
operating losses and the differences between the book and tax basis of property.
However, a valuation allowance has been recorded to fully reserve the deferred
tax asset as its realization is uncertain.
Significant components of the Company's deferred income taxes are as
follows (in L000's):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net operating loss carryforwards (carried forward
indefinitely)............................................. L 3,253 L 3,218
Differences between book and tax basis of property.......... 7,880 6,916
Less: Valuation allowance................................... (11,133) (10,134)
-------- --------
L L
======== ========
</TABLE>
In connection with the Birmingham Facility and the related preference share
arrangement (see Note 3), the Company is obligated to pay ACT on all preference
share dividends. Related ACT for 1997, 1996 and 1995 was L1.4 million, L2.8
million and L2.5 million, respectively, and has been classified as a component
of interest expense in the Company's consolidated statement of operations. ACT
may be carried forward indefinitely to offset potential future tax liabilities
of the Company.
7. STATEMENT OF CASH FLOWS -- SUPPLEMENTAL INFORMATION
The Company made cash payments for interest and preferred stock dividends
of approximately L43.0 million, L31.2 million and L11.3 million during the years
ended December 31, 1997, 1996 and 1995, respectively.
F-79
<PAGE> 208
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
The Company incurred capital lease obligations of L4.1 million, L5.0
million and L4.6 million during the years ended December 31, 1997, 1996 and
1995, respectively.
8. COMMITMENTS AND CONTINGENCIES
Certain of the Company's facilities and equipment are held under operating
or capital leases which expire through 2007.
A summary of assets held under capital leases are as follows (in L000's):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
System, fixtures, fittings, equipment and vehicles.......... L18,991 L14,925
Less: Accumulated depreciation.............................. (5,779) (3,556)
------- -------
L13,212 L11,369
======= =======
</TABLE>
Future minimum rental payments under lease commitments with an initial or
remaining term of more than one year as of December 31, 1997 are as follows (in
L000's):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
1998........................................................ L 2,699 L 156
1999........................................................ 2,801 156
2000........................................................ 2,778 156
2001........................................................ 2,300 157
2002........................................................ 1,719 154
Thereafter.................................................. 7,710 1,805
-------- -------
Total minimum rental commitments............................ 20,007 L 2,584
=======
Less: Amount representing interest.......................... (4,783)
--------
Present value of minimum rental commitments................. 15,224
Less: Current portion of capital lease obligations.......... (1,685)
--------
Long-term portion of capital lease obligations.............. L 13,539
========
</TABLE>
Operating lease expense for the years ended December 31, 1997, 1996 and
1995 was L169,000, L428,000 and L947,000, respectively.
Included within accounts payable and accrued expenses and other long-term
liabilities as of December 31, 1997 and 1996 is L570,000 and L665,000,
respectively, which represents the obligation incurred by the Company in
connection with the termination of a contractual obligation under an agreement
with the local authority to service and maintain the Company's satellite master
antenna television installations in the franchise area. This liability is
noninterest bearing and will be discharged by the payment of L95,000 annually
through 2003. The effect of discounting the liability is not significant to the
Company's financial position or results of operations.
F-80
<PAGE> 209
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Cable London PLC
We have audited the accompanying consolidated balance sheet of Cable London
PLC (a company incorporated in the United Kingdom) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, shareholders' (deficiency) equity and of cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Cable London PLC and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE
London, England
February 27, 1998
F-81
<PAGE> 210
CABLE LONDON PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN L000'S, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1996
--------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash...................................................... L 2,718 L 3,213
Accounts receivable, less allowance for doubtful accounts
of L1,762 and L1,465................................... 4,792 3,670
Other current assets...................................... 2,830 3,334
--------- --------
Total current assets.............................. 10,340 10,217
--------- --------
PROPERTY AND EQUIPMENT...................................... 235,786 192,630
Accumulated depreciation.................................. (55,292) (36,480)
--------- --------
Property and equipment, net............................... 180,494 156,150
--------- --------
DEFERRED CHARGES............................................ 8,073 6,986
Accumulated amortization.................................. (3,214) (3,230)
--------- --------
Deferred charges, net..................................... 4,859 3,756
--------- --------
L 195,693 L170,123
========= ========
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses..................... L 19,972 L 21,705
Other current liabilities................................. 2,172 3,117
Current portion of long-term debt and capital lease
obligations............................................ 758 60,361
--------- --------
Total current liabilities......................... 22,902 85,183
--------- --------
LONG-TERM DEBT, less current portion........................ 89,727 718
--------- --------
CAPITAL LEASE OBLIGATIONS, less current portion............. 11,751 7,869
--------- --------
CONVERTIBLE DEBT AND LOANS FROM SHAREHOLDERS................ 69,017 52,244
--------- --------
OTHER LIABILITIES........................................... 2,543
--------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIENCY) EQUITY
Ordinary shares, L.10 par value--authorized, 100,000,000
shares; issued, 55,572,916 and 55,125,690.............. 5,557 5,513
Additional capital........................................ 97,254 96,486
Accumulated deficit....................................... (103,058) (77,890)
--------- --------
Total shareholders' (deficiency) equity................ (247) 24,109
--------- --------
L 195,693 L170,123
========= ========
</TABLE>
See notes to consolidated financial statements.
F-82
<PAGE> 211
CABLE LONDON PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN L000'S)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
SERVICE INCOME............................................. L 52,816 L 40,091 L 30,277
-------- -------- --------
COSTS AND EXPENSES
Operating................................................ 22,084 17,978 14,622
Selling, general and administrative...................... 23,703 21,157 18,616
Depreciation and amortization............................ 19,740 14,862 10,847
-------- -------- --------
65,527 53,997 44,085
-------- -------- --------
OPERATING LOSS............................................. (12,711) (13,906) (13,808)
INTEREST EXPENSE........................................... 12,692 7,556 4,133
INVESTMENT INCOME.......................................... (235) (221) (266)
-------- -------- --------
NET LOSS................................................... L(25,168) L(21,241) L(17,675)
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-83
<PAGE> 212
CABLE LONDON PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN L000'S)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................................. L(25,168) L(21,241) L(17,675)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization......................... 19,740 14,862 10,847
Non-cash interest expense............................. 4,773 3,355 3,311
Increase in accounts receivable and other current
assets.............................................. (618) (2,428) (214)
(Decrease) increase in accounts payable and accrued
expenses, other current liabilities and other
liabilities......................................... (135) 7,508 3,992
-------- -------- --------
Net cash (used in) provided by operating
activities....................................... (1,408) 2,056 261
-------- -------- --------
FINANCING ACTIVITIES
Proceeds from borrowings................................. 94,029 40,000 38,000
Debt acquisition costs................................... (1,704) (493)
Loans from shareholders.................................. 12,000 3,000
Repayments of debt....................................... (65,031) (33) (30)
Repayment of capital leases.............................. (537) (21)
Issuances of shares...................................... 812
-------- -------- --------
Net cash provided by financing activities........... 39,569 42,946 37,477
-------- -------- --------
INVESTING ACTIVITIES
Capital expenditures..................................... (38,656) (46,082) (36,780)
Deferred charges and other............................... (834)
-------- -------- --------
Net cash used in investing activities............... (38,656) (46,082) (37,614)
-------- -------- --------
(DECREASE) INCREASE IN CASH................................ (495) (1,080) 124
CASH, beginning of year.................................... 3,213 4,293 4,169
-------- -------- --------
CASH, end of year.......................................... L 2,718 L 3,213 L 4,293
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-84
<PAGE> 213
CABLE LONDON PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIENCY) EQUITY
(IN L000'S)
<TABLE>
<CAPTION>
ORDINARY ADDITIONAL ACCUMULATED
SHARES CAPITAL DEFICIT TOTAL
-------- ---------- ----------- --------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995........................ L5,513 L96,486 L (38,974) L 63,025
Net loss...................................... (17,675) (17,675)
------ ------- --------- --------
BALANCE, DECEMBER 31, 1995...................... 5,513 96,486 (56,649) 45,350
Net loss...................................... (21,241) (21,241)
------ ------- --------- --------
BALANCE, DECEMBER 31, 1996...................... 5,513 96,486 (77,890) 24,109
Shares issued................................. 44 768 812
Net loss...................................... (25,168) (25,168)
------ ------- --------- --------
BALANCE, DECEMBER 31, 1997...................... L5,557 L97,254 L(103,058) L (247)
====== ======= ========= ========
</TABLE>
See notes to consolidated financial statements.
F-85
<PAGE> 214
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. BUSINESS
Cable London PLC, a company incorporated in the United Kingdom ("UK"), and
subsidiaries (the "Company") is principally engaged in the development,
construction, management and operation of cable telecommunications systems. The
Company holds four franchises covering Camden, Haringey, Hackney/ Islington and
Enfield, England.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Company maintains its books and records in accordance with accounting
principles generally accepted in the UK. The consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
as practiced in the United States ("US") and are stated in UK pounds sterling
("UK Pound"). There were no significant differences between accounting
principles followed for UK purposes and generally accepted accounting principles
practiced in the US. The UK Pound exchange rate as of December 31, 1997 and 1996
was US $1.65 and US $1.71, respectively.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company
and all wholly owned subsidiaries. All significant intercompany accounts and
transactions among the consolidated entities have been eliminated.
Management's 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Fair Values
The estimated fair value amounts presented in these notes to consolidated
financial statements have been determined by the Company using available market
information and appropriate methodologies. However, considerable judgment is
required in interpreting market data to develop the estimates of fair value. The
estimates presented herein are not necessarily indicative of the amounts that
the Company could realize in a current market exchange. The use of different
market assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts. Such fair value estimates are based on
pertinent information available to management as of December 31, 1997 and 1996,
and have not been comprehensively revalued for purposes of these consolidated
financial statements since such dates.
Prematurity Period
The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its cable telecommunications systems under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 51,
"Financial Reporting by Cable Television Companies."
Under SFAS No. 51, during the period while the systems are partially under
construction and partially in service (the "Prematurity Period"), costs of cable
telecommunications plant, including materials, direct labor and construction
overhead are capitalized. Subscriber-related costs and general and
F-86
<PAGE> 215
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
administrative costs are expensed as incurred. Costs incurred in anticipation of
servicing a fully operating system that will not vary regardless of the number
of subscribers are partially expensed and partially capitalized, based on the
percentage of average actual or estimated subscribers, whichever is greater, to
the total number of subscribers expected at the end of the Prematurity Period
(the "Fraction").
During the Prematurity Period, depreciation and amortization of system
assets is determined by multiplying the depreciation and amortization of the
total capitalized system assets expected at the end of the Prematurity Period by
the Fraction. At the end of the Prematurity Period, depreciation and
amortization of system assets is based on the remaining undepreciated cost at
that date.
As of December 31, 1997, three of the Company's four franchise areas have
completed their Prematurity Period. The remaining Prematurity Period is expected
to terminate in 1998.
Property and Equipment
Property and equipment, which consists principally of system assets, is
shown at historical cost less accumulated depreciation. Improvements that extend
asset lives are capitalized; other repairs and maintenance charges are expensed
as incurred. The cost and related accumulated depreciation applicable to assets
sold or retired are removed from the accounts and the gain or loss on
disposition is recognized as a component of depreciation expense.
System assets
- --------------
Prior to the Prematurity Period, no depreciation is provided on system
assets. During the Prematurity Period, depreciation is provided in accordance
with SFAS No. 51.
Depreciation of system assets is provided by the straight-line method over
estimated useful lives as follows:
<TABLE>
<S> <C>
Plant....................................................... 40 years
Network..................................................... 15 years
Subscriber equipment........................................ 6-8 years
Switch...................................................... 10 years
Computers................................................... 4 years
</TABLE>
Non-system assets
- -------------------
Depreciation of non-system assets is provided by the straight-line method
over estimated useful lives as follows:
<TABLE>
<S> <C>
Leased buildings............................................ 40 years
Fixtures, fittings and equipment............................ 5 years
Computers................................................... 4 years
Vehicles.................................................... 3 years
</TABLE>
Leased Assets
Assets held under capital leases are treated as if they had been purchased
outright and the corresponding liability is included in capital lease
obligations. Capital lease payments include principal and interest, with the
interest portion being expensed. Payments on operating leases are expensed on a
straight-line basis over the lease term.
F-87
<PAGE> 216
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Deferred Charges
Deferred charges consist primarily of franchise acquisition and development
costs directly attributable to obtaining, developing and maintaining the
franchise licenses and debt acquisition costs incurred by the Company in
entering into the London Revolver (see Note 3). Franchise acquisition and
development costs are being amortized on a straight-line basis over periods from
two to fifteen years. Debt acquisition costs are being amortized on a
straight-line basis over the term of the London Revolver of nine years.
Valuation of Long-Lived Assets
The Company periodically evaluates the recoverability of its long-lived
assets, including property and equipment and deferred charges, using objective
methodologies. Such methodologies include evaluations based on the cash flows
generated by the underlying assets or other determinants of fair value.
Revenue Recognition
Service income is recognized as service is provided. Credit risk is managed
by disconnecting services to subscribers who are delinquent.
Income Taxes
The Company recognizes deferred tax assets and liabilities for temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities and expected benefits of utilizing net
operating loss carryforwards. The impact on deferred taxes of changes in tax
rates and laws, if any, applied to the years during which temporary differences
are expected to be settled, are reflected in the financial statements in the
period of enactment.
Derivative Financial Instruments
The Company uses derivative financial instruments, including interest rate
exchange agreements ("Swaps") and interest rate collar agreements ("Collars"),
to manage its exposure to fluctuations in interest rates.
Swaps and Collars are matched with either fixed or variable rate debt and
periodic cash payments are accrued on a settlement basis as an adjustment to
interest expense.
Those instruments that have been entered into by the Company to hedge
exposure to interest rate risks are periodically examined by the Company to
ensure that the instruments are matched with underlying liabilities, reduce the
Company's risks relating to interest rates and, through market value and
sensitivity analysis, maintain a high correlation to the interest expense or
underlying value of the hedged item.
The Company does not hold or issue any derivative financial instruments for
trading purposes and is not a party to leveraged instruments (see Note 3). The
credit risks associated with the Company's derivative financial instruments are
controlled through the evaluation and monitoring of the creditworthiness of the
counterparties. Although the Company may be exposed to losses in the event of
nonperformance by the counterparties, the Company does not expect such losses,
if any, to be significant.
Reclassifications
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to those classifications used in 1997.
F-88
<PAGE> 217
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
3. LONG-TERM DEBT
In June 1995, the Company entered into a L60.0 million revolving credit
facility (the "London Facility") with various banks. The London Facility had a
two year term and an interest rate at the London Interbank Offered Rate
("LIBOR") plus 2 1/2%. In April 1997, the amount available under the London
Facility was increased to L65.0 million.
In May 1997, the Company entered into a L170.0 million revolving credit
facility (the "London Revolver") with various banks, which converts into a five
year term loan on June 30, 2001. Interest rates on the London Revolver are at
LIBOR plus 1/2% to 2 3/8%. In May 1997, the Company repaid all amounts
outstanding under the London Facility with proceeds from borrowings under the
London Revolver. The balance of the London Revolver will be used, subject to
certain restrictions, for capital expenditures and working capital requirements
relating to the build-out of its systems.
The London Revolver contains restrictive covenants which limit the
Company's ability to enter into arrangements for the acquisition and sale of
property and equipment, investments, mergers and the incurrence of additional
debt. Certain of these covenants require that certain financial ratios and cash
flow levels be maintained and contain certain restrictions on dividend payments.
The Company's two principal shareholders' rights to receive consulting fee
payments from the Company has been subordinated to the banks under the London
Revolver. The payment of consulting fees is restricted until the Company meets
certain financial ratio tests under the London Revolver. In addition, the
Company's two principal shareholders' shares in the Company have been pledged to
secure the London Revolver. Upon a change of control, all amounts due under the
London Revolver become immediately due and payable. On February 4, 1998, Comcast
UK Cable Partners Limited ("Comcast UK"), one the Company's principal
shareholders, entered into a definitive agreement to amalgamate (the "NTL
Transaction") with a wholly owned subsidiary of NTL Incorporated. The
consummation of the NTL Transaction will not result in a change of control as
defined in the London Revolver.
The Company enters into Swaps and Collars as a normal part of its risk
management efforts to limit its exposure to adverse fluctuations in interest
rates. Using Swaps, the Company agrees to exchange, at specified intervals, the
difference between fixed and variable interest amounts calculated by reference
to an agreed upon notional amount. Collars limit the Company's exposure to and
benefits from interest rate fluctuations on variable rate debt to within a
certain range of interest rates. In June 1997, the Company entered into a series
of four year interest Swaps with three banks. Under the agreements, the Company
pays fixed rate interest at 7.34% and receives floating rate interest at three
month LIBOR, based upon the outstanding notional amount of the Swaps. As of
December 31, 1997, the notional amount outstanding on the Swaps was L44.5
million and increased to L49.5 million on January 7, 1998. Also in June 1997,
the Company entered into a Collar which limits the interest rate on the notional
amount to between 6% and 9%. As of December 31, 1997, the notional amount
outstanding on the Collar was L22.3 million and increased to L24.8 million on
January 7, 1998. The notional amounts of interest rate agreements and interest
rate collar agreements are used to measure interest to be paid or received and
do not represent the amount of exposure to credit loss. While Swaps and Collars
represent an integral part of the Company's interest rate risk management
program, their incremental effect on interest expense for the year ended
December 31, 1997 was not significant. The estimated amount to settle the
Company's Swaps and Collar was L1.5 million as of December 31, 1997.
Also included in long-term debt is a mortgage note payable with an
outstanding balance of L753,000 and L755,000 as of December 31, 1997 and 1996,
respectively, payable in monthly installments through 2002 which is secured by
property of the Company. The mortgage note bears interest at a fixed rate of
9.79%.
F-89
<PAGE> 218
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Maturities of long-term debt outstanding as of December 31, 1997 for the
four years after 1998 are as follows (L000's):
<TABLE>
<S> <C>
1999................................................ L
2000................................................
2001................................................ 2,225
2002................................................ 8,900
</TABLE>
The differences between the carrying amounts and estimated fair value of
the Company's long-term debt was not significant as of December 31, 1997 and
1996. Interest rates that are currently available to the Company for debt with
similar terms and remaining maturities are used to estimate fair value for debt
issues for which quoted market prices are not available.
4. CONVERTIBLE DEBT AND LOANS FROM SHAREHOLDERS
As of December 31, 1997 and 1996, the Company had outstanding convertible
debt due to shareholders of L42.0 million and outstanding loans from
shareholders of L15.0 million and L3.0 million, respectively. The convertible
debt and loans from shareholders bear interest at 2% above the base lending rate
of Barclays Bank PLC (9.25% effective rate as of December 31, 1997) and are
payable on demand. Accrued interest on the convertible debt and loans from
shareholders is L12.0 million and L7.2 million as of December 31, 1997 and 1996,
respectively. Under the terms of the London Revolver, principal and interest on
the convertible debt and loans from shareholders cannot be paid until the London
Revolver is repaid. Accordingly, the convertible debt, loans from shareholders
and accrued interest thereon has been classified as long-term convertible debt
and other in the Company's consolidated balance sheet. The convertible debt,
along with accrued interest thereon, is convertible into the Company's ordinary
shares at L2.00 per share. Interest expense on the convertible debt and loans
from shareholders was L4.8 million, L3.3 million and L3.2 million during the
years ended December 31, 1997, 1996 and 1995, respectively. The carrying value
of the convertible debt and loans from shareholders approximates fair value as
of December 31, 1997 and 1996.
5. RELATED PARTY TRANSACTIONS
The Company has consulting agreements with Comcast U.K. Consulting, Inc.
("Comcast Consulting") and Telewest Communications Group Ltd., subsidiaries of
the Company's two principal shareholders, Comcast UK and Telewest Communications
plc ("Telewest"), respectively. The Company pays a fee to Telewest each year as
a contribution to the operating expenses and capital expenditures of Telewest's
Network Service Center, which provides telephony support to the Company.
A summary of related party charges included in the Company's consolidated
financial statements is as follows (in L000's):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Consulting fees.......................................... L1,077 L 790 L 962
Network Service Center fees.............................. 521 639 503
Other.................................................... 355 125 33
------ ------ ------
L1,953 L1,554 L1,498
====== ====== ======
</TABLE>
As of December 31, 1997 and 1996, accounts payable and accrued expenses
include L176,000 million and L1.6 million, respectively, payable to the
Company's two principal shareholders, principally for consulting fees and normal
operating expenses paid by the shareholders and their affiliates on behalf of
the
F-90
<PAGE> 219
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Company. As of December 31, 1997 other long-term liabilities includes L2.5
million of consulting fees and interest payable to the Company's two principal
shareholders as payment is restricted under the London Revolver.
In management's opinion, the foregoing transactions were entered into on
terms no more or less favorable than those with non-affiliated third parties.
6. INCOME TAXES
The Company has a deferred tax asset arising from the carryforward of net
operating losses and the differences between the book and tax basis of property.
However, a valuation allowance has been recorded to fully reserve the deferred
tax asset as its realization is uncertain.
Significant components of the Company's deferred income taxes are as
follows (in L000's):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net operating loss carryforwards (carried forward
indefinitely)............................................. L 17,692 L 15,852
Differences between book and tax basis of property.......... 10,426 7,329
Other....................................................... (459) (756)
Less: Valuation allowance................................... (27,659) (22,425)
-------- --------
L L
======== ========
</TABLE>
7. STATEMENT OF CASH FLOWS -- SUPPLEMENTAL INFORMATION
The Company made cash payments for interest of approximately L7.4 million,
L3.7 million and L691,000 during the years ended December 31, 1997, 1996 and
1995, respectively.
The Company incurred capital lease obligations of L4.8 million, L1.5
million and L3.9 million during the years ended December 31, 1997, 1996 and
1995, respectively.
8. COMMITMENTS AND CONTINGENCIES
Certain of the Company's facilities and equipment are held under operating
or capital leases which expire through 2007.
A summary of assets held under capital leases are as follows (in L000's):
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1997 1996
------- -------
<S> <C> <C>
System, fixtures, fittings, equipment and vehicles.......... L13,040 L 8,219
Less: Accumulated depreciation.............................. (2,836) (1,523)
------- -------
L10,204 L 6,696
======= =======
</TABLE>
F-91
<PAGE> 220
CABLE LONDON PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
Future minimum rental payments under lease commitments with an initial or
remaining term of more than one year as of December 31, 1997 are as follows (in
L000's):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1998........................................................ L 1,550 L 902
1999........................................................ 2,036 496
2000........................................................ 2,078 181
2001........................................................ 2,313 148
2002........................................................ 1,457 146
Thereafter.................................................. 7,727 955
------- ------
Total minimum rental commitments............................ 17,161 L2,828
======
Less: Amount representing interest.......................... (4,678)
-------
Present value of minimum rental commitments................. 12,483
Less: Current portion of capital lease obligations.......... (732)
-------
Long-term portion of capital lease obligations.............. L11,751
=======
</TABLE>
Operating lease expense for the years ended December 31, 1997, 1996 and
1995 was L919,000, L1.2 million and L1.1 million, respectively.
F-92
<PAGE> 221
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
ComTel UK Finance B.V.
We have audited the accompanying combined balance sheet of ComTel UK
Finance B.V. and its subsidiaries ("the Company") as of December 31, 1997 and
the related combined statement of operations, shareholders' equity and cash
flows for the year ended December 31, 1997. These combined financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United Kingdom which are similar to those in the United States
of America. 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of the Company as of
December 31, 1997 and the combined results of its operations and its combined
cash flows for the year ended December 31, 1997 in conformity with generally
accepted accounting principles in the United States of America.
DELOITTE & TOUCHE
Chartered Accountants
Bracknell, England
June 5, 1998
(July 16, 1998 as to Note 10)
F-93
<PAGE> 222
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
ComTel UK Finance B.V.
We have audited the combined balance sheet of ComTel UK Finance B.V. and
its subsidiaries ("the Company") as of December 31, 1996 and the related
combined statement of operations, shareholders' equity and cash flows for the
year ended December 31, 1996. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audit. We did not
audit the combined financial statements of Telecential Communications (UK)
Limited and Telecential Communications (Canada) Limited, both 50% owned entities
(collectively "Telecential"). Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it relates to
the amounts included for Telecential, is based solely on the report of the other
auditors.
We conducted our audit in accordance with United Kingdom generally accepted
auditing standards which do not differ in any material respect from auditing
standards generally accepted in the United States of America. 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
audit provides a reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors,
the financial statements referred to above present fairly, in all material
respects, the combined financial position of the Company as of December 31, 1996
and the combined results of its operations and its combined cash flows for the
year ended December 31, 1996 in conformity with generally accepted accounting
principles in the United States of America.
COOPERS & LYBRAND
Chartered Accountants
London, England
June 5, 1998, except as to Note 10, as to
which the date is July 16, 1998
F-94
<PAGE> 223
COMTEL UK FINANCE B.V.
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
------------------
1996 1997
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
REVENUE
Cable television............................................ 5,680 27,192
Residential telephone....................................... 3,247 23,203
Business telecommunications................................. 214 893
------- -------
9,141 51,288
------- -------
OPERATING COSTS AND EXPENSES
Telephone................................................... 1,247 4,461
Programming................................................. 3,659 17,730
Selling, general and administrative......................... 11,501 33,911
Depreciation and amortisation............................... 11,211 32,604
------- -------
27,618 88,706
------- -------
OPERATING LOSS.............................................. (18,477) (37,418)
Interest income............................................. 1,859 2,041
Interest expense............................................ (10,485) (27,044)
Loss from equity investment................................. (15,224) (6,125)
Foreign exchange gain (note 7).............................. 7,456 6,549
------- -------
LOSS BEFORE INCOME TAX EXPENSE.............................. (34,871) (61,997)
Income tax expense (note 3)................................. -- (100)
------- -------
NET LOSS.................................................... (34,871) (62,097)
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-95
<PAGE> 224
COMTEL UK FINANCE B.V.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1996 1997
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... 9,977 10,119
Trade receivables (net of allowance for doubtful accounts of
L883 and L4,263 at December 31, 1996 and 1997
respectively)............................................. 1,754 5,895
Other assets................................................ 1,290 12,541
Advance to Telecential...................................... 46,563 --
Property, plant and equipment, net (note 4)................. 89,339 425,936
Equity investment in Telecential (note 5)................... 37,338 --
Intangible assets, net (note 6)............................. 120,962 210,573
------- -------
Total assets...................................... 307,223 665,064
======= =======
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accounts payable............................................ 5,321 20,036
Other liabilities........................................... 13,445 49,532
Debt and capital lease obligations (note 7)................. 182,757 487,749
Loan from Parent (note 7)................................... 51,129 69,141
Shareholders' equity (note 8)............................... 54,571 38,606
------- -------
Total liabilities and shareholders' equity........ 307,223 665,064
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-96
<PAGE> 225
COMTEL UK FINANCE B.V.
COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31, 1996
AND 1997
L
-------------------
(IN THOUSANDS)
<S> <C>
BALANCE AT DECEMBER 31, 1995................................ (3,570)
Net loss.................................................... (34,871)
Capital contributions from shareholders..................... 93,012
-------
BALANCE AT DECEMBER 31, 1996................................ 54,571
Net loss.................................................... (62,097)
Capital contributions from shareholders..................... 46,132
-------
BALANCE AT DECEMBER 31, 1997................................ 38,606
=======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-97
<PAGE> 226
COMTEL UK FINANCE B.V.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
1996 1997
L L
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................... (34,871) (62,097)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortisation............................. 11,211 32,604
Loss from equity investment............................... 15,224 6,125
Foreign exchange gain..................................... (7,456) (6,549)
Provision for bad debt.................................... 817 841
Change in operating assets and liabilities:
Change in trade receivables............................... (2,011) (2,458)
Change in other assets.................................... 2,273 58
Change in accounts payable................................ (2,609) 3,196
Change in other liabilities............................... 3,252 23,166
Other....................................................... (1,274) 613
-------- --------
Net cash used in operating activities....................... (15,444) (4,501)
-------- --------
Cash flows from investing activities:
Cash invested in property, plant and equipment............ (51,456) (118,033)
Proceeds from disposition of assets....................... -- 869
Acquisition of Telecential, net of cash received.......... -- (117,024)
Acquisition of Coventry, net of cash received............. (3,949) --
Advances to Telecential................................... (40,411) (15,893)
-------- --------
Net cash used in investing activities....................... (95,816) (250,081)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of debt............................ 49,180 301,048
Repayment of debt......................................... (22,086) (30,000)
Repayment of advances..................................... -- (62,456)
Capital contributions from shareholders................... 93,012 46,132
-------- --------
Net cash provided by financing activities................... 120,106 254,724
-------- --------
Net increase in cash and cash equivalents................... 8,846 142
Cash and cash equivalents at beginning of year.............. 1,131 9,977
-------- --------
Cash and cash equivalents at end of year.................... 9,977 10,119
======== ========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-98
<PAGE> 227
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
1. THE COMPANY
ComTel UK Finance B.V. ("the Company") is a holding company to be
incorporated in The Netherlands to hold the United Kingdom cable assets of
Vision Networks N.V. ("Vision Networks"). These assets comprise United Kingdom
subsidiaries which have exclusive licenses to operate a cable television and
telecommunications business through partnerships and subsidiaries focused on
certain franchise areas located north and east of Birmingham and north and west
of London, England.
References to Shareholders in these financial statements are to the
subscribers to the Company.
All amounts herein are presented in thousands in pounds sterling ("L")
unless otherwise noted.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's combined financial statements have been prepared in
accordance with United States of America generally accepted accounting
principles.
The financial statements include the results of the companies acquired by
Vision Networks in 1995 and 1996. These companies include Vision Networks UK
Holding B.V., Vision Networks (UK) Holdings Limited, Vision Network (UK) I
Limited, Vision Network (UK) II Limited, Vision Networks Canada Limited, Andover
Cablevision Limited, Oxford Cable Limited, Stafford Communications Limited,
Wessex Cable Limited, ComTel Coventry Limited, ComTel Cable Services Limited,
Lichfield Cable Communications Limited, Tamworth Cable Communications Limited
and Vision Networks Services UK Limited. In addition, the financial statements
reflect the 50% ownership position in Telecential Communications (UK) Limited
and Telecential Communications (Canada) Limited (collectively "Telecential") on
the equity basis through May 27, 1997, being the date of acquisition of the
remaining 50% interest, and 100% on a combined basis for the remainder of 1997.
Principles of Combination -- The financial statements combine the accounts
of the Company and those of all majority owned subsidiaries for the two year
period ended December 31, 1997. The subsidiaries are under common ownership and
common management. Investments in more than 20% owned affiliates are accounted
for on the equity method. All significant intercompany accounts and transactions
have been eliminated.
Cable System Costs and Expenses -- The Company accounts for costs and
expenses applicable to the construction and operation of its cable system under
Statement of Financial Accounting Standards ("SFAS") No. 51, "Financial
Reporting by Cable Television Companies". Costs and expenses incurred in each
franchise during the set up period of the cable system have been capitalised in
full. Certain expenses incurred during the prematurity period are apportioned
between capital and revenue on the basis of the average number of subscribers as
a fraction of the number of subscribers estimated at the end of the prematurity
period. The prematurity period is deemed to run from when the first subscriber
is connected to the system to the earlier of three years or when the number of
cable television and telephony subscribers represents an appropriate percentage
penetration of the number of homes passed.
Revenue Recognition -- Revenue is recognised as services are delivered.
Initial connection fees are recognized in full upon installation to the
extent of direct selling costs incurred.
Initial installation costs for subscribers are capitalised and written off
over a period of 8 years. Subsequent connections are expensed as incurred.
Income Tax Expense -- Deferred tax assets and liabilities are recognised
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted
F-99
<PAGE> 228
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to reverse. A valuation allowance is raised
against a deferred tax asset where it is more likely than not some portion of
the deferred tax asset will not be realised.
Franchise Costs -- Costs of successful franchise applications are
capitalised as intangible assets and amortised over a period of 20 years. Costs
of unsuccessful applications are expensed as incurred.
Goodwill -- Goodwill arising on the acquisition of subsidiaries is
amortised on a straight line basis over twenty years.
Property, Plant and Equipment -- Property, plant and equipment is stated at
cost. Depreciation on equipment other than cable infrastructure is computed on a
straight line basis using estimated useful lives of five to ten years. Cable
infrastructure is depreciated over twenty years. Leasehold improvements are
depreciated on a straight line basis over the lease periods.
Cash and Cash Equivalents -- Cash and cash equivalents include highly
liquid investments with original maturity of three months or less that are
readily convertible to cash.
Foreign Currencies -- The primary economic environment in which the Company
operates is the United Kingdom and hence its functional and reporting currency
is the United Kingdom pound sterling. Transactions in foreign currencies are
recorded using the rate of exchange in effect on the date of the transaction or
at the forward rate if the transaction has been hedged. Monetary assets and
liabilities denominated in foreign currencies are translated using the rate of
exchange in effect on the balance sheet date and gains or losses on translation
are included in the statement of operations.
Leasing Commitments -- Assets held under finance lease contracts are
capitalised in the balance sheet and are depreciated over their useful lives.
The interest element of the rental obligation is charged to expense over the
period of the lease and represents a constant proportion of the balance of
capital repayments outstanding. Rentals paid under operating leases are charged
to expense over the lease term.
Pension Costs -- The Company operates a defined contribution pension plan
for eligible employees and contributes up to specified limits to a third party
plan of the employee's choice. Pension costs totalled L85 and L332 in the years
ended December 31, 1996 and 1997, respectively.
Use of Estimates -- The preparation of financial statements in conformity
with United States of America generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Concentration of Credit Risk and Market Risk -- The Company operates
predominantly in one industry segment, the provision of cable television and
telecommunications services in certain areas of England. Concentrations of
credit risk with respect to trade receivables are limited due to the large
number of customers comprising the Company's customer base. Ongoing credit
evaluations of customers' financial condition are performed and generally, no
collateral is required. The Company maintains reserves for potential credit
losses and such losses, in the aggregate, have not exceeded management's
estimates. No single customer accounts for 10% or more of combined revenues.
Fair Value of Financial Instruments -- Financial instruments are defined as
cash or contracts relating to the receipt, delivery or exchange of financial
instruments. Except as otherwise noted, fair value approximates the carrying
value of such instruments.
F-100
<PAGE> 229
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. INCOME TAX EXPENSE
No provision for deferred taxation has been made due to operating losses
incurred to date in the Company. The Company has net tax operating losses
carried forward in the United Kingdom and The Netherlands of approximately L175
million at December 31, 1997.
The operating losses have an unlimited carry forward period under United
Kingdom tax law (subject to restrictions on a loss carried forward where there
is a change in group ownership and a major change in the nature or conduct of
the business), but are limited in their use to the type of business which
generated the loss. The operating losses available in The Netherlands are also
subject to an unlimited carry forward under The Netherlands tax law (again
subject to restrictions where there is a change in group ownership).
Differences between the tax benefit recognised in the financial statements
and the expected tax benefit for the Company at the United Kingdom and The
Netherlands statutory rate of 31.5% (1996: 33%) and 35%, respectively, are
summarised as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
------------------
1996 1997
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
Tax benefit of net losses at statutory rate.............. (11,716) (20,532)
Non-deductible expenses.................................. (103) 755
Tax benefit of operating losses not recognised
currently.............................................. 11,819 19,877
------- -------
Income tax expense....................................... -- 100
======= =======
Deferred tax assets relating to:
Net losses............................................... 17,976 56,331
Valuation allowance...................................... (9,516) (23,265)
------- -------
8,460 33,066
Deferred tax liabilities relating to:
Property, plant and equipment............................ (8,460) (33,066)
------- -------
Deferred tax per balance sheet........................... -- --
======= =======
</TABLE>
The ultimate realisation of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, the level of
historical taxable losses, and tax planning strategies in making its assessment
as to the appropriateness of the reported valuation allowance.
The tax charge for the year represents current taxation on those United
Kingdom profits against which United Kingdom group relief cannot be offset.
F-101
<PAGE> 230
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and comprises:
<TABLE>
<CAPTION>
DECEMBER 31
-----------------
1996 1997
L L
------ -------
(IN THOUSANDS)
<S> <C> <C>
Land and buildings and improvements....................... 4,835 13,982
Plant and equipment....................................... 86,554 453,373
Set-up and prematurity costs.............................. 6,748 33,737
------ -------
98,137 501,092
Less accumulated depreciation............................. (8,798) (75,156)
------ -------
89,339 425,936
====== =======
</TABLE>
The Company leases certain plant and equipment under arrangements accounted
for as capital leases. The original cost of assets held under these arrangements
was L2,558 and L17,510 at December 31, 1996 and 1997, respectively. Accumulated
depreciation charged against these assets was L734 and L7,047 at December 31,
1996 and 1997, respectively.
Depreciation expense totaled L4,780 and L23,425 in the years ended December
31, 1996 and 1997, respectively, of which L537 and L2,770, respectively,
represented depreciation on assets held under capital lease arrangements.
5. ACQUISITIONS
In April 1996, the Company acquired 87.75% of ComTel Coventry Limited
("Coventry") for cash consideration of L3,973. The acquisition was accounted for
using the purchase method of accounting. The excess of consideration over fair
value of net assets acquired was L11,829, which is included in goodwill.
The 50% interest in Telecential which was not owned was acquired on May 27,
1997 for cash consideration of L123,191. The acquisition was accounted for using
the purchase method of accounting. The excess of fair value of net assets
acquired at the date of acquisition was L90,553 which is included in goodwill.
Accordingly, operating results of Telecential have been included in the combined
statement of operations from the date of acquisition of the remaining 50%
interest.
The unaudited pro forma combined historical results of the Company, as if
the acquisitions had occurred as of January 1, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
------------------
1996 1997
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
Revenue.................................................. 47,555 72,271
Operating cost and expenses.............................. 89,368 119,036
------- -------
Operating loss........................................... (41,813) (46,765)
Loss before income taxes................................. (63,874) (74,248)
Net loss................................................. (63,971) (74,348)
</TABLE>
The unaudited pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition had been completed as of the
beginning of each of the fiscal periods presented, nor are they necessarily
indicative of future combined results.
F-102
<PAGE> 231
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
5. ACQUISITIONS (CONTINUED)
Following the May 27, 1997 acquisition of the 50% interest in Telecential
the operations of both Telecential and the Company were combined. This involved
rationalising operations throughout the Company to (i) consolidate customer
operations and combine processes, practices and systems in order to provide
"World Class" customer services; (ii) rebrand the Company under the ComTel brand
name; and (iii) reduce staff and pay related severance costs. The initial
accrued liability in respect of these costs comprised:
<TABLE>
<CAPTION>
L
(IN THOUSANDS)
--------------
<S> <C>
Consolidation of customer operations........................ 1,838
Rebranding as ComTel........................................ 450
Severance costs............................................. 300
-----
2,588
=====
</TABLE>
All of the above was contracted for in 1997 and has therefore been expensed
within operating costs and expenses in the combined statement of operations.
L2,316 of these costs had been incurred by December 31, 1997 and the remaining
L272 was spent in the first quarter of 1998.
6. INTANGIBLE ASSETS
Intangible assets are stated at cost and comprise:
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1996 1997
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
Goodwill................................................. 128,658 220,155
Franchise costs.......................................... -- 7,293
------- -------
128,658 227,448
Less accumulated amortisation............................ (7,696) (16,875)
------- -------
120,962 210,573
======= =======
</TABLE>
Amortisation expense totaled L6,431 and L9,179 in the years ended December
31, 1996 and 1997, respectively.
7. DEBT AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1996 1997
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
Note payable to bank..................................... 181,314 463,545
Other.................................................... -- 2,516
Capital lease obligations................................ 1,443 21,688
------- -------
182,757 487,749
Loan from Parent......................................... 51,129 69,141
------- -------
233,886 556,890
======= =======
</TABLE>
The note payable to the bank bears interest at a rate of LIBOR (7.438% at
December 31, 1997) plus 15 basis points. The loan is repayable in full in 1998.
The loan is collateralised by a guarantee from the ultimate parent company
Koninklijke PTT Nederland N.V. The loan from parent represents a Dutch
F-103
<PAGE> 232
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
7. DEBT AND CAPITAL LEASE OBLIGATIONS -- (CONTINUED)
guilder denominated loan from Vision Networks and bears interest at a rate of
LIBOR as of December 31, 1997, and has no fixed repayment term. Debt obligations
consisting of repayments on loans, excluding capital lease obligations, are all
due 1998.
Future minimum lease payments on capital lease obligations are due in
future years in the following amounts:
<TABLE>
<CAPTION>
DECEMBER 31
--------------
1997
L
--------------
(IN THOUSANDS)
<S> <C>
1998................................................... 4,073
1999................................................... 2,878
2000................................................... 2,288
2001................................................... 9,155
2002................................................... 1,454
Thereafter............................................. 1,840
------
21,688
Imputed interest....................................... 3,247
------
24,935
======
</TABLE>
Cash paid for interest during 1996 and 1997 was L10,874 and L27,726,
respectively.
8. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
VISION
VISION NETWORKS VISION
NETWORKS (UK) NETWORKS
UK HOLDING HOLDINGS SERVICES UK
B.V. LIMITED LIMITED TOTAL
L L L L
---------- -------- ----------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1996...................... (1,363) (2,207) -- (3,570)
Net loss........................................ (7,547) (27,190) (134) (34,871)
Capital contributions........................... 93,012 -- -- 93,012
------- ------- ---- -------
BALANCE AT DECEMBER 31, 1996.................... 84,102 (29,397) (134) 54,571
Net loss........................................ (13,079) (48,888) (130) (62,097)
Capital contributions........................... 46,132 -- -- 46,132
------- ------- ---- -------
BALANCE AT DECEMBER 31, 1997.................... 117,155 (78,285) (264) 38,606
======= ======= ==== =======
</TABLE>
Vision Networks UK Holding B.V. consolidates all of the ComTel group of
companies, whilst Vision Networks (UK) Holdings Limited combines all of the
Telecential group of companies. Vision Networks Services UK Limited is a Dutch
holding company which provided management services to all of the companies in
each of the two groups.
9. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases business offices and uses certain equipment under lease
agreements accounted for as operating leases. Rental expense under such
arrangements amounted to L1,427 and L4,510 in the years ended December 31, 1996
and 1997 respectively.
F-104
<PAGE> 233
COMTEL UK FINANCE B.V.
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum lease payments under non cancellable operating leases as of
December 31, 1997 are summarised as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------
1997
L
--------------
(IN THOUSANDS)
<S> <C>
1998................................................... 1,533
1999................................................... 2,686
2000................................................... --
2001................................................... --
2002................................................... --
Thereafter............................................. 1,608
-----
5,827
=====
</TABLE>
It is expected that, in the normal course of business, expiring leases will
be renewed or replaced by leases on other properties.
Milestones
The Company is obligated under the terms of its existing licences, and
under the milestone requirements of Local Delivery Licences ("LDL's") to
construct cable systems passing a predefined number of premises. Should the
Company fail to achieve these milestones, without licence modifications, the
Director General could commence proceedings to require compliance. Similarly the
Independent Television Commission ("ITC") may commence proceedings to require
compliance with the build milestones in the LDL's.
If the Company is unable to comply, its licence, in respect of which
milestones have not been met, could be revoked and awarded to other cable
operators, which could have a material adverse effect on the Company.
As of December 31, 1997 the Company was in compliance with its milestone
obligations.
10. SUBSEQUENT EVENTS
On June 11, 1998 the Company was incorporated in The Netherlands as
contemplated in note 1.
On June 16, 1998 NTL Group Limited ("NTL"), a subsidiary of NTL
Incorporated, acquired the entire issued share capital of the UK subsidiaries
which form part of the Company's combined group as presented in these financial
statements (the "ComTel Shares"). These UK subsidiaries comprised Andover
Cablevision Limited, Oxford Cable Limited, Stafford Communications Limited,
Wessex Cable Limited, ComTel Coventry Limited, ComTel Cable Services Limited,
Lichfield Cable Communications Limited, Tamworth Cable Communications Limited
and Vision Networks Services UK Limited.
On the same date an undertaking was entered into by NTL to acquire the
entire issued share capital of ComTel Limited, Heartland Cablevision (UK)
Limited and Heartland Cablevision II (UK) Limited, together with all interests
in the Telecommunications Partnership and LP5 and LP6 (the "Telecential
Assets"). The Telecential Assets form part of the Company's combined group as
presented in these financial statements. The completion of the acquisition of
the Telecential Assets is subject to compliance with certain obligations on all
parties to the sale before March 15, 1999 or, subject to specific exceptions,
December 31, 2002.
F-105
<PAGE> 234
COMTEL UK FINANCE B.V.
COMBINED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
(UNAUDITED)
------------------
1997 1998
L L
------- -------
(IN THOUSANDS)
<S> <C> <C>
REVENUE
Cable television............................................ 4,921 21,534
Residential telephone....................................... 3,511 19,390
Business telecommunications................................. 274 2,570
------- -------
8,706 43,494
------- -------
OPERATING COSTS AND EXPENSES
Telephone................................................... 1,065 5,699
Programming................................................. 3,393 12,924
Selling, general and administrative......................... 7,640 24,140
Depreciation and amortisation............................... 8,897 25,969
------- -------
20,995 68,732
------- -------
OPERATING LOSS.............................................. (12,289) (25,238)
Interest income............................................. 412 665
Interest expense............................................ (8,726) (19,877)
Loss from equity investment................................. (9,312) --
Foreign exchange gain (loss)................................ 3,876 (7,639)
------- -------
LOSS BEFORE INCOME TAX EXPENSE.............................. (26,039) (52,089)
Income tax expense.......................................... -- --
------- -------
NET LOSS.................................................... (26,039) (52,089)
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-106
<PAGE> 235
COMTEL UK FINANCE B.V.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1998
(UNAUDITED)
L
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Cash and cash equivalents................................... 11,517
Trade receivables (net of allowance for doubtful accounts of
L3,854 at June 30, 1998).................................. 11,493
Other assets................................................ 114,074
Property, plant and equipment, net.......................... 295,132
Intangible assets, net...................................... 156,923
-------
Total assets...................................... 589,139
=======
</TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
L
--------------
(IN THOUSANDS)
<S> <C>
Accounts payable............................................ 23,248
Other liabilities........................................... 60,798
Debt and capital lease obligations.......................... 309,706
Shareholders' equity........................................ 195,387
-------
Total liabilities and shareholders' equity........ 589,139
=======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-107
<PAGE> 236
COMTEL UK FINANCE B.V.
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
JUNE 30, 1998
-----------------
(UNAUDITED)
L
-----------------
(IN THOUSANDS)
<S> <C>
BALANCE AT DECEMBER 31, 1997................................ 38,606
Capital contributions....................................... 208,870
Net loss.................................................... (52,089)
-------
BALANCE AT JUNE 30, 1998.................................... 195,387
=======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-108
<PAGE> 237
COMTEL UK FINANCE B.V.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIODS ENDED
JUNE 30
--------------------
(UNAUDITED)
1997 1998
L L
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................... (26,039) (52,089)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortisation............................. 8,897 25,969
Loss from equity investment............................... 9,312 --
Foreign exchange (gain) loss.............................. (3,876) 7,639
Change in operating assets and liabilities:
Change in trade receivables............................... (2,317) (12,432)
Change in other assets.................................... 5,815 5,899
Change in accounts payable................................ 12,311 19,061
Change in other liabilities............................... (9,850) 10,312
Other....................................................... (2,461) 654
-------- --------
Net cash used in/provided by operating activities........... (8,208) 5,013
-------- --------
Cash flows from investing activities:
Cash invested in property, plant and equipment............ (45,798) (44,533)
Proceeds from sale of ComTel Shares, net of cash on
hand................................................... -- 267,652
Acquisition of Telecential, net of cash received.......... (117,024) --
Advances to Telecential................................... (15,893) --
-------- --------
Net cash used in/provided by investing activities........... (178,715) 223,119
-------- --------
Cash flows from financing activities:
Proceeds from the issuance of debt........................ 222,433 280,712
Repayment of debt......................................... (1,443) (535,535)
Repayment of advances..................................... (62,456) --
Capital contributions from shareholders................... 33,786 28,089
-------- --------
Net cash provided by/used in financing activities........... 192,320 (226,734)
-------- --------
Net increase in cash and cash equivalents................... 5,397 1,398
Cash and cash equivalents at beginning of period............ 9,977 10,119
-------- --------
Cash and cash equivalents at end of period.................. 15,374 11,517
======== ========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-109
<PAGE> 238
COMTEL UK FINANCE B.V.
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
1. THE COMPANY
ComTel UK Finance B.V. ("the Company") is a holding company incorporated in
The Netherlands to hold the United Kingdom cable assets of Vision Networks N.V.
("Vision Networks"). These assets comprise United Kingdom subsidiaries which
have exclusive licences to operate a cable television and telecommunications
business through partnerships and subsidiaries focused on certain franchise
areas located north and east of Birmingham and north and west of London,
England.
References to Shareholders in these financial statements are to the
subscribers to the Company.
The preparation of unaudited financial statements in conformity with United
States of America generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
These unaudited financial statements are presented on a basis which is
consistent with the audited financial statements included elsewhere, herein.
The amounts pertaining to the unaudited combined financial statements are
presented in thousands in pounds sterling ("L").
2. SUPPLEMENTAL UNAUDITED PRO FORMA INFORMATION
The following supplemental unaudited pro forma information includes 100% of
the results of Vision Networks UK Holding B.V., Vision Networks (UK) Holdings
Limited, Vision Networks (UK) I Limited, Vision Networks (UK) II Limited, Vision
Networks Canada Limited, Andover Cablevision Limited, Oxford Cable Limited,
Stafford Communications Limited, Wessex Cable Limited, ComTel Coventry Limited,
ComTel Cable Services Limited, Lichfield Cable Communications Limited, Tamworth
Cable Communications Limited, Vision Networks Services UK Limited, and
Telecential Communications (UK) Limited and Telecential Communications (Canada)
Limited (collectively "Telecential") on a pro forma basis for the six months
ended June 30, 1997 as if Telecential had been acquired as of January 1, 1997.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997
(UNAUDITED)
L
----------------
(IN THOUSANDS)
----------------
<S> <C>
Revenue..................................................... 34,063
Operating costs and expenses................................ (59,852)
-------
Operating loss.............................................. (25,789)
Interest income............................................. 544
Interest expense............................................ (11,278)
Foreign exchange gain....................................... 3,876
-------
Loss before income tax expense.............................. (32,647)
-------
Income tax expense.......................................... (75)
-------
Net loss.................................................... (32,722)
=======
</TABLE>
The supplemental unaudited pro forma information is provided for
illustrative purposes only and does not purport to represent what the actual
results of operations would have been had Telecential operated as part of the
Company for the six months ended June 30, 1997, nor is it necessarily indicative
of the Company's future operating results or combined financial position.
F-110
<PAGE> 239
COMTEL UK FINANCE B.V.
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUPPLEMENTAL UNAUDITED PRO FORMA INFORMATION (CONTINUED)
The Company has accounted for the acquisition of Telecential using the
purchase method of accounting under United States of America generally accepted
accounting principles. Accordingly, the purchase consideration in the
acquisition has been allocated to the assets acquired and liabilities assumed
with any excess being allocated to goodwill and amortised over 20 years.
The six months ended June 30, 1997 supplemental unaudited pro forma
information includes estimates made by the Company and assumptions that it
believes to be reasonable.
The supplemental unaudited pro forma information reflects the following:
1. The actual results of operations for the Company for the six month
period ended June 30, 1997.
2. The results of operations for Telecential for the six month period
ended June 30, 1997 as if Telecential had been acquired January 1, 1997.
3. Amortisation of goodwill based on purchase price allocation as if
Telecential had been acquired January 1, 1997.
4. Interest expense related to loans incurred to finance the
acquisition of Telecential as if the loans had been outstanding since
January 1, 1997.
5. The elimination of intercompany income and expenses as if
Telecential had been acquired January 1, 1997.
3. SUBSEQUENT EVENTS
On June 16, 1998 NTL Group Limited ("NTL"), a subsidiary of NTL
Incorporated, acquired the entire issued share capital of the UK subsidiaries
which form part of the Company's combined group as presented in these financial
statements (the "ComTel Shares"). These UK subsidiaries comprised Andover
Cablevision Limited, Oxford Cable Limited, Stafford Communications Limited,
Wessex Cable Limited, ComTel Coventry Limited, ComTel Cable Services Limited,
Lichfield Cable Communications Limited, Tamworth Cable Communications Limited
and Vision Networks Services UK Limited.
On the same date an undertaking was entered into by NTL to acquire the
entire issued share capital of ComTel Limited, Heartland Cablevision (UK)
Limited and Heartland Cablevision II (UK) Limited, together with all interests
in the Telecommunications Partnership and LP5 and LP6 (the "Telecential
Assets"). The Telecential Assets form part of the Company's combined group as
presented in these financial statements. The completion of the acquisition of
the Telecential Assets is subject to compliance with certain obligations on all
parties to the sale before March 15, 1999 or, subject to specific exceptions,
December 31, 2002.
F-111
<PAGE> 240
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Telecential Communications (Canada) Limited and
Telecential Communications (UK) Limited
We have audited the accompanying combined balance sheet of Telecential
Communications (Canada) Limited and Telecential Communications (UK) Limited
(collectively "Telecential") as of December 31, 1996 and the related combined
statement of operations, shareholders' equity and cash flows for the sixteen
month period ended December 31, 1996. The companies are under common ownership
and common management. These combined financial statements are the
responsibility of the Telecential management. Our responsibility is to express
an opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United Kingdom which are similar to those in the United States
of America. 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 reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Telecential as of
December 31, 1996 and the combined results of their operations and their
combined cash flows for the sixteen month period ended December 31, 1996 in
conformity with generally accepted accounting principles in the United States of
America.
DELOITTE & TOUCHE
Chartered Accountants
Bracknell, England
June 5, 1998
(July 16, 1998 as to note 9)
F-112
<PAGE> 241
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOUR MONTHS
SIXTEEN MONTHS YEAR ENDED ENDED
ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
DECEMBER 31, 1996 (UNAUDITED) (UNAUDITED)
L L L
-------------------- ----------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
REVENUE
Cable television....................... 26,829 21,196 5,633
Residential telephone.................. 20,273 16,363 3,910
Business telecommunications............ 982 855 127
------- ------- ------
48,084 38,414 9,670
------- ------- ------
OPERATING COSTS AND EXPENSES
Telephone.............................. 8,370 6,880 1,490
Programming............................ 15,346 12,557 2,789
Selling, general and administrative.... 28,709 23,125 5,584
Depreciation and amortisation.......... 18,199 14,660 3,539
------- ------- ------
70,624 57,222 13,402
------- ------- ------
OPERATING LOSS......................... (22,540) (18,808) (3,732)
Interest income........................ 288 207 81
Interest expense....................... (13,372) (11,834) (1,538)
Other income........................... 83 83 --
------- ------- ------
LOSS BEFORE INCOME TAX EXPENSE......... (35,541) (30,352) (5,189)
Income tax expense (note 3)............ (129) (97) (32)
------- ------- ------
NET LOSS............................... (35,670) (30,449) (5,221)
======= ======= ======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-113
<PAGE> 242
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
AT
DECEMBER 31,
1996
L
--------------
(IN THOUSANDS)
<S> <C>
ASSETS
Cash and cash equivalents................................... 6,501
Trade receivables (net of allowance for doubtful accounts of
L2,100 at December 31, 1996).............................. 3,299
Other assets................................................ 2,319
Property, plant and equipment, net (note 4)................. 222,157
Investments (note 5)........................................ 969
Franchise costs less accumulated amortisation of L1,109 at
December 31, 1996......................................... 6,187
-------
Total assets................................................ 241,432
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
L
-------
(IN THOUSANDS)
Accounts payable............................................ 12,521
Other liabilities........................................... 11,375
Debt and capital lease obligations (note 6)................. 142,861
Shareholders' equity........................................ 74,675
-------
Total liabilities and shareholders' equity.................. 241,432
=======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-114
<PAGE> 243
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON SHARES COMMON SHARE ADDITIONAL ACCUMULATED SHAREHOLDERS'
(NOTE 8) CAPITAL PAID-IN CAPITAL DEFICIT EQUITY
NUMBER L L L L
------------- ------------ --------------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 1, 1995... 200 -- 84,201 (37,344) 46,857
Shares issued and capital
contributions................ -- -- 60,000 -- 60,000
Net loss....................... -- -- -- (35,670) (35,670)
Interest imputed on
shareholders' subordinated
debt (note 6)................ -- -- -- 3,488 3,488
--- -- ------- ------- -------
BALANCE AT DECEMBER 31, 1996... 200 -- 144,201 (69,526) 74,675
=== == ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-115
<PAGE> 244
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOUR MONTHS
SIXTEEN MONTHS YEAR ENDED ENDED
ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
DECEMBER 31, 1996 (UNAUDITED) (UNAUDITED)
L L L
-------------------- ----------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss for the period................ (35,670) (30,449) (5,221)
Adjustments to reconcile net loss to
net cash provided by/(used in)
operating activities:
Depreciation and amortisation........ 18,199 14,660 3,539
Amortisation of deferred financing
costs............................. 5,146 4,946 200
Interest imputed on shareholders'
subordinated debt................. 3,488 3,404 84
Change in operating assets and
liabilities:
Change in trade receivables.......... (1,923) (381) (1,542)
Change in other assets............... 2,513 3,444 (931)
Change in accounts payable........... 2,291 3,585 (1,294)
Change in other liabilities.......... 5,600 4,971 629
-------- ------- -------
Net cash (used in)/provided by
operating activities................. (356) 4,180 (4,536)
-------- ------- -------
Cash flows from investing activities:
Cash invested in property and
equipment......................... (99,044) (74,119) (24,925)
Cash invested in set up & prematurity
costs............................. (7,513) (5,847) (1,666)
Proceeds from disposition of
assets............................ 16 16 --
-------- ------- -------
Net cash used in investing
activities........................... (106,541) (79,950) (26,591)
-------- ------- -------
Cash flows from financing activities:
Shareholder advances................. 112,113 81,403 30,710
Repayment of shareholder advances.... (60,000) (60,000) --
Repayment of capital lease
obligations....................... (961) (434) (527)
Issue of share capital............... 60,000 60,000 --
-------- ------- -------
Net cash provided by financing
activities........................... 111,152 80,969 30,183
-------- ------- -------
Net increase/(decrease) in cash and
cash equivalents..................... 4,255 5,199 (944)
Cash and cash equivalents at beginning
of period............................ 2,246 1,302 2,246
-------- ------- -------
Cash and cash equivalents at end of
period............................... 6,501 6,501 1,302
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-116
<PAGE> 245
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS
1. TELECENTIAL
Telecential Communications (Canada) Limited and Telecential Communications
(UK) Limited (collectively "Telecential") have exclusive licenses to operate a
cable television and telecommunications business through their partnerships and
subsidiaries focused on certain franchise areas located south and east of
Birmingham and north and west of London, England.
At December 31, 1996, Telecential was indirectly 50% owned by each of
Koninklijke PTT Nederland N.V. and TELUS Corporation of Canada.
All amounts herein are presented in thousands in pounds sterling ("L").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Telecential combined financial statements have been prepared in
accordance with United States of America generally accepted accounting
principles.
Principles of Combination -- The financial statements combine the accounts
of Telecential and those of all majority owned subsidiaries for the 16 month
period ended December 31, 1996. The subsidiaries are under common ownership and
common management. All significant intercompany accounts and transactions have
been eliminated on combination.
Use of Estimates -- The preparation of financial statements in conformity
with United States of America generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cable System Costs and Expenses -- Telecential accounts for costs and
expenses applicable to the construction and operation of its cable system under
Statement of Financial Accounting Standards ("SFAS") No. 51, "Financial
Reporting by Cable Television Companies". Costs and expenses incurred in each
franchise during the set up period of the cable system have been capitalised in
full. Certain expenses incurred during the prematurity period are apportioned
between capital and revenue on the basis of the average number of subscribers as
a fraction of the number of subscribers estimated at the end of the prematurity
period. The prematurity period is deemed to run from when the first subscriber
is connected to the system to the earlier of three years or when the number of
cable television and telephony subscribers represents an appropriate penetration
percentage of the number of homes passed.
Franchise Costs -- Costs arising on the acquisition of franchises are
capitalised in accordance with SFAS 51 and are amortised on a straight line
basis over twenty years.
Revenue Recognition -- Revenue is recognised as services are delivered.
Initial connection fees are recognised in the period of connection.
Income Tax Expense -- Deferred tax assets and liabilities are recognised
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases to the extent that they are available to Telecential.
Under this method, deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to reverse. A valuation allowance is
raised against a deferred tax asset where it is more likely than not some
portion of the deferred tax asset will not be realised.
Investments -- Investments are stated at original cost less any appropriate
provisions for permanent diminution in value.
F-117
<PAGE> 246
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property, Plant and Equipment -- Property, plant and equipment is stated at
cost. Depreciation on equipment other than cable infrastructure is computed on a
straight line basis using estimated useful lives of five to ten years. Cable
infrastructure is depreciated over twenty years. Leasehold improvements are
depreciated on a straight line basis over the lease periods.
Cash and Cash Equivalents -- Cash and cash equivalents include highly
liquid investments with original maturity of three months or less that are
readily convertible to cash.
Foreign Currencies -- The primary economic environment in which Telecential
operates is the United Kingdom and hence its reporting currency is the United
Kingdom pound sterling. Transactions in foreign currencies are recorded using
the rate of exchange in effect on the date of the transaction or at the forward
rate if the transaction has been hedged. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange in
effect on the balance sheet date and gains or losses on translation are included
in the statement of operations.
Leasing Commitments -- Assets held under finance leases are capitalised in
the balance sheet and are depreciated over their useful lives. The interest
element of the rental obligation is charged to expense over the period of the
lease and represents a constant proportion of the balance of capital repayments
outstanding.
Rentals paid under operating leases are charged to expense on a straight
line basis over the lease term.
Pension Plan -- Telecential operates a defined contribution pension plan
for eligible employees and contributes up to specified limits to a third party
plan of the employee's choice. Pension costs which totalled L437,000 in the
sixteen month period ended December 31, 1996 represent the contributions payable
to the selected plans.
Concentration of Credit Risk and Market Risk -- Telecential operates
predominantly in one industry segment, the provision of cable television and
telecommunications services in certain areas of England. Concentrations of
credit risk with respect to trade receivables are limited due to the large
number of customers comprising Telecential's customer base. Ongoing credit
evaluations of customers' financial condition are performed and generally, no
collateral is required. Telecential maintains reserves for potential credit
losses and such losses, in the aggregate, have not exceeded management's
estimates. No single customer accounts for 10% or more of combined revenues.
Fair Value of Financial Instruments -- Financial instruments are defined as
cash or contracts relating to the receipt, delivery or exchange of financial
instruments. Except as otherwise noted, fair value approximates the carrying
value of such instruments.
3. INCOME TAX EXPENSE
No provision for deferred taxation has been made due to operating losses
incurred to date. Various subsidiary entities of Telecential have net tax
operating losses carried forward of approximately L38 million at December 31,
1996.
The operating losses have an unlimited carry forward period under United
Kingdom tax law (subject to restrictions on a loss carried forward where there
is a change in group ownership and a major change in the nature or conduct of
the business), but are limited in their use to the type of business which
generated the loss and to those entities in which the losses arose.
F-118
<PAGE> 247
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
3. INCOME TAX EXPENSE (CONTINUED)
Differences between the tax benefit recognised in the financial statements
and the expected tax benefit at the United Kingdom statutory rate of 33% are
summarised as follows:
<TABLE>
<CAPTION>
FOUR MONTHS
YEAR ENDED ENDED
SIX MONTHS ENDED DECEMBER 31, 1996 DECEMBER 31, 1995
DECEMBER 31, 1996 (UNAUDITED) (UNAUDITED)
L L L
-------------------- ----------------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax benefit on loss before
income tax expense at
statutory rate............... (10,706) (9,010) (1,696)
Non-deductible expenses........ 28 21 7
Tax benefit of operating losses
not recognised currently..... 10,807 9,086 1,721
------- ------ ------
Income tax expense............. 129 97 32
======= ====== ======
Deferred tax assets relating
to:
Net losses..................... 12,509 12,509 7,917
Valuation allowance............ (8,046) (8,046) (47)
------- ------ ------
4,463 4,463 7,870
Deferred tax liabilities
relating to:
Property, plant and
equipment.................... (4,463) (4,463) (7,870)
------- ------ ------
Deferred tax per balance
sheet........................ -- -- --
======= ====== ======
</TABLE>
The ultimate realisation of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, the level of
historical taxable losses, and tax planning strategies in making its assessment
as to the appropriateness of the reported valuation allowance.
The income tax expense for the period represents current taxation on those
United Kingdom profits against which United Kingdom tax relief cannot be offset.
F-119
<PAGE> 248
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost and comprises:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
L
-----------------
(IN THOUSANDS)
<S> <C>
Land and buildings and improvements......................... 3,922
Plant and equipment......................................... 234,593
Set-up and prematurity costs................................ 19,768
-------
258,283
Less accumulated depreciation............................... (36,126)
-------
222,157
=======
</TABLE>
Telecential leases certain plant and equipment under arrangements accounted
for as capital leases. The original cost of assets held under these arrangements
was L13,847 at December 31, 1996. Accumulated depreciation charged against these
assets was L3,693 at December 31, 1996.
Depreciation expense totalled L18,199 in the sixteen month period ended
December 31, 1996 of which L1,264 represented depreciation on assets held under
capital lease arrangements.
5. INVESTMENTS
Investments are stated at cost and comprise:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
L
-----------------
(IN THOUSANDS)
<S> <C>
ComTel Coventry Limited.............................. 869
Other................................................ 100
---
969
===
</TABLE>
ComTel Coventry Limited is registered in England and Wales and holds the
cable television license for the Coventry franchise. The amount for ComTel
Coventry Limited represented a 12.25% shareholding in the company. The remaining
shares were held by a related company, Vision Networks UK Holding B.V., at
December 31, 1996 and to whom the above equity interest was transferred, at
cost, during 1997.
The fair value of the above investments is not less than original cost.
6. DEBT AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
DECEMBER 31, 1996
L
-----------------
(IN THOUSANDS)
<S> <C>
Bank loan............................................ 30,000
Shareholders' subordinated debt...................... 95,223
Capital lease obligations............................ 17,638
-------
142,861
=======
</TABLE>
F-120
<PAGE> 249
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
6. DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Bank Loan
In December 1994, Telecential entered into a L140 million facility with a
syndicate of banks. Following initial drawdowns which totalled L30 million,
Telecential was unable to make any further drawdowns on the loan and the balance
of the facility was cancelled. The bank facility was therefore fully drawn at
December 31, 1996. Interest was at LIBOR plus 3%. At December 31, 1996, the rate
was 9.047%. Interest and commitment fees expense amounted to L4,313 during the
sixteen month period ended December 31, 1996. The loan was repaid in August 1997
and the remaining facility cancelled.
Shareholders' Subordinated Debt
The changes in shareholders' subordinated debt in the period were as
follows:
<TABLE>
<CAPTION>
1996
L
--------------
(IN THOUSANDS)
<S> <C>
As at September 1, 1995..................................... 43,110
Subordinated debt borrowings................................ 112,113
Subordinated debt converted to equity....................... (60,000)
-------
As at December 31, 1996..................................... 95,223
=======
</TABLE>
The shareholders' subordinated debt is interest free and has no specific
repayment terms. An imputed interest expense of L3,488,000 has been recognised
and accounted for as a capital contribution. The interest expense has been
calculated by applying a variable rate comprising the aggregate of a margin and
LIBOR applicable to the related loan made to the company's parent by ING Bank
NV. As at December 31, 1996, the margin was 15 basis points and the one month
LIBOR rate was 6.047%.
Capital Lease Obligations
Future minimum lease payments under non cancellable capital leases are
summarised as follows as of December 31, 1996:
<TABLE>
<CAPTION>
L
--------------
(IN THOUSANDS)
<S> <C>
1997........................................................ 1,588
1998........................................................ 2,283
1999........................................................ 1,242
2000........................................................ 1,961
2001........................................................ 1,547
Thereafter.................................................. 9,017
------
17,638
Imputed interest............................................ 602
------
18,240
======
</TABLE>
Cash paid for interest on capital leases totalled L1,059 for the sixteen
month period ended December 31, 1996.
F-121
<PAGE> 250
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
7. COMMITMENTS AND CONTINGENCIES
Operating Leases
Telecential leases business offices and uses certain equipment under lease
agreements accounted for as operating leases. Minimum rental expenses under such
arrangements amounted to L2,533 for the sixteen month period ended December 31,
1996.
Future minimum lease payments under non cancellable operating leases are
summarised as follows as of December 31, 1996:
<TABLE>
<CAPTION>
L
--------------
(IN THOUSANDS)
<S> <C>
1997................................................... 1,806
1998................................................... 3,017
1999................................................... 1,646
2000................................................... 1,643
2001................................................... 4,586
Thereafter............................................. 28,113
------
40,811
======
</TABLE>
It is expected that, in the normal course of business, expiring leases will
be renewed or replaced by leases on other properties.
Milestones
Telecential is obligated under the terms of its existing licenses, and
under the milestone requirements of Local Delivery Licenses ("LDL's") to
construct cable systems passing a predefined number of premises. Should
Telecential fail to achieve these milestones, without license modifications, the
Director General could commence proceedings to require compliance. Similarly the
Independent Television Commission ("ITC") may commence proceedings to require
compliance with the build milestones in the LDL's.
If Telecential is unable to comply, its license in respect of which
milestones have not been met could be revoked and awarded to other cable
operators, which could have a material adverse effect on Telecential.
As of December 31, 1996 Telecential was in compliance with its milestone
obligations.
F-122
<PAGE> 251
TELECENTIAL COMMUNICATIONS (CANADA) LIMITED
TELECENTIAL COMMUNICATIONS (UK) LIMITED
NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
8. COMMON SHARE CAPITAL
Common Share Capital comprises:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
L
-----------------
(IN THOUSANDS)
<S> <C>
Telecential Communications (Canada) Limited:
Authorised:
Unlimited number of Common Shares with no par value
Called up, allotted and fully paid:
200 Common Shares of no par value each...................... --
------
--
======
Telecential Communications (UK) Limited:
Authorised:
Unlimited number of Common Shares with L0.05 par value
Called up, allotted and fully paid:
200 Common Shares of L0.05 par value each (L10)............. --
------
--
======
</TABLE>
9. SUBSEQUENT EVENTS
On June 16, 1998, NTL Group Limited, a subsidiary of NTL Incorporated,
entered into an undertaking to acquire the entire issued share capital of ComTel
Limited, Heartland Cablevision (UK) Limited and Heartland Cablevision II (UK)
Limited, together with all interests in the Telecommunications Partnership and
LP5 and LP6 (the "Telecential Assets"). The Telecential Assets form
substantially all of Telecential's combined group as presented in these
financial statements. The completion of the acquisition of the Telecential
Assets is subject to compliance with certain obligations on all parties to the
sale before March 15, 1999 or, subject to specific exceptions, December 31,
2002.
F-123
<PAGE> 252
- ------------------------------------------------------
- ------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY
OTHER INFORMATION. THIS PROSPECTUS MAY BE DELIVERED TO YOU AFTER THE DATE OF
THIS PROSPECTUS. HOWEVER, YOU SHOULD REALIZE THAT THE AFFAIRS OF NTL MAY HAVE
CHANGED SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS WILL NOT REFLECT SUCH
CHANGES. YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN OFFER OR SOLICITATION
RELATING TO THE NOTES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION
IS NOT AUTHORIZED. FURTHERMORE, YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN
OFFER OR SOLICITATION RELATING TO THE NOTES IF THE PERSON MAKING THE OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR IF IT IS UNLAWFUL FOR YOU TO RECEIVE
SUCH AN OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information... --
Incorporation of Certain Documents by
Reference........................... --
Prospectus Summary.................... 1
Risk Factors.......................... 17
The Exchange Offer.................... 28
Use of Proceeds....................... 36
Exchange Rates........................ 36
Capitalization........................ 37
Selected Consolidated Financial
Data................................ 39
Unaudited Pro Forma Financial Data.... 41
Description of Notes.................. 49
Registration Rights................... 113
Certain Federal Income Tax
Considerations...................... 115
Plan of Distribution.................. 119
Book-Entry; Delivery and Form......... 120
Legal Matters......................... 123
Experts............................... 123
Enforceability of Civil Liabilities... 123
General Information................... 124
Index to Financial Statements......... F-1
</TABLE>
UNTIL , 1999 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS) DEALERS
AFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS OBLIGATION IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
[LOGO]
NTL INCORPORATED
$625,000,000
11 1/2% SERIES B
SENIOR NOTES DUE 2008
$450,000,000
12 3/8% SERIES B
SENIOR DEFERRED
COUPON NOTES DUE 2008
------------------------
PROSPECTUS
------------------------
January , 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 253
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 102 of the Delaware General Corporation Law (the
"DGCL"), the Company's Amended and Restated Certificate of Incorporation
eliminates a director's personal liability for monetary damages to the Company
and its stockholders arising from a breach or alleged breach of a director's
fiduciary duty except for liability under Section 174 of the DGCL or liability
for a breach of the director's duty of loyalty to the Company or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction in
which the director derived an improper personal benefit. The effect of this
provision in the certificate of incorporation is to eliminate the rights of the
Company and its stockholders (through stockholders, derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situations described above.
The Company's Restated By-laws provide that directors and officers of the
Company shall be indemnified against liabilities arising from their service as
directors and officers to the full extent permitted by law. Section 145 of the
DGCL empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the fight of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
The Company has entered into a director and officer indemnity agreement
("Indemnity Agreement") with each officer and director of the Company (an
"Indemnitee"). Under the bylaws and these Indemnity Agreements, the Company must
indemnify an Indemnitee to the fullest extent permitted by the DGCL for losses
and expenses incurred in connection with actions in which the indemnitee is
involved by reason of
II-1
<PAGE> 254
having been a director or officer of the Company. The Company is also obligated
to advance expenses an indemnitee may incur in connection with such actions
before any resolution of the action.
ITEM 21. EXHIBITS
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1 Purchase Agreement, dated October 26, 1998, by and among the
Company and Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman, Sachs & Co., with respect to the
11 1/2% Notes
1.2 Purchase Agreement, dated October 30, 1998, by and among the
Company and Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman, Sachs & Co., with respect to the
12 3/8% Notes
3.1 Restated Certificate of Incorporation of the Company, as
amended by the Certificate of Amendment, dated June 5, 1996
and the Certificate of Amendment dated October 29, 1998*
3.1(a) Certificate of Ownership and Merger, dated as of March 26,
1997(6)
3.2 Restated By-laws of the Company(1)
4.1 Indenture, dated as of November 2, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 11 1/2% Notes
4.2 Indenture, dated as of November 6, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 12 3/8% Notes
4.3 Registration Rights Agreement, dated as of November 2, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 11 1/2% Notes
4.4 Registration Rights Agreement, dated as of November 6, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 12 3/8% Notes
4.5 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 10% Notes(10)
4.6 Certificate of Designation, dated February 12, 1997, with
respect to the Redeemable Preferred Stock(10)
4.7 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% Notes(10)
4.8 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 Redeemable Preferred Stock(10)
4.9 Form of 11 1/2% New Notes (included in Exhibit 4.1)
4.10 Form of 12 3/8% New Notes (included in Exhibit 4.2)
4.11 Indenture, dated as of June 12, 1996, by and between the
Company and Chemical Bank, as Trustee, with respect to the
7% Convertible Notes(8)
</TABLE>
II-2
<PAGE> 255
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.12 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(8)
4.13 Indenture, dated as of January 30, 1996, by and among the
Company and Chemical Bank, as Trustee, with respect to the
11 1/2% Notes(7)
4.14 Registration Rights Agreement, dated January 30, 1996, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Chase
Securities, Inc., with respect to the 11 1/2% Notes(7)
4.15 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
12 3/4% Notes(2)
4.16 First Supplemental Indenture, dated as of January 22, 1996,
by and among the Company and Chemical Bank, as Trustee with
respect to the Indenture included as Exhibit 4.19(7)
4.17 Registration Agreement, dated April 13, 1995 by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.,
with respect to the 12 3/4% Notes(2)
4.18 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(3)
4.19 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(3)
4.20 Indenture, dated as of October 1, 1993, by and among the
Company and Chemical Bank, as Trustee with respect to the
10 7/8% Senior Notes(4)
4.21 First Supplemental Indenture, dated January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with
respect to the Indenture included as Exhibit 4.24(7)
4.22 Rights Agreement, dated as of October 1, 1993, between the
Company and Continental Transfer & Trust Company, as Rights
Agent(1)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the notes being registered hereby*
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(11)
10.2 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)(2)
11.1 Statement of computation of per share earnings(11)
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends*
21.1 Subsidiaries of the Company(11)
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche -- Birmingham
23.4 Consent of Deloitte & Touche -- London
23.5 Consent of Deloitte & Touche -- Comtel
23.6 Consent of Coopers & Lybrand -- ComTel
23.7 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)*
</TABLE>
II-3
<PAGE> 256
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.1*
25.2 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.2*
99.1 Form of Letter of Transmittal in respect of the Notes
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Client
99.4 Form of Letter to Brokers, Dealers, Trust Companies and
others Nominees
99.5 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(5)
99.6 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Inverclyde, Scotland(5)
99.7 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Bearsden and Milngavie, Scotland(5)
99.8 Prescribed Diffusion Service License, dated December 3,
1990, issued to Newport Cablevision Limited (renamed
CableTel Newport) for the area of Newport, Wales(5)
99.9 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(5)
99.10 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Greater Glasgow, Scotland(5)
99.11 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Paisley and Renfrew, Scotland(5)
99.12 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(5)
99.13 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)(5)
99.14 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(5)
99.15 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(5)
99.16 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(5)
99.17 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(5)
</TABLE>
II-4
<PAGE> 257
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.18 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(5)
99.19 Local Delivery Service License, dated October 2, 1995,
issued to CableTel Northern Ireland Limited for Northern
Ireland(5)
99.20 Local Delivery Service License, dated December 6, 1995,
issued to CableTel South Wales Limited for Glamorgan and
Gwent, Wales(5)
99.21 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)(5)
99.22 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Camarthen, Wales (now held
by Metro South Wales Limited)(5)
99.23 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)(5)
99.24 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales(5)
99.25 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Ammanford, West Glamorgan,
Wales(5)
99.26 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5)
99.27 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Haverfordwest, Preseli,
Wales(5)
99.28 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)(5)
99.29 License, dated January 11, 1991, issued to Cablevision
Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt
and Ware (Lea Valley) cable franchise, England(5)
99.30 License, dated December 8, 1990, issued to Cablevision
Communications Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England(5)
99.31 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas,
England(5)
99.32 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England(5)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable
Franchise, Scotland(5)
99.34 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie
Cable Franchise, Scotland(5)
99.35 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland(5)
99.36 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and
Clydebank, Scotland(5)
99.37 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland(5)
</TABLE>
II-5
<PAGE> 258
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.38 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales(5)
99.39 License, dated January 22, 1991, issued to Newport
Cablevision Limited (renamed CableTel Newport), for Newport
Cable franchise Wales(5)
99.40 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West
Glamorgan) for West Glamorgan, Wales(5)
99.41 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and
Dewsbury cable franchise, England(5)
99.42 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(5)
99.43 License, dated January 20, 1995, issued to CableTel
Bedfordshire Ltd. for the area of South Bedfordshire,
England(5)
99.44 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England(5)
99.45 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(5)
99.46 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and
Ware (Lea Valley), England(5)
99.47 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England(5)
99.48 License, dated July 21, 1995, issued to CableTel Kirklees(5)
99.49 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd.(5)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales(5)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales(5)
99.52 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales(5)
99.53 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales(5)
99.54 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales(5)
99.55 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales(5)
99.56 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales(5)
99.57 License, dated October 27, 1995, issued to CableTel South
Wales Limited for the area of Glamorgan and Gwent, Wales(5)
99.58 License, dated January 26, 1996, issued to Cabletel South
Wales Limited, for part of the Glamorgan area(5)
</TABLE>
II-6
<PAGE> 259
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.59 License, dated November 3, 1997, issued to NTL (UK) Group,
Inc. for the Provision of Radio Fixed Access Operator
Services(10)
99.60 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors,
L.P.(11)
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63570.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-4, File No. 33-92794.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 33-92792.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63572.
(5) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 20, 1996.
(6) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 26, 1997.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-1010.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-07879.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-16751.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed on March 28, 1997.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed with the Commission on March 30, 1998.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Securities
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such
II-7
<PAGE> 260
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-8
<PAGE> 261
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of New York,
State of New York, on the 27th day of January, 1999.
NTL Incorporated
By /s/ RICHARD J. LUBASCH
------------------------------------
Richard J. Lubasch
Senior Vice President --
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GEORGE S. BLUMENTHAL Chairman of the Board, Treasurer January 27, 1999
- ---------------------------------- and Director
George S. Blumenthal
/s/ J. BARCLAY KNAPP President, Chief Executive and January 27, 1999
- ---------------------------------- Financial Officer and Director
J. Barclay Knapp
/s/ GREGG GORELICK Vice President -- Controller January 27, 1999
- ----------------------------------
Gregg Gorelick
/s/ SIDNEY R. KNAFEL Director January 27, 1999
- ----------------------------------
Sidney R. Knafel
/s/ DEL MINTZ Director January 27, 1999
- ----------------------------------
Del Mintz
/s/ ALAN J. PATRICOF Director January 27, 1999
- ----------------------------------
Alan J. Patricof
/s/ WARREN POTASH Director January 27, 1999
- ----------------------------------
Warren Potash
/s/ MICHAEL S. WILLNER Director January 27, 1999
- ----------------------------------
Michael S. Willner
</TABLE>
II-9
<PAGE> 262
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1 Purchase Agreement, dated October 26, 1998, by and among the
Company and Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman, Sachs & Co., with respect to the
11 1/2% Notes
1.2 Purchase Agreement, dated October 30, 1998, by and among the
Company and Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Goldman, Sachs & Co., with respect to the
12 3/8% Notes
3.1 Restated Certificate of Incorporation of the Company, as
amended by the Certificate of Amendment, dated June 5, 1996
and the Certificate of Amendment dated October 29, 1998*
3.1(a) Certificate of Ownership and Merger, dated as of March 26,
1997(6)
3.2 Restated By-laws of the Company(1)
4.1 Indenture, dated as of November 2, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 11 1/2% Notes
4.2 Indenture, dated as of November 6, 1998, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 12 3/8% Notes
4.3 Registration Rights Agreement, dated as of November 2, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 11 1/2% Notes
4.4 Registration Rights Agreement, dated as of November 6, 1998,
by and among the Company and Morgan Stanley & Co.
Incorporated, Chase Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.
with respect to the 12 3/8% Notes
4.5 Indenture, dated as of February 12, 1997, by and between the
Company and The Chase Manhattan Bank, as Trustee, with
respect to the 10% Notes(10)
4.6 Certificate of Designation, dated February 12, 1997, with
respect to the Redeemable Preferred Stock(10)
4.7 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% Notes(10)
4.8 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 Redeemable Preferred Stock(10)
4.9 Form of 11 1/2% New Notes (included in Exhibit 4.1)
4.10 Form of 12 3/8% New Notes (included in Exhibit 4.2)
4.11 Indenture, dated as of June 12, 1996, by and between the
Company and Chemical Bank, as Trustee, with respect to the
7% Convertible Notes(8)
4.12 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(8)
</TABLE>
<PAGE> 263
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.13 Indenture, dated as of January 30, 1996, by and among the
Company and Chemical Bank, as Trustee, with respect to the
11 1/2% Notes(7)
4.14 Registration Rights Agreement, dated January 30, 1996, by
and among the Company and Donaldson, Lufkin & Jenrette
Securities Corporation, Salomon Brothers Inc and Chase
Securities, Inc., with respect to the 11 1/2% Notes(7)
4.15 Indenture, dated as of April 20, 1995, by and among the
Company and Chemical Bank, as Trustee, with respect to the
12 3/4% Notes(2)
4.16 First Supplemental Indenture, dated as of January 22, 1996,
by and among the Company and Chemical Bank, as Trustee with
respect to the Indenture included as Exhibit 4.19(7)
4.17 Registration Agreement, dated April 13, 1995 by and among
the Company and Salomon Brothers Inc, Donaldson, Lufkin &
Jenrette Securities Corporation and Goldman, Sachs & Co.,
with respect to the 12 3/4% Notes(2)
4.18 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(3)
4.19 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(3)
4.20 Indenture, dated as of October 1, 1993, by and among the
Company and Chemical Bank, as Trustee with respect to the
10 7/8% Senior Notes(4)
4.21 First Supplemental Indenture, dated January 23, 1996, by and
among the Company and Chemical Bank, as Trustee, with
respect to the Indenture included as Exhibit 4.24(7)
4.22 Rights Agreement, dated as of October 1, 1993, between the
Company and Continental Transfer & Trust Company, as Rights
Agent(1)
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to
the legality of the notes being registered hereby*
10.1 Compensation Plan Agreements, as amended and restated
effective June 3, 1997(11)
10.2 Form of Director and Officer Indemnity Agreement (together
with a schedule of executed Indemnity Agreements)(2)
11.1 Statement of computation of per share earnings(11)
12.1 Computation of Ratio of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred Stock Dividends*
21.1 Subsidiaries of the Company(11)
23.1 Consent of Ernst & Young, LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Deloitte & Touche -- Birmingham
23.4 Consent of Deloitte & Touche -- London
23.5 Consent of Deloitte & Touche -- Comtel
23.6 Consent of Coopers & Lybrand -- ComTel
23.7 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5.1)*
25.1 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.1*
</TABLE>
<PAGE> 264
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
25.2 Form T-1 Statement of Eligibility of Trustee with respect to
Indenture included as Exhibit 4.2*
99.1 Form of Letter of Transmittal in respect of the Notes
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to Client
99.4 Form of Letter to Brokers, Dealers, Trust Companies and
others Nominees
99.5 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(5)
99.6 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Inverclyde, Scotland(5)
99.7 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Bearsden and Milngavie, Scotland(5)
99.8 Prescribed Diffusion Service License, dated December 3,
1990, issued to Newport Cablevision Limited (renamed
CableTel Newport) for the area of Newport, Wales(5)
99.9 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(5)
99.10 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Greater Glasgow, Scotland(5)
99.11 Prescribed Diffusion Service License, dated December 3,
1990, issued to Clyde Cablevision (renamed CableTel Glasgow)
for the area of Paisley and Renfrew, Scotland(5)
99.12 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(5)
99.13 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)(5)
99.14 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(5)
99.15 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(5)
99.16 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(5)
99.17 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(5)
99.18 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(5)
</TABLE>
<PAGE> 265
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.19 Local Delivery Service License, dated October 2, 1995,
issued to CableTel Northern Ireland Limited for Northern
Ireland(5)
99.20 Local Delivery Service License, dated December 6, 1995,
issued to CableTel South Wales Limited for Glamorgan and
Gwent, Wales(5)
99.21 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)(5)
99.22 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Camarthen, Wales (now held
by Metro South Wales Limited)(5)
99.23 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)(5)
99.24 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West
Glamorgan, Wales(5)
99.25 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Ammanford, West Glamorgan,
Wales(5)
99.26 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5)
99.27 Local Delivery Service License, dated March 15, 1991, issued
to Maxwell Cable TV Limited for Haverfordwest, Preseli,
Wales(5)
99.28 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)(5)
99.29 License, dated January 11, 1991, issued to Cablevision
Communications Company of Hertfordshire Ltd (renamed
CableTel Hertfordshire Limited) for the Hertford, Cheshunt
and Ware (Lea Valley) cable franchise, England(5)
99.30 License, dated December 8, 1990, issued to Cablevision
Communications Company Limited for Central Hertfordshire
(renamed CableTel Central Hertfordshire Limited), England(5)
99.31 License, dated August 23, 1989, issued to Cablevision
Bedfordshire Limited for Bedford and surrounding areas,
England(5)
99.32 License, dated January 9, 1991, issued to Cablevision North
Bedfordshire Ltd for North Bedfordshire, England(5)
99.33 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Inverclyde Cable
Franchise, Scotland(5)
99.34 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Bearsden and Milngavie
Cable Franchise, Scotland(5)
99.35 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Paisley and Renfrew Cable
Franchise, Scotland(5)
99.36 License, dated June 7, 1985, issued to Clyde Cablevision Ltd
(renamed CableTel Glasgow) for North West Glasgow and
Clydebank, Scotland(5)
99.37 License, dated January 29, 1991, issued to Clyde Cablevision
(renamed CableTel Glasgow) for the Greater Glasgow cable
franchise, Scotland(5)
99.38 License, dated October 13, 1993, issued to Insight
Communications Cardiff Limited (renamed CableTel Cardiff
Limited) for Cardiff, Wales(5)
</TABLE>
<PAGE> 266
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.39 License, dated January 22, 1991, issued to Newport
Cablevision Limited (renamed CableTel Newport), for Newport
Cable franchise Wales(5)
99.40 License, dated May 18, 1990, issued to Cable and Satellite
Television Holdings Limited (renamed CableTel West
Glamorgan) for West Glamorgan, Wales(5)
99.41 License, dated December 20, 1990, issued to Kirklees Cable
(renamed CableTel Kirklees) for the Huddersfield and
Dewsbury cable franchise, England(5)
99.42 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(5)
99.43 License, dated January 20, 1995, issued to CableTel
Bedfordshire Ltd. for the area of South Bedfordshire,
England(5)
99.44 License, dated January 20, 1995, issued to CableTel North
Bedfordshire Ltd. for the area of Bedford, England(5)
99.45 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(5)
99.46 License, dated January 20, 1995, issued to Cabletel
Hertfordshire Ltd. for the area of Hertford, Cheshunt and
Ware (Lea Valley), England(5)
99.47 License, dated January 20, 1995, issued to Cabletel Central
Hertfordshire Ltd. for the area of Central Hertfordshire,
England(5)
99.48 License, dated July 21, 1995, issued to CableTel Kirklees(5)
99.49 License, dated June 8, 1995, issued to CableTel Bedfordshire
Ltd.(5)
99.50 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Neyland, Wales(5)
99.51 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Cwmgors, Wales(5)
99.52 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Ammanford, Wales(5)
99.53 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Carmarthen, Wales(5)
99.54 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Haverfordwest, Wales(5)
99.55 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Pembroke Dock, Wales(5)
99.56 License, dated October 27, 1995, issued to Metro South Wales
Limited for the area of Milford Haven, Wales(5)
99.57 License, dated October 27, 1995, issued to CableTel South
Wales Limited for the area of Glamorgan and Gwent, Wales(5)
99.58 License, dated January 26, 1996, issued to Cabletel South
Wales Limited, for part of the Glamorgan area(5)
99.59 License, dated November 3, 1997, issued to NTL (UK) Group,
Inc. for the Provision of Radio Fixed Access Operator
Services(10)
</TABLE>
<PAGE> 267
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
99.60 Agreement and Plan of Amalgamation; Undertaking of Comcast
Corporation; Undertaking of Warburg, Pincus Investors,
L.P.(11)
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63570.
(2) Incorporated by reference from the Company's Registration Statement on Form
S-4, File No. 33-92794.
(3) Incorporated by reference from the Company's Registration Statement on Form
S-3, File No. 33-92792.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1, File No. 33-63572.
(5) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 20, 1996.
(6) Incorporated by reference from the Company's Form 8-K, filed with the
Commission on March 26, 1997.
(7) Incorporated by reference to the Company's Registration Statement on Form
S-4, File No. 333-1010.
(8) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-07879.
(9) Incorporated by reference to the Company's Registration Statement on Form
S-3, File No. 333-16751.
(10) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed on March 28, 1997.
(11) Incorporated by reference to the Company's Annual Report on Form 10-K,
filed with the Commission on March 30, 1998.
<PAGE> 1
Exhibit 1.1
EXECUTION COPY
NTL INCORPORATED
$625,000,000 11-1/2% SENIOR NOTES DUE 2008
PURCHASE AGREEMENT
October 26, 1998
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
NTL Incorporated, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the parties named in Schedule I hereto
$625,000,000 in aggregate principal amount of its 11-1/2% Senior Notes Due 2008
(the "NOTES"). The parties named in Schedule I hereto are each, individually, an
"INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS." The Notes are
to be issued under an indenture (the "INDENTURE"), dated as of November 2, 1998,
between the Company and The Chase Manhattan Bank, as trustee (the "TRUSTEE").
The sale of the Notes to the Initial Purchasers will be made
without registration of the Notes under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), in reliance upon exemptions from the registration
requirements of the Securities Act. The Initial Purchasers have advised the
Company that they will offer and sell the Notes purchased by them hereunder in
accordance with Section 4 hereof as soon as they deem advisable after the
execution and delivery of this Agreement.
In connection with the sale of the Notes, the Company has
prepared an offering memorandum, dated October 26, 1998 (the "OFFERING
MEMORANDUM"). Any reference to the Offering Memorandum shall be deemed to refer
to and include all documents incorporated by reference therein to filings made
with the U.S. Securities and Exchange Commission (the "COMMISSION") pursuant to
Section 13(a), 13(c) or 15(d) of the U.S. Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and all subsequent documents so filed by the
Company with the Commission on or prior to the date of the Offering Memorandum
and any reference to the Offering Memorandum, as amended or supplemented, as of
any specified date, shall be deemed to include (i) any documents filed with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act after
the date of the Offering Memorandum and prior to such specified date and (ii)
all documents filed under the Exchange Act and so deemed to be included in the
Offering Memorandum or any amendment or supplement thereto are hereinafter
called the "EXCHANGE ACT REPORTS."
<PAGE> 2
The Offering Memorandum sets forth certain information
concerning the Company and the Notes. The Company hereby confirms that it has
authorized the use of the Offering Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Notes by the Initial
Purchasers.
The holders of the Notes will be entitled to the benefits of
the Registration Rights Agreement to be entered into among the Company and the
Initial Purchasers (the "REGISTRATION RIGHTS AGREEMENT").
For purposes of this Agreement, if closing of the Amalgamation
Agreement (as defined in the Offering Memorandum) occurs on or before the
Closing Date, references to the Company's "SUBSIDIARIES" and the Company's
"MATERIAL SUBSIDIARIES" in respect of periods on or after the closing of the
Amalgamation Agreement shall, in each case, be deemed to include, but not be
limited to, Comcast UK Cable Partners Limited and such subsidiaries of Comcast
UK Cable Partners Limited as shall be deemed to be either "subsidiaries" or
"Material Subsidiaries" as those terms are defined in this Agreement.
1. Representations and Warranties. The Company represents and
warrants to each Initial Purchaser as set forth below in this Section 1.
(a) The Offering Memorandum, at the date hereof, does not, and
at the Closing Date (as defined below) will not (and any amendment or
supplement thereto, at the date thereof and at the Closing Date, will
not), contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty
as to the information contained in or omitted from the Offering
Memorandum, or any amendment or supplement thereto, in reliance upon
and in conformity with information relating to any Initial Purchaser
furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion therein.
(b) Neither the Company, nor any of its Affiliates (as defined
in Rule 501(b) of Regulation D under the Securities Act ("REGULATION
D")), nor any person acting on its or their behalf has, directly or
indirectly, made offers or sales of any security, or solicited offers
to buy any security, under circumstances that would require the
registration of the Notes under the Securities Act.
(c) No securities of the same class as the Notes have been
issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(d) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Notes in the United
States.
(e) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S under the
Securities Act ("REGULATION S") with respect to the Notes, and each of
them has complied with the offering restriction requirements of
Regulation S in connection with the offering of the Notes outside the
United States.
2
<PAGE> 3
(f) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(g) At the Closing Date, the Company will have been advised by
the National Association of Securities Dealers, Inc. PORTAL Market
("PORTAL") that the Notes have been or will be designated PORTAL
eligible securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.
(h) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT"), without taking account of any exemption
arising out of the number of holders of the Company's securities.
(i) The Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing (or
the local equivalent thereof, if any) under the laws of its
jurisdiction of incorporation and has the corporate power and authority
to carry on its business as it is currently being conducted and to own,
lease and operate its properties, in each case, as described in the
Offering Memorandum, and each is duly qualified and in good standing as
a foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified or in good standing would not have a material adverse effect
on the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
(j) Neither the Company nor any of its subsidiaries is in
violation of its respective certificate of incorporation or by-laws or
other governing documents or is in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any indenture,
material agreement or material instrument to which the Company or any
of its Material Subsidiaries (as defined in the Indenture) is a party
or by which it or any of its Material Subsidiaries is bound or to which
any of their respective properties is subject or, except as referred to
in the Offering Memorandum, is in violation of any law, statute, rule,
regulation, judgment or court decree applicable to the Company or any
of its Material Subsidiaries or any of their respective properties
(including any laws, statutes, rules or regulations promulgated by the
Independent Television Commission ("ITC"), the Office of
Telecommunications ("OFTEL") and the Department of Trade and Industry
("DTI")), nor has any event occurred which with notice or lapse of time
or both would constitute such a violation or default, except in each
case, which would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(k) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, the Indenture and the Registration Rights Agreement and to
issue, sell and deliver the Notes as provided herein and therein.
(l) The (i) issuance and sale of the Notes by the Company,
(ii) execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement, (iii) compliance by
the Company with the provisions of the Notes, this Agreement, the
Indenture and the Registration Rights Agreement, and (iv) consummation
of the transactions contemplated by any of the Notes, this Agreement,
the Indenture and the Registration Rights Agreement, will not
3
<PAGE> 4
require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental
body, including the Federal Communications Commission, ITC, OFTEL or
DTI (except such as may be required under the securities or Blue Sky
laws of the various states and those consents, authorizations,
approvals, orders, filings, registrations or notices that have been
obtained or made and are in full force and effect) and will not
conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the certificate of incorporation or by-laws (or
other governing documents) of the Company or any of its subsidiaries or
any bond, debenture, note or any other evidence of indebtedness or in
any indenture, material agreement or material instrument to which the
Company or any of its Material Subsidiaries is a party or by which it
or any of its Material Subsidiaries is bound or any of their respective
properties is subject, or violate or conflict with any law, statute,
rule, regulation, judgment or court decree applicable to the Company or
any of its Material Subsidiaries or any of their respective properties
(including any laws, statutes, rules or regulations promulgated by ITC,
OFTEL or DTI).
(m) Except as otherwise set forth in the Offering Memorandum,
there are no material investigations, proceedings or actions, whether
judicial or administrative and whether brought by any regulatory body,
administrative agency or other governmental body or by any other
person, pending, or, to the knowledge of the Company, threatened, to
which the Company or any of its Material Subsidiaries is a party or of
which any of their respective properties is the subject.
(n) The Company and each of its Material Subsidiaries have all
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities or other rights currently necessary to be
procured by them in order to engage in the respective businesses
currently conducted by each of them as set forth in the Offering
Memorandum (collectively, "PERMITS"), including, without limitation,
under any laws regulating or relating to the conduct of cable/telephony
operations, as are necessary to own, lease and operate its respective
properties and to conduct its business, except where the failure to
have any such Permit would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and its subsidiaries taken as a whole; the Company and each of its
Material Subsidiaries have fulfilled and performed all of their
respective obligations with respect to such Permits, and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination of any such Permit or result in any other
impairment of the rights of the holder of any such Permit, except in
each case, as would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole, and subject in each case to such
qualification as may be set forth in the Offering Memorandum; and,
except as described in the Offering Memorandum, no such Permit contains
any restriction that would have a material adverse effect on the
business, financial condition or results of operations of the Company
and its subsidiaries taken as a whole. Neither the Company nor any of
its Material Subsidiaries has any reason to believe that any
governmental body or regulatory agency is considering limiting,
suspending or revoking any Permits, except as would not have a material
adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
(o) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
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<PAGE> 5
(p) The Indenture has been duly and validly authorized by the
Company and, when duly executed and delivered by the Company and duly
authorized, executed and delivered by the Trustee, will be the valid
and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that (i)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (2)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (ii) the waiver
contained in Section 4.04 of the Indenture may be deemed unenforceable.
(q) The Notes have been duly and validly authorized by the
Company and, when (i) the Notes have been duly executed and
authenticated in accordance with the terms of the Indenture, (ii) the
Notes have been delivered to and paid for by the Initial Purchasers as
contemplated by this Agreement and (iii) the Indenture has been duly
executed and delivered by the Company (assuming the due authorization,
execution and delivery thereof by the Trustee), the Notes will be valid
and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that (1) enforcement
thereof may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (y) general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law) and (2) the waiver contained in Section 4.04 of
the Indenture may be deemed unenforceable.
(r) The Registration Rights Agreement has been duly and
validly authorized by the Company and, when duly executed and delivered
by the Company (assuming the due authorization, execution and delivery
thereof by the Initial Purchasers), will be the valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms except as the enforceability thereof may be
limited by the effect of (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (y) general principles of
equity (whether enforcement is considered in a proceeding in equity or
at law).
(s) The consolidated financial statements of the Company and
its subsidiaries present fairly in all material respects the financial
position and results of operations of the Company and its subsidiaries
at the respective dates and for the respective periods indicated. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the periods presented except as described in the Offering Memorandum
and except that the unaudited interim financial statements are subject
to normal year end adjustments. The selected financial data included in
the Offering Memorandum present fairly the information shown therein
and have been prepared on a basis consistent with that of the financial
statements included in the Offering Memorandum.
(t) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or Section 15(d) of the Exchange
Act.
(u) The Company has not paid or agreed to pay to any person
any compensation for soliciting another to purchase any securities of
the Company (except as contemplated by this Agreement).
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<PAGE> 6
(v) The information provided by the Company pursuant to
Section 5(g) hereof will not, at the date thereof, contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(w) It is not necessary in connection with the offer, sale and
delivery of the Notes in the manner contemplated by this Agreement and
the Offering Memorandum to register the Notes under the Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "TRUST INDENTURE ACT").
(x) There is no employee pension or benefit plan with respect
to which the Company or any corporation considered an affiliate of the
Company within the meaning of Section 407(d)(7) of ERISA is a party in
interest or disqualified person. The execution and delivery of this
Agreement, the Indenture and the Registration Rights Agreement, and the
resale by the Initial Purchasers of the Notes to certain purchasers as
set forth in Section 4 hereof will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made
by the purchasers of the Notes as set forth in the Offering Memorandum
under the Section entitled "Transfer Restrictions."
(y) The Exchange Act Reports, when they were or are filed with
the Commission, conformed or will conform in all material respects to
the applicable requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Initial Purchaser, and each Initial Purchaser
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 97.125% of the aggregate principal amount thereof, the aggregate
principal amount of Notes set forth opposite such Initial Purchaser's name on
Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Notes
shall be made at 9:00 A.M., New York time, on November 2, 1998, or such later
date as the Initial Purchasers and the Company may agree or as provided in
Section 9 hereof (such date and time of delivery and payment for the Notes being
herein called the "CLOSING DATE"). Delivery of the Notes shall be made to the
Initial Purchasers for their respective account against payment by the Initial
Purchasers of the purchase price thereof to or upon the order of the Company by
wire transfer in same-day funds to a U.S. dollar account designated by the
Company or such other manner of payment as may be designated by the Company and
agreed to by the Initial Purchasers not less than two business days prior to the
Closing Date. Delivery of the Notes shall be made at such location as the
Initial Purchasers shall reasonably designate at least one business day in
advance of the Closing Date and payment for the Notes shall be made at the
office of Latham & Watkins ("COUNSEL FOR THE INITIAL PURCHASER"), 885 Third
Avenue, New York, New York. Global note certificates representing the Notes
shall be registered in such names and in such denominations as the Initial
Purchasers may request not less than two full U.S. business days in advance of
the Closing Date.
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<PAGE> 7
The Company agrees to have the Notes available for inspection
and checking by the Initial Purchasers in New York, New York not later than 9:00
A.M., New York time, on the business day prior to the Closing Date.
4. Offering of Notes. Each Initial Purchaser (i) acknowledges
that the Notes have not been registered under the Securities Act and may not be
offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or pursuant to
an effective registration statement under the Securities Act and (ii) severally,
not jointly, represents and warrants to, and agrees with, the Company that:
(a) It has not offered or sold, and will not offer or sell,
any Notes except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act)
and that, in connection with each such sale, it has taken or will take
reasonable steps to ensure that the purchaser of such securities is
aware that such sale is being made in reliance on Rule 144A or (ii) to
non-U.S. persons in accordance with Regulation S and in compliance with
the representations, warranties and agreements in this Section 4 (all
such persons referred to in clauses (i) and (ii) are hereinafter
collectively referred to as "ELIGIBLE PURCHASERS").
(b) Neither it nor any of its Affiliates or any person acting
on its or their behalf has made or will make offers or sales of the
Notes in the United States by means of any form of general solicitation
or general advertising (within the meaning of Regulation D) in the
United States, except pursuant to a registered public offering as
provided in the Registration Rights Agreement.
(c) Neither it nor any of its Affiliates, nor any person
acting on its or their behalf will, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Notes under
the Securities Act.
(d) Neither it nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any directed selling
efforts with respect to the Notes, except pursuant to a registered
public offering as provided in the Registration Rights Agreement.
(e) (i) It has not offered or sold, and, prior to the expiry
of the period of six months from the Closing Date, it will not offer or
sell, any Notes in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or as agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995, (ii)
it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United
Kingdom, and (iii) it has only issued or passed on and will only issue
or pass on in the United Kingdom any document received by it in
connection with the issue of the Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996, as amended, or is
a person to whom the document may otherwise lawfully be issued or
passed on.
7
<PAGE> 8
(f) No action has been or will be taken by the Company or any
other person that would permit the offer or sale of the Notes or the
possession or the distribution of the Offering Memorandum or any other
offering or publicity material relating to the Notes in any
jurisdiction where action for that purpose is required. The Company
shall have no responsibility with respect to the rights of any person
to offer or sell Notes or to distribute the Offering Memorandum or any
other offering material relating to the Notes in any jurisdiction.
Accordingly, no Initial Purchaser shall offer, sell or deliver any
Notes, or distribute the Offering Memorandum or any other offering or
publicity material relating to the Notes, in any jurisdiction except in
compliance with applicable laws and regulations of that jurisdiction.
Each Initial Purchaser shall obtain any consent, approval or
authorization required for it to offer or sell Notes, or to distribute
the Offering Memorandum or any other offering or publicity material
relating to the Notes under the laws or regulations of any jurisdiction
where it proposes to make offers or sales of Notes, or to distribute
the Offering Memorandum or any other offering material relating to the
Notes, in each case at its own expense, except for the reasonable fees
and disbursements of Counsel for the Initial Purchasers relating to the
registration or qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states of the United States.
(g) The Notes have not been and will not be registered under
the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. It represents that it
has not offered, sold or delivered the Notes, and will not offer, sell
or deliver the Notes (i) as part of its distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, within the United States or to, or for
the account or benefit of, U.S. persons, except in accordance with Rule
903 of Regulation S or Rule 144A under the Securities Act. Accordingly,
it agrees that neither it, its Affiliates nor any persons acting on its
or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Rule 901(b) of Regulation S with respect
to the Notes, and it, its Affiliates and all persons acting on its or
their behalf have complied and will comply with the offering
restrictions requirements of Regulation S.
(h) It represents and agrees that the Notes offered and sold
in reliance on Regulation S have been and will be offered and sold only
in offshore transactions and that such securities have been and will be
represented upon issuance by a global security that may not be
exchanged for definitive securities until the expiration of the
Distribution Compliance Period (as defined in Rule 902(f) of Regulation
S) and only upon certification of beneficial ownership of the
securities by a non-U.S. person or a U.S. person who purchased such
securities in a transaction that was exempt from the registration
requirements of the Securities Act.
(i) It agrees that, at or prior to confirmation of a sale of
Notes (other than a sale in accordance with Section 4(a) hereof), it
will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from
it during the Distribution Compliance Period a confirmation or notice
to substantially the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later
8
<PAGE> 9
of the commencement of the offering and the date of closing of
the offering, except in either case in accordance with
Regulation S (or Rule 144A or another exemption from the
registration requirements of the Securities Act if available)
under the Securities Act. Terms used above have the meaning
given to them by Regulation S."
It further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or
delivery of the Notes, except with its Affiliates or with the prior
written consent of the Company.
(j) It agrees not to cause any advertisement of the Notes to
be published in any newspaper or periodical or posted in any public
place and not to issue any circular relating to the Notes, except such
advertisements that include the statements required by Regulation S.
Terms used in this Section 4 that have meanings assigned to
them in Regulation S are used in this Section 4 as so defined.
5. Agreements. The Company agrees with each Initial Purchaser
that:
(a) The Company will furnish to each Initial Purchaser and to
Counsel for the Initial Purchasers, without charge, during the period
referred to in paragraph (b) below, as many copies of the Offering
Memorandum and any amendments and supplements thereto as it may
reasonably request. The Company will pay the expenses of printing or
other production of all documents relating to the offering.
(b) At any time prior to the completion of the sale of the
Notes by the Initial Purchasers, the Company will not amend or
supplement the Offering Memorandum if the Initial Purchasers reasonably
object to such amendment or supplement within two business days after
receiving a copy thereof, and if at any time prior to the completion of
the sale of the Notes by the Initial Purchasers, any event occurs as a
result of which the Offering Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it should be necessary to amend or supplement the
Offering Memorandum to comply with applicable law, the Company will
promptly notify the Initial Purchasers of the same, will prepare and
provide to the Initial Purchasers the proposed amendment or supplement
which will correct such statement or omission or effect such compliance
and will not publish such amendment or supplement if the Initial
Purchasers reasonably object to the publication of such amendment or
supplement within two business days after receiving a copy thereof.
(c) The Company will arrange for the qualification of the
Notes for sale by the Initial Purchasers under the laws of such
jurisdictions, if any, as the Initial Purchasers may reasonably
designate in writing prior to the date of this Agreement and will
maintain such qualifications in effect so long as reasonably required
for the distribution of the Notes; provided, however, that the Company
shall not be required in connection therewith to qualify to do business
in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general or unlimited service of
process or taxation in any jurisdiction where it is not now so subject.
The Company will promptly advise the Initial Purchasers of the receipt
by the
9
<PAGE> 10
Company of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(d) The Company will not, and will not permit any of its
Affiliates to, resell any Notes that have been acquired by any of them.
(e) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any security,
under circumstances that would require the registration of the Notes
under the Securities Act.
(f) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Notes in the United
States, except pursuant to a registered public offering as provided in
the Registration Rights Agreement.
(g) So long as any of the Notes are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the
Company will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act, provide to
each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities,
upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the
Securities Act. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders,
from time to time of such restricted securities.
(h) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any directed
selling efforts with respect to the Notes, except pursuant to a
registered public offering as provided in the Registration Rights
Agreement, and each of them will comply with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the
meanings given to them by Regulation S.
(i) The Company will cooperate with the Initial Purchasers and
use its best efforts to permit the Notes to be eligible for clearance
and settlement through DTC and, with respect to any Notes sold in
accordance with Regulation S, the Cedel Bank, societe anonyme ("CEDEL
BANK"), and the Euroclear System ("EUROCLEAR").
(j) The Company will not, until 90 days following the Closing
Date, without the prior written consent of the Initial Purchasers,
offer, issue, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any senior debt
securities issued or guaranteed by the Company (other than (i) pursuant
to a registered public offering as provided in the Registration Rights
Agreement relating to the Notes, (ii) the solicitation of consents,
waivers or any other action by or from the holders of the Company's
debt securities outstanding immediately prior to the Closing Date,
(iii) the negotiation, syndication, arrangement or completion of, or
borrowings under, the Credit Facility (as defined in the Indenture) or
(iv) the issuance of registered (a) Series B 9-1/2% Senior Notes due
2008, (b) Series B 10-3/4% Senior Deferred Coupon Notes due 2008 and
(c) Series B 9-3/4% Senior Deferred Coupon Notes due 2008, in each case
in exchange for privately placed (a) 9-1/2% Senior Notes due 2008, (b)
10-
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<PAGE> 11
3/4% Senior Deferred Coupon Notes due 2008 and (c) 9-3/4% Senior
Deferred Coupon Notes due 2008, respectively).
(k) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, to pay all costs, expenses, fees and taxes incident to and
in connection with: (i) the preparation, printing, filing and
distribution of the Offering Memorandum (including, without limitation,
financial statements and supplements thereto), (ii) the preparation,
printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Registration
Rights Agreement and the Indenture, all Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents printed
and delivered in connection herewith and with the sale of the Notes by
the Initial Purchasers to certain purchasers as set forth in Section 4
above, (iii) the issuance and delivery of the Notes, (iv) the
registration or qualification of the Notes for offer and sale under the
securities or Blue Sky laws of the several states (including, without
limitation, the reasonable fees and disbursements of the Initial
Purchasers' counsel relating to such registration or qualification),
(v) the preparation of certificates for the Notes (including, without
limitation, printing and engraving thereof), (vi) the fees,
disbursements and expenses of the Company's counsel and accountants,
(vii) all expenses and listing fees in connection with the application
for quotation of the Notes on PORTAL, (viii) all fees and expenses
(including fees and expenses of counsel) of the Company in connection
with approval of the Notes by DTC for "book-entry" transfer and
eligibility of settlement of transactions in the Notes sold in
accordance with Regulation S through Euroclear and Cedel Bank, (ix) the
fees and disbursements of the Trustee and the registrars of the Notes
(including fees and disbursement of their counsel) and (x) the
performance by the Company of its other obligations under this
Agreement.
6. Conditions to the Obligations of the Initial Purchasers.
The obligations of the Initial Purchasers to purchase the Notes shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained herein at the date and time that this Agreement is executed and
delivered by the parties hereto (the "EXECUTION TIME") and the Closing Date, to
the accuracy of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Initial Purchasers
the opinion of Richard J. Lubasch, Senior Vice President, General
Counsel and Secretary of the Company, dated the Closing Date, to the
effect that:
(i) each of the Company and CableTel UK Group,
Inc. and any other subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and is incorporated
under the laws of the State of Delaware (for purposes of this
Section 6(a) only, individually, a "SUBSIDIARY" and
collectively, the "SUBSIDIARIES") has been duly incorporated
and is validly existing as a corporation and is in good
standing under the laws of the State of Delaware with full
corporate power and authority to own its properties and
conduct its business as described in the Offering Memorandum,
and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction
which requires such qualification where failure so to qualify
would have a material adverse effect on the Company and its
subsidiaries taken as a whole;
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<PAGE> 12
(ii) all the outstanding shares of capital stock
of each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Offering Memorandum, all of the
outstanding shares of capital stock of the Subsidiaries are
owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, after due inquiry, any
other security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity
capitalization is as set forth in the Offering Memorandum;
(iv) the Indenture has been duly authorized,
executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that (i) enforcement thereof may
be limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally and (2)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and (ii) the waiver contained in Section 4.04 of the Indenture
may be deemed unenforceable;
(v) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof
by the Initial Purchasers, constitutes a valid and legally
binding obligation of the Company enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law) and (iii) the enforceability
of indemnification and contribution provisions may be limited
by Federal and state securities laws or the public policy
underlying such laws;
(vi) the Notes have been duly and validly
authorized and executed by the Company and, when duly
authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchasers as
contemplated by this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee), will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance
with their terms, except to the extent that (1) enforcement
thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (y) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or
at law) and (2) the waiver contained in Section 4.04 of the
Indenture may be deemed unenforceable;
(vii) the statements set forth under the heading
"Description of Notes" and "Description of Certain
Indebtedness" in the Offering Memorandum, insofar as they
purport to constitute a summary of documents referred to
therein (and assuming that the
12
<PAGE> 13
documents referred to therein are governed by the law of New
York or Delaware) fairly present such documents in all
material respects;
(viii) this Agreement has been duly authorized,
executed and delivered by the Company;
(ix) no consent, approval, authorization or order
of any Delaware, New York or U.S. federal court or
governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as may be
required under the blue sky or securities laws of any
jurisdiction in connection with the purchase and sale of the
Notes by the Initial Purchasers (as to which counsel need
express no opinion) and such other approvals (specified in
such opinion) as have been obtained;
(x) the issuance and sale of the Notes by the
Company, the execution and delivery of the Indenture, the
Registration Rights Agreement and this Agreement by the
Company, compliance by the Company with the terms thereof and
the consummation of the transactions contemplated thereby will
not (a) conflict with the charter or by-laws of the Company,
(b) result in any violation of the General Corporation Law of
the State of Delaware, the laws of the State of New York or
the federal laws of the United States of America (the
"REQUIREMENTS OF LAW") or (c) constitute a breach of or an
event of default under the terms of any indenture or other
agreement to which the Company or any of its subsidiaries is a
party or bound which is listed on Schedule II hereto (except
that such counsel need not express an opinion as to any
covenant, restriction or provision of any such agreement with
respect to financial covenants, ratios or tests or any aspect
of the financial condition or results of operations of the
Company or any of its subsidiaries and such counsel may assume
that all such agreements or instruments are governed by the
law of New York or Delaware) or any judgment, order or decree
known to such counsel to be applicable to the Company or any
of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator
(collectively, the "ORDERS") of the United States or the
States of New York or Delaware having jurisdiction over the
Company or any of its subsidiaries which conflict, breach or
default will have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of
the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement; provided,
however, that such counsel's opinion expressed in this
paragraph may be based on such counsel's review of those
Requirements of Law which, in such counsel's experience, are
normally applicable to transactions of the type contemplated
by in this Agreement, but without having made any special
investigation concerning any other Requirements of Law, and
those Orders specifically identified to such counsel by the
Company as being Orders to which it is subject; provided,
however, that such counsel need express no opinion with
respect to the U.S. federal or state securities laws or blue
sky laws, antifraud laws and the rules and regulations of the
National Association of Securities Dealers, Inc.;
(xi) after due inquiry, such counsel does not
know of any legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is
or could be a party or to which any of their respective
property is or could be subject, which might result in a
material adverse effect on the business, financial condition
or results of operations of the Company and its subsidiaries,
taken as a whole;
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<PAGE> 14
(xii) the Indenture is in such form that would
not preclude qualification under the Trust Indenture Act, in
accordance with the Registration Rights Agreement;
(xiii) assuming (1) the accuracy of the
representations and warranties of the Company set forth in
Section 1 of this Agreement and of the Initial Purchasers'
representations and warranties set forth in Section 4 of this
Agreement, (2) the due performance by the Company of the
agreements set forth in Section 5 of this Agreement and the
due performance by the Initial Purchasers of the agreements
set forth in Section 4 of this Agreement, (3) compliance by
the Initial Purchasers with the offering and transfer
procedures and restrictions described elsewhere in this
Agreement and in the Offering Memorandum, (4) the accuracy of
the representations and agreements made in accordance with
this Agreement and the Offering Memorandum by the purchasers
to whom the Initial Purchasers initially resell the Notes and
(5) that purchasers to whom the Initial Purchasers initially
resell the Notes receive a copy of the Offering Memorandum
prior to such sale, the offer, sale and initial resale of the
Notes in the manner contemplated by this Agreement and the
Offering Memorandum, do not require registration under the
Securities Act and the Indenture does not require
qualification under the Trust Indenture Act, it being
understood that such counsel does not express any opinion as
to any subsequent resale of any Note; and
(xiv) the Company is not required to be
registered as an "investment company" within the meaning of
the Investment Company Act, without taking account of any
exemption arising out of the number of holders of the
Company's securities.
Such counsel shall also state that, in the course of
preparation by the Company of the Offering Memorandum, such counsel has
participated in conferences with directors, officers and other representatives
of the Company, representatives of the independent public accountants for the
Company, representatives of the Initial Purchasers and representatives of
Counsel for the Initial Purchasers, at which conferences the contents of the
Offering Memorandum and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum and has made no independent check or verification thereof (except as
stated in paragraph (vii) hereof), on the basis of the foregoing (relying as to
materiality to a large extent upon the statements of directors, officers and
other representatives of the Company), no facts have come to such counsel's
attention which have caused such counsel to believe that the Offering
Memorandum, as of its date or as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need not express any opinion or belief with respect to the
financial statements and schedules and other financial and accounting data
included in or omitted from the Offering Memorandum).
Such opinion may be limited to the General Corporation Law of
the State of Delaware and the laws of the State of New York and the federal laws
of the United States and may be subject to customary assumptions, qualifications
and exceptions. In rendering such opinion, such counsel may rely as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the State of Delaware or the United States, to the extent such counsel
deems proper and specified in such opinion, upon the opinion of other counsel
who are satisfactory to Counsel for the Initial Purchasers.
14
<PAGE> 15
All references in this Section 6(a) to the Offering Memorandum
shall be deemed to include any amendment or supplement thereto at the Closing
Date.
(b) If the transactions contemplated by the Amalgamation
Agreement shall have closed by the Closing Date, the Company shall have
furnished to the Initial Purchasers an opinion of counsel reasonably
satisfactory to the Initial Purchasers, dated the Closing Date, to the
effect that:
(i) Comcast UK Cable Partners Limited has been
duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization with full
power and authority to own its properties and conduct its
business as described in the Offering Memorandum;
(ii) all the outstanding shares of capital stock
of Comcast UK Cable Partners Limited have been duly and
validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the
Offering Memorandum, all of the outstanding shares of capital
stock of such entity are owned by the Company either directly
or through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interests,
claims, liens or encumbrances;
(c) The Company shall have furnished to the Initial Purchasers
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Company, dated the Closing Date, to the effect that:
(i) each of the Company and CableTel UK Group,
Inc. (for purposes of this Section 6(c) only, individually, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES") has been
duly incorporated and is validly existing as a corporation and
is in good standing under the laws of the State of Delaware;
(ii) the Indenture has been duly authorized,
executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that (i) enforcement thereof may
be limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally and (2)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and (ii) the waiver contained in Section 4.04 of the Indenture
may be deemed unenforceable;
(iii) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof
by the Initial Purchasers, constitutes a valid and legally
binding obligation of the Company enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law) and
15
<PAGE> 16
(iii) the enforceability of indemnification and contribution
provisions may be limited by Federal and state securities laws
or the public policy underlying such laws;
(iv) the Notes have been duly and validly
authorized and executed by the Company and, when duly
authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchasers as
contemplated by this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee), will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance
with their terms, except to the extent that (1) enforcement
thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (y) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or
at law) and (2) the waiver contained in Section 4.04 of the
Indenture may be deemed unenforceable;
(v) the statements made under the heading
"Description of Notes" and "Description of Certain
Indebtedness" in the Offering Memorandum, insofar as they
constitute summaries of the provisions of the Indenture and
the Notes, fairly present such provisions in all material
respects;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) although the discussion in the Offering
Memorandum under the caption "Certain Federal Income Tax
Considerations" does not purport to discuss all possible U.S.
federal income tax consequences of the purchase, ownership and
disposition of the Notes, such discussion constitutes, in all
material respects, a fair summary of the U.S. federal income
tax consequences of the purchase, ownership and disposition of
the Notes under current law;
(viii) the issuance and sale of the Notes by the
Company, the execution and delivery of the Indenture, the
Registration Rights Agreement and this Agreement by the
Company, compliance by the Company with the terms thereof and
the consummation of the transactions contemplated thereby will
not (a) conflict with the charter or by-laws of the Company,
(b) result in any violation of the General Corporation Law of
the State of Delaware, the laws of the State of New York or
the federal laws of the United States of America (the
"REQUIREMENTS OF LAW") or (c) constitute a breach of or event
of default under the terms of any indenture or other agreement
to which the Company or any of its Subsidiaries is a party or
bound which is listed on Schedule II hereto (except that such
counsel need not express an opinion as to any covenant,
restriction or provision of any such agreement with respect to
financial covenants, ratios or tests or any aspect of the
financial condition or results of operations of the Company or
any of its subsidiaries and such counsel may assume that all
such agreements or instruments are governed by the law of New
York or Delaware) or any judgment, order or decree known to
such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator (collectively, the
"ORDERS") of the United States or the States of Delaware or
New York having jurisdiction over the
16
<PAGE> 17
Company or any of its subsidiaries; provided, however, that
such counsel's opinion expressed in this paragraph may be
based on such counsel's review of those Requirements of Law
which, in such counsel's experience, are normally applicable
to transactions of the type contemplated by in this Agreement,
but without having made any special investigation concerning
any other Requirements of Law, and those Orders specifically
identified to such counsel by the Company as being Orders to
which it is subject; provided, however, that such counsel need
express no opinion in this paragraph with respect to the U.S.
federal or state securities laws or blue sky laws, antifraud
laws and the rules and regulations of the National Association
of Securities Dealers, Inc.;
(ix) the Indenture is in such form that would not
preclude qualification under the Trust Indenture Act, in
accordance with the Registration Rights Agreement; and
(x) assuming (1) the accuracy of the
representations and warranties of the Company set forth in
Section 1 of this Agreement and of the Initial Purchasers'
representations and warranties set forth in Section 4 of this
Agreement, (2) the due performance by the Company of the
agreements set forth in Section 5 of this Agreement and the
due performance by the Initial Purchasers of the agreements
set forth in Section 4 of this Agreement, (3) compliance by
the Initial Purchasers with the offering and transfer
procedures and restrictions described elsewhere in this
Agreement and in the Offering Memorandum, (4) the accuracy of
the representations and agreements made in accordance with
this Agreement and the Offering Memorandum by the purchasers
to whom the Initial Purchasers initially resell the Notes and
(5) that purchasers to whom the Initial Purchasers initially
resell the Notes receive a copy of the Offering Memorandum
prior to such sale, the offer, sale and initial resale of the
Notes in the manner contemplated by this Agreement and the
Offering Memorandum, do not require registration under the
Securities Act and the Indenture do not require qualification
under the Trust Indenture, it being understood that such
counsel does not express any opinion as to any subsequent
resale of any Note.
Such counsel shall also state that, in the course of
preparation by the Company of the Offering Memorandum, such counsel has
participated in conferences with directors, officers and other representatives
of the Company, representatives of the independent public accountants for the
Company, representatives of the Initial Purchasers and representatives of
Counsel for the Initial Purchasers, at which conferences the contents of the
Offering Memorandum and related matters were discussed and, although such
counsel is not passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum and has made no independent check or verification thereof (except to
the extent stated in paragraphs (v) and (vii) hereof), on the basis of the
foregoing, no facts have come to such counsel's attention which have caused such
counsel to believe that the Offering Memorandum, as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need not express any
opinion or belief with respect to the financial statements and schedules and
other financial and accounting data included in or omitted from the Offering
Memorandum).
17
<PAGE> 18
Such opinion may be limited to the General Corporation Law of
the State of Delaware and the laws of the State of New York and the federal laws
of the United States and may be subject to customary assumptions, qualifications
and exceptions. In rendering such opinion, such counsel may rely as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the State of Delaware or the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel who are
satisfactory to Counsel for the Initial Purchasers.
All references in this Section 6(c) to the Offering Memorandum
shall be deemed to include any amendment or supplement thereto at the Closing
Date.
(d) The Company shall have furnished to the Initial Purchasers
the opinion of Robert Mackenzie, Director of Legal Affairs of the
Company, dated the Closing Date, in the form previously approved by
counsel to the Initial Purchasers.
(e) The Initial Purchasers shall have received from Latham &
Watkins, Counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the
Notes, the Offering Memorandum (as amended or supplemented at the
Closing Date) and other related matters as the Initial Purchasers may
reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers
a certificate of the Company, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Offering Memorandum, any
amendment or supplement to the Offering Memorandum and this Agreement
and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to the
Closing Date;
(ii) since the date of the most recent financial
statements included in the Offering Memorandum, there has been
no adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
subsidiaries, which is material to the Company and its
subsidiaries taken as a whole whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated by the Offering Memorandum (exclusive
of any amendment or supplement thereto); and
(iii) no consolidated financial statements of the
Company prepared in accordance with U.S. generally accepted
accounting principles as of any date or any period subsequent
to June 30, 1998 are available.
(g) At the Closing Date, Ernst & Young LLP shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent auditors with respect
to the Company
18
<PAGE> 19
within the meaning of Rule 101 of AICPA's Code of Professional Conduct
and its interpretation and rulings and stating in effect that:
(i) the consolidated financial statements and
financial statement schedules audited by them and included in
the Offering Memorandum comply as to form in all material
respects with the applicable requirements of the Exchange Act
and the related published rules and regulations
(ii) they have audited the consolidated balance
sheets of the Company and its subsidiaries as of December 31,
1996 and 1997, and the consolidated statements of operations,
shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1997, all included in
the Offering Memorandum;
(iii) they have read the 1997 and 1998 minutes of
meetings of the shareholders and the Board of Directors and
other committees of the Company and its subsidiaries as set
forth in the minute books through a specified date not more
than five business days prior to the date of the letter, and
have inquired of certain officials of the Company who have
responsibility for financial and accounting matters;
(iv) with respect to the six-month periods ended
June 30, 1997 and 1998, (X) they have (1) performed the
procedures specified by the American Institute of Certified
Public Accountants for review of interim financial information
as described in SAS No. 71, "Interim Financial Information",
on the unaudited condensed consolidated financial statements
of the Company and its subsidiaries (the "UNAUDITED
FINANCIALS") included in the Offering Memorandum and (2)
inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether
the Unaudited Financials are stated on a basis substantially
consistent with that of the audited consolidated financial
statements of the Company and its subsidiaries included in the
Offering Memorandum and (Y) as a result of the procedures
performed in (X) above, nothing came to their attention that
caused them to believe that any material modifications should
be made to such Unaudited Financials for them to be in
conformity with generally accepted accounting principles;
(v) with respect to the period subsequent to June
30, 1998, management of the Company has informed them that
there were not any changes at a specified date not more than
five business days prior to the date of the letter, in the
long-term debt of the Company and its subsidiaries or
decreases in the capital stock of the Company as compared with
the amounts shown on the June 30, 1998, condensed consolidated
balance sheet referred to above, except in all instances for
changes, decreases or increases set forth in such letter, in
which case the letter shall be accompanied by an explanation
by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Initial Purchasers;
(vi) nothing came to their attention that caused
them to believe that any unaudited pro forma financial
statements included in the Offering Memorandum do not comply
as to form in all material respects with Regulation S-X of the
Securities Act or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of those statements; and
19
<PAGE> 20
(vii) they have performed certain other specified
procedures as a result of which they determined that certain
information of accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Offering
Memorandum agrees with the accounting records of the Company
and its subsidiaries, excluding any questions of legal
interpretation.
In rendering such letter or letters, Ernst & Young LLP may
rely upon the letters of Deloitte & Touche LLP and PriceWaterhouseCoopers LLP
with respect to certain historical financial information included in the
unaudited pro forma financial statements.
(h) At the Closing Date, Deloitte & Touche LLP shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent auditors with respect
to Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries within the meaning of
Rule 101 of AICPA's Code of Professional Conduct and its interpretation
and rulings and stating in effect that:
(i) the consolidated financial statements and
financial statement schedules audited by them and included in
the Offering Memorandum comply as to form in all material
respects with the applicable requirements of the Exchange Act
and the related published rules and regulations
(ii) they have audited the consolidated balance
sheets of Comcast UK Cable Partners Limited, ComTel UK
Finance, B.V. and Telecential and their respective
subsidiaries as of December 31, 1996 and 1997, and the
consolidated statements of operations, shareholders' equity
and cash flows for each of the three years in the period ended
December 31, 1997, all included in the Offering Memorandum;
(iii) they have read the 1997 and 1998 minutes of
meetings of the shareholders and the Board of Directors and
other committees of Comcast UK Cable Partners Limited, ComTel
UK Finance, B.V. and Telecential and their respective
subsidiaries as set forth in the minute books through a
specified date not more than five business days prior to the
date of the letter, and have inquired of certain officials of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries who have
responsibility for financial and accounting matters;
(iv) with respect to the six-month periods ended
June 30, 1997 and 1998, (X) they have (1) performed the
procedures specified by the American Institute of Certified
Public Accountants for review of interim financial information
as described in SAS No. 71, "Interim Financial Information",
on the unaudited condensed consolidated financial statements
of Comcast UK Cable Partners Limited, ComTel UK Finance, B.V.
and Telecential and their respective subsidiaries (the "D&T
UNAUDITED FINANCIALS") included in the Offering Memorandum and
(2) inquired of certain officials of Comcast UK Cable Partners
Limited, ComTel UK Finance, B.V. and Telecential and their
respective subsidiaries who have responsibility for financial
and accounting matters whether the D&T Unaudited Financials
are stated on a basis substantially consistent with
20
<PAGE> 21
that of the audited consolidated financial statements of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries included in the
Offering Memorandum and (Y) as a result of the procedures
performed in (X) above, nothing came to their attention that
caused them to believe that any material modifications should
be made to such D&T Unaudited Financials for them to be in
conformity with generally accepted accounting principles;
(v) with respect to the period subsequent to June
30, 1998, management of Comcast UK Cable Partners Limited,
ComTel UK Finance, B.V. and Telecential and their respective
subsidiaries has informed them that there were not any changes
at a specified date not more than five business days prior to
the date of the letter, in the long-term debt of Comcast UK
Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries or decreases in
the capital stock of Comcast UK Cable Partners Limited, ComTel
UK Finance, B.V. and Telecential and their respective
subsidiaries as compared with the amounts shown on the June
30, 1998, condensed consolidated balance sheet referred to
above, except in all instances for changes, decreases or
increases set forth in such letter, in which case the letter
shall be accompanied by an explanation by Comcast UK Cable
Partners Limited, ComTel UK Finance, B.V. and Telecential and
their respective subsidiaries as to the significance thereof
unless said explanation is not deemed necessary by the Initial
Purchasers; and
(vi) they have performed certain other specified
procedures as a result of which they determined that certain
information of accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries) set forth in
the Offering Memorandum agrees with the accounting records of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries, excluding any
questions of legal interpretation.
(i) At the Closing Date, PriceWaterhouseCoopers LLP shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent auditors with respect
to Comcast UK Finance B.V. within the meaning of Rule 101 of AICPA's
Code of Professional Conduct and its interpretation and rulings and
stating in effect that:
(i) the consolidated financial statements and
financial statement schedules audited by them and included in
the Offering Memorandum comply as to form in all material
respects with the applicable requirements of the Exchange Act
and the related published rules and regulations
(ii) they have audited the consolidated balance
sheets Comcast UK Finance B.V. as of December 31, 1996 and the
consolidated statements of operations, shareholders' equity
and cash flows for each of the two years in the period ended
December 31, 1996, all included in the Offering Memorandum;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of accounting, financial or statistical
21
<PAGE> 22
nature (which is limited to accounting, financial or
statistical information derived from the general accounting
records of Comcast UK Finance B.V.) set forth in the Offering
Memorandum agrees with the accounting records of Comcast UK
Finance B.V., excluding any questions of legal interpretation.
(j) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Offering Memorandum, there
shall not have been (i) any change or decrease specified in the letter
or letters referred to in paragraph (f) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or
affecting the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries the effect
of which is, in the judgment of the Initial Purchasers, so material and
adverse as to make it impractical or inadvisable to market the Notes as
contemplated by the Offering Memorandum.
(k) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Securities Act).
(l) Prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(m) On or prior to the Closing Date, the Indenture and the
Registration Rights Agreement shall have been executed substantially in
the form hereto delivered to you and shall have been delivered to you
and the Trustee.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Initial Purchasers and Counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Initial Purchasers. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will
be delivered at the office of Latham & Watkins, Counsel for the Initial
Purchasers, at 885 Third Avenue, New York, New York, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Notes
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Initial Purchasers in payment for the Notes on the Closing
Date, the Company will reimburse the Initial Purchasers upon demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Notes against appropriate receipts there for.
22
<PAGE> 23
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, each person who controls any
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act and the respective officers, directors,
partners, employees, representatives and agents of such Initial Purchaser or
controlling person thereof against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Offering Memorandum, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in the Offering Memorandum or any
information provided by the Company to any holder or prospective purchaser of
Notes pursuant to paragraph 5(g) hereof, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information
relating to any Initial Purchaser furnished to the Company by or on behalf of
any Initial Purchaser specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company, its directors, its officers, and
each person who controls the Company within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Initial Purchaser, but only with
reference to written information relating to such Initial Purchaser furnished to
the Company by or on behalf of such Initial Purchaser specifically for inclusion
in the Offering Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which any Initial
Purchaser may otherwise have. The Company acknowledges that the statements
relating to the Initial Purchasers set forth in the last paragraph of the cover
page and in the second and third sentences of the second paragraph, the fifth
paragraph and the eleventh paragraph under the heading "Plan of Distribution" in
the Offering Memorandum constitute the only information furnished in writing by
or on behalf of the Initial Purchasers for inclusion in the Offering Memorandum
(or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action (including any
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the
23
<PAGE> 24
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 if (i) the indemnifying party shall authorize the indemnified
party in writing to employ separate counsel at the expense of the indemnifying
party, (ii) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest, (iii)
the indemnifying party shall not have employed counsel reasonably 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 named parties of
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded based upon the advice of such counsel (with a copy to the indemnifying
party) that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party (in any of which cases the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all such
indemnified parties, which firm shall be designated in writing by the
indemnified party, and that all such reasonable fees and expenses shall be
reimbursed as they are incurred upon written request and presentation of
satisfactory invoices). The indemnifying party shall indemnify and hold harmless
the indemnified party from and against all losses, claims, damages and
liabilities by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the settlement
is entered into more than twenty business days after the indemnifying party
shall have received a request from the indemnified party for reimbursement for
the fees and expenses of counsel (in any case where such fees and expenses are
at the expense of the indemnifying party) and, prior to the date of such
settlement, the indemnifying party shall have failed to comply with such
reimbursement request. Notwithstanding the immediately preceding sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, an
indemnifying party shall not be liable for any settlement of the nature
contemplated by the immediately preceding sentence effected without its consent
if such indemnifying party (i) reimburses such indemnified party in accordance
with such request to the extent that it considers such request to be reasonable
and (ii) provides written notice to the indemnified party substantiating the
unpaid balance as unreasonable, in each case, prior to the date of settlement.
An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act, by or on behalf of the indemnified party.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchasers agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "LOSSES") to which the Company
and one or more of the Initial Purchasers may be
24
<PAGE> 25
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and by the Initial Purchasers from the offering of the
Notes; provided, however, that in no case shall any Initial Purchaser (except as
may be provided in any agreement among the Initial Purchasers relating to the
offering of the Notes) be responsible for any amount in excess of the purchase
discount or commission applicable to the Notes purchased by such Initial
Purchaser hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Initial Purchasers
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and of the Initial
Purchasers in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits received
by the Company shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses), and benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions received by the Initial Purchasers from the Company in connection
with the purchase of the Notes hereunder. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or the Initial Purchasers. The Initial
Purchasers' respective obligations to contribute to this Section 8 are several
in proportion to the principal amount of Notes they have purchased hereunder,
and not joint. The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee and
agent of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Notes agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount of the
Notes set forth opposite their names in Schedule I bears to the aggregate
principal amount of such Notes set forth opposite the names of all the remaining
Initial Purchasers in Schedule I) the Notes which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of such Notes
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of such Notes set
forth in Schedule I, the remaining Initial Purchasers that agreed to purchase
such Notes shall have the right to purchase all, but shall not be under any
obligation to purchase any, of such Notes, and if such non-defaulting Initial
Purchasers do not purchase all such Notes, this Agreement will terminate without
liability to any non-defaulting Initial Purchaser or the Company. In the event
of a default by any Initial Purchaser as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the non-defaulting Initial Purchasers shall determine in order that the required
changes in the Offering Memorandum or in any other documents or arrangements may
be effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any non-defaulting
Initial Purchaser for damages occasioned by its default hereunder.
25
<PAGE> 26
10. Termination. This Agreement shall be subject to
termination by notice given by the Initial Purchasers to the Company, if (a)
after the execution and delivery of this Agreement and prior to the Closing Date
(i) trading generally shall have been suspended or materially limited on or by,
as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Initial
Purchasers, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event, singly or together with
any other such event, makes it, in the judgment of the Initial Purchasers,
impracticable or inadvisable to market the Notes on the terms and in the manner
contemplated in the Offering Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof. and will survive delivery of and payment for the Notes. The provisions
of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Initial Purchasers, will be
mailed, delivered or sent by facsimile (212-761-0086) and confirmed to them, at
Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036,
attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or sent by facsimile (212-906-8497) and confirmed to it at 110 East
59th Street, 26th Floor, New York, New York 10022, attention: General Counsel.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and, except as expressly set forth in Section 5(h) hereof, no other person will
have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. Business Day. For purposes of this Agreement, "business
day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in The City of New York, New York are
authorized not to open or are not obligated by law, executive order or
regulation to open.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
[Signature pages follow]
26
<PAGE> 27
If the foregoing is in accordance with your understanding of
our agreement. please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the Initial Purchaser.
Very truly yours,
NTL INCORPORATED
By: /s/ George S. Blumenthal
-----------------------------------
Name: George S. Blumenthal
Title: Chairman
<PAGE> 28
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Donal A. Quigley
___________________________________
Name:
Title:
CHASE SECURITIES INC.
By: ___________________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Anthony Belnikoff
___________________________________
Name: Anthony Belnikoff
Title: Managing Director
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
___________________________________
Name:
Title:
2
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF NOTES
INITIAL PURCHASER TO BE PURCHASED
- ----------------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated .................................... $406,250,000
Chase Securities Inc. ................................................ 93,750,000
Donaldson, Lufkin & Jenrette Securities Corporation .................. 62,500,000
Goldman, Sachs & Co. ................................................. 62,500,000
============
TOTAL ....................................................... $625,000,000
</TABLE>
<PAGE> 30
SCHEDULE II
1. Amended and Restated Agreement of Reorganization and Plan of Merger,
dated as of May 28, 1993, among the Company, OCOM Corporation and
CableTel Merger, Inc.
2. Rights Agreement, dated as of October 1, 1993, between the Company and
Continental Stock Transfer & Trust Company, as Rights Agent.
3. Indenture, dated as of April 20, 1995, between the Company and the
Trustee, governing the Company's 12-3/4% Senior Deferred Coupon Notes
Due 2005, as amended by a First Supplemental Indenture, dated as of
January 22, 1996, as amended by a Second Supplemental Indenture, dated
as of October 14, 1998.
4. Indenture, dated as of January 30, 1996, between the Company and the
Trustee, governing the Company's 11-1/2 % Senior Deferred Coupon Notes
Due 2006, as amended by a First Supplemental Indenture, dated as of
October 14, 1998.
5. Indenture, dated as of June 12, 1996, between the Company and the
Trustee governing the Company's 7% Convertible Subordinated Notes Due
2008.
6. Indenture, dated as of February 12, 1997, between the Company and the
Trustee governing the Company's 10% Senior Notes Due 2007, as amended
by a First Supplemental Indenture, dated as of October 14, 1998.
7. Warrants to Purchase Common Stock issued by the Company to various
persons in the form included as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
8. NTL, Inc. 1993 Stock Option Plan.
9. NTL, Inc. 1993 Non-Employee Director Stock Option Plan.
10. OCOM Corporation 1991 Stock Option Plan.
11. Consulting Agreement between the Company and Insight Communications
Company, L.P.
12. Non-Competition Agreements between the Company and various persons in
the form included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
13. Credit Facility between the Company and The Chase Manhattan Bank, dated
as of October 17, 1997, as amended by that certain letter agreement,
dated as of March 6, 1998.
14. Indenture, dated as of March 13, 1998, between the Company and The
Chase Manhattan Bank governing the Company's 9-1/2% Sterling Senior
Notes Due 2008.
<PAGE> 31
15. Indenture, dated as of February 12, 1997, between the Company and The
Chase Manhattan Bank governing the Company's 10-3/4% Sterling Senior
Deferred Coupon Notes Due 2008.
16. Indenture, dated as of February 12, 1997, between the Company and The
Chase Manhattan Bank governing the Company's 9-3/4% Senior Deferred
Coupon Notes Due 2008.
17. Agreement and Plan of Amalgamation, dated as of February 4, 1998, as
amended, among the Company, NTL (Bermuda) Limited, a Bermuda
corporation and a wholly-owned subsidiary of the Company and Comcast UK
Cable Partners Limited.(1)
18. Share Exchange Agreement, dated as of June 16, 1998, among the Company
and the shareholders of Diamond Cable Communications Plc. set forth
therein.
- --------
(1) This agreement may be removed from this Schedule II if the amalgamation has
closed by the Closing Date.
<PAGE> 1
Exhibit 1.2
EXECUTION COPY
NTL INCORPORATED
$450,000,000 12-3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
PURCHASE AGREEMENT
October 30, 1998
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
NTL Incorporated, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the parties named in Schedule I hereto
$450,000,000 in aggregate principal amount at maturity of its 12-3/8% Senior
Deferred Coupon Notes Due 2008 (the "NOTES"). The parties named in Schedule I
hereto are each, individually, an "INITIAL PURCHASER" and, collectively, the
"INITIAL PURCHASERS." The Notes are to be issued under an indenture (the
"INDENTURE"), dated as of November 6, 1998, between the Company and The Chase
Manhattan Bank, as trustee (the "TRUSTEE").
The sale of the Notes to the Initial Purchasers will be made
without registration of the Notes under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), in reliance upon exemptions from the registration
requirements of the Securities Act. The Initial Purchasers have advised the
Company that they will offer and sell the Notes purchased by them hereunder in
accordance with Section 4 hereof as soon as they deem advisable after the
execution and delivery of this Agreement.
In connection with the sale of the Notes, the Company has
prepared an offering memorandum, dated October 30, 1998 (the "OFFERING
MEMORANDUM"). Any reference to the Offering Memorandum shall be deemed to refer
to and include all documents incorporated by reference therein to filings made
with the U.S. Securities and Exchange Commission (the "COMMISSION") pursuant to
Section 13(a), 13(c) or 15(d) of the U.S. Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and all subsequent documents so filed by the
Company with the Commission on or prior to the date of the Offering Memorandum
and any reference to the Offering Memorandum, as amended or supplemented, as of
any specified date, shall be deemed to include (i) any documents filed with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act after
the date of the Offering Memorandum and prior to such specified date and (ii)
all documents filed under the Exchange Act and so deemed to be included in the
Offering Memorandum or any amendment or supplement thereto are hereinafter
called the "EXCHANGE ACT REPORTS."
<PAGE> 2
The Offering Memorandum sets forth certain information
concerning the Company and the Notes. The Company hereby confirms that it has
authorized the use of the Offering Memorandum, and any amendment or supplement
thereto, in connection with the offer and sale of the Notes by the Initial
Purchasers.
The holders of the Notes will be entitled to the benefits of
the Registration Rights Agreement to be entered into among the Company and the
Initial Purchasers (the "REGISTRATION RIGHTS AGREEMENT").
1. Representations and Warranties. The Company represents and
warrants to each Initial Purchaser as set forth below in this Section 1.
(a) The Offering Memorandum, at the date hereof, does not, and
at the Closing Date (as defined below) will not (and any amendment or
supplement thereto, at the date thereof and at the Closing Date, will
not), contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty
as to the information contained in or omitted from the Offering
Memorandum, or any amendment or supplement thereto, in reliance upon
and in conformity with information relating to any Initial Purchaser
furnished in writing to the Company by or on behalf of the Initial
Purchasers specifically for inclusion therein.
(b) Neither the Company, nor any of its Affiliates (as defined
in Rule 501(b) of Regulation D under the Securities Act ("REGULATION
D")), nor any person acting on its or their behalf has, directly or
indirectly, made offers or sales of any security, or solicited offers
to buy any security, under circumstances that would require the
registration of the Notes under the Securities Act.
(c) No securities of the same class as the Notes have been
issued and sold by the Company within the six-month period immediately
prior to the date hereof.
(d) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Notes in the United
States.
(e) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S under the
Securities Act ("REGULATION S") with respect to the Notes, and each of
them has complied with the offering restriction requirements of
Regulation S in connection with the offering of the Notes outside the
United States.
(f) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(g) At the Closing Date, the Company will have been advised by
the National Association of Securities Dealers, Inc. PORTAL Market
("PORTAL") that the Notes have been or will be designated PORTAL
eligible securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.
2
<PAGE> 3
(h) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT"), without taking account of any exemption
arising out of the number of holders of the Company's securities.
(i) The Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing (or
the local equivalent thereof, if any) under the laws of its
jurisdiction of incorporation and has the corporate power and authority
to carry on its business as it is currently being conducted and to own,
lease and operate its properties, in each case, as described in the
Offering Memorandum, and each is duly qualified and in good standing as
a foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified or in good standing would not have a material adverse effect
on the business, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
(j) Neither the Company nor any of its subsidiaries is in
violation of its respective certificate of incorporation or by-laws or
other governing documents or is in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any indenture,
material agreement or material instrument to which the Company or any
of its Material Subsidiaries (as defined in the Indenture) is a party
or by which it or any of its Material Subsidiaries is bound or to which
any of their respective properties is subject or, except as referred to
in the Offering Memorandum, is in violation of any law, statute, rule,
regulation, judgment or court decree applicable to the Company or any
of its Material Subsidiaries or any of their respective properties
(including any laws, statutes, rules or regulations promulgated by the
Independent Television Commission ("ITC"), the Office of
Telecommunications ("OFTEL") and the Department of Trade and Industry
("DTI")), nor has any event occurred which with notice or lapse of time
or both would constitute such a violation or default, except in each
case, which would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(k) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, the Indenture and the Registration Rights Agreement and to
issue, sell and deliver the Notes as provided herein and therein.
(l) The (i) issuance and sale of the Notes by the Company,
(ii) execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement, (iii) compliance by
the Company with the provisions of the Notes, this Agreement, the
Indenture and the Registration Rights Agreement, and (iv) consummation
of the transactions contemplated by any of the Notes, this Agreement,
the Indenture and the Registration Rights Agreement, will not require
any consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body,
including the Federal Communications Commission, ITC, OFTEL or DTI
(except such as may be required under the securities or Blue Sky laws
of the various states and those consents, authorizations, approvals,
orders, filings, registrations or notices that have been obtained or
made and are in full force and effect) and will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the certificate of incorporation or by-laws (or other governing
documents) of the Company or any of its subsidiaries or any bond,
debenture, note or any other evidence of indebtedness or in
3
<PAGE> 4
any indenture, material agreement or material instrument to which the
Company or any of its Material Subsidiaries is a party or by which it
or any of its Material Subsidiaries is bound or any of their respective
properties is subject, or violate or conflict with any law, statute,
rule, regulation, judgment or court decree applicable to the Company or
any of its Material Subsidiaries or any of their respective properties
(including any laws, statutes, rules or regulations promulgated by ITC,
OFTEL or DTI).
(m) Except as otherwise set forth in the Offering Memorandum,
there are no material investigations, proceedings or actions, whether
judicial or administrative and whether brought by any regulatory body,
administrative agency or other governmental body or by any other
person, pending, or, to the knowledge of the Company, threatened, to
which the Company or any of its Material Subsidiaries is a party or of
which any of their respective properties is the subject.
(n) The Company and each of its Material Subsidiaries have all
such permits, licenses, franchises and authorizations of governmental
or regulatory authorities or other rights currently necessary to be
procured by them in order to engage in the respective businesses
currently conducted by each of them as set forth in the Offering
Memorandum (collectively, "PERMITS"), including, without limitation,
under any laws regulating or relating to the conduct of cable/telephony
operations, as are necessary to own, lease and operate its respective
properties and to conduct its business, except where the failure to
have any such Permit would not have a material adverse effect on the
business, financial condition or results of operations of the Company
and its subsidiaries taken as a whole; the Company and each of its
Material Subsidiaries have fulfilled and performed all of their
respective obligations with respect to such Permits, and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination of any such Permit or result in any other
impairment of the rights of the holder of any such Permit, except in
each case, as would not have a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole, and subject in each case to such
qualification as may be set forth in the Offering Memorandum; and,
except as described in the Offering Memorandum, no such Permit contains
any restriction that would have a material adverse effect on the
business, financial condition or results of operations of the Company
and its subsidiaries taken as a whole. Neither the Company nor any of
its Material Subsidiaries has any reason to believe that any
governmental body or regulatory agency is considering limiting,
suspending or revoking any Permits, except as would not have a material
adverse effect on the business, financial condition or results of
operations of the Company and its subsidiaries taken as a whole.
(o) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(p) The Indenture has been duly and validly authorized by the
Company and, when duly executed and delivered by the Company and duly
authorized, executed and delivered by the Trustee, will be the valid
and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent that (i)
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (2)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and (ii) the waiver
contained in Section 4.04 of the Indenture may be deemed unenforceable.
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<PAGE> 5
(q) The Notes have been duly and validly authorized by the
Company and, when (i) the Notes have been duly executed and
authenticated in accordance with the terms of the Indenture, (ii) the
Notes have been delivered to and paid for by the Initial Purchasers as
contemplated by this Agreement and (iii) the Indenture has been duly
executed and delivered by the Company (assuming the due authorization,
execution and delivery thereof by the Trustee), the Notes will be valid
and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that (1) enforcement
thereof may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (y) general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law) and (2) the waiver contained in Section 4.04 of
the Indenture may be deemed unenforceable.
(r) The Registration Rights Agreement has been duly and
validly authorized by the Company and, when duly executed and delivered
by the Company (assuming the due authorization, execution and delivery
thereof by the Initial Purchasers), will be the valid and legally
binding obligation of the Company, enforceable against the Company in
accordance with its terms except as the enforceability thereof may be
limited by the effect of (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (y) general principles of
equity (whether enforcement is considered in a proceeding in equity or
at law).
(s) The consolidated financial statements of the Company and
its subsidiaries present fairly in all material respects the financial
position and results of operations of the Company and its subsidiaries
at the respective dates and for the respective periods indicated. Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout
the periods presented except as described in the Offering Memorandum
and except that the unaudited interim financial statements are subject
to normal year end adjustments. The selected financial data included in
the Offering Memorandum present fairly the information shown therein
and have been prepared on a basis consistent with that of the financial
statements included in the Offering Memorandum.
(t) The Company is subject to and in full compliance with the
reporting requirements of Section 13 or Section 15(d) of the Exchange
Act.
(u) The Company has not paid or agreed to pay to any person
any compensation for soliciting another to purchase any securities of
the Company (except as contemplated by this Agreement).
(v) The information provided by the Company pursuant to
Section 5(g) hereof will not, at the date thereof, contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(w) It is not necessary in connection with the offer, sale and
delivery of the Notes in the manner contemplated by this Agreement and
the Offering Memorandum to register the Notes under the Act or to
qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "TRUST INDENTURE ACT").
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<PAGE> 6
(x) There is no employee pension or benefit plan with respect
to which the Company or any corporation considered an affiliate of the
Company within the meaning of Section 407(d)(7) of ERISA is a party in
interest or disqualified person. The execution and delivery of this
Agreement, the Indenture and the Registration Rights Agreement, and the
resale by the Initial Purchasers of the Notes to certain purchasers as
set forth in Section 4 hereof will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975
of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made
by the purchasers of the Notes as set forth in the Offering Memorandum
under the Section entitled "Transfer Restrictions."
(y) The Exchange Act Reports, when they were or are filed with
the Commission, conformed or will conform in all material respects to
the applicable requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Initial Purchaser, and each Initial Purchaser
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 53.38% of the principal amount thereof, plus accreted value, if any,
the principal amount at maturity of Notes set forth opposite such Initial
Purchaser's name on Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for the Notes
shall be made at 9:00 A.M., New York time, on November 6, 1998, or such later
date as the Initial Purchasers and the Company may agree or as provided in
Section 9 hereof (such date and time of delivery and payment for the Notes being
herein called the "CLOSING DATE"). Delivery of the Notes shall be made to the
Initial Purchasers for their respective account against payment by the Initial
Purchasers of the purchase price thereof to or upon the order of the Company by
wire transfer in same-day funds to a U.S. dollar account designated by the
Company or such other manner of payment as may be designated by the Company and
agreed to by the Initial Purchasers not less than two business days prior to the
Closing Date. Delivery of the Notes shall be made at such location as the
Initial Purchasers shall reasonably designate at least one business day in
advance of the Closing Date and payment for the Notes shall be made at the
office of Latham & Watkins ("COUNSEL FOR THE INITIAL PURCHASER"), 885 Third
Avenue, New York, New York. Global note certificates representing the Notes
shall be registered in such names and in such denominations as the Initial
Purchasers may request not less than two full U.S. business days in advance of
the Closing Date.
The Company agrees to have the Notes available for inspection
and checking by the Initial Purchasers in New York, New York not later than 9:00
A.M., New York time, on the business day prior to the Closing Date.
4. Offering of Notes. Each Initial Purchaser (i) acknowledges
that the Notes have not been registered under the Securities Act and may not be
offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or pursuant to
an effective registration statement under the Securities Act and (ii) severally,
not jointly, represents and warrants to, and agrees with, the Company that:
(a) It has not offered or sold, and will not offer or sell,
any Notes except (i) to those it reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the
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<PAGE> 7
Securities Act) and that, in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser of
such securities is aware that such sale is being made in reliance on
Rule 144A or (ii) to non-U.S. persons in accordance with Regulation S
and in compliance with the representations, warranties and agreements
in this Section 4 (all such persons referred to in clauses (i) and (ii)
are hereinafter collectively referred to as "ELIGIBLE PURCHASERS").
(b) Neither it nor any of its Affiliates or any person acting
on its or their behalf has made or will make offers or sales of the
Notes in the United States by means of any form of general solicitation
or general advertising (within the meaning of Regulation D) in the
United States, except pursuant to a registered public offering as
provided in the Registration Rights Agreement.
(c) Neither it nor any of its Affiliates, nor any person
acting on its or their behalf will, directly or indirectly, make offers
or sales of any security, or solicit offers to buy any security, under
circumstances that would require the registration of the Notes under
the Securities Act.
(d) Neither it nor any of its Affiliates, nor any person
acting on its or their behalf will engage in any directed selling
efforts with respect to the Notes, except pursuant to a registered
public offering as provided in the Registration Rights Agreement.
(e) (i) It has not offered or sold, and, prior to the expiry
of the period of six months from the Closing Date, it will not offer or
sell, any Notes in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or as agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995, (ii)
it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United
Kingdom, and (iii) it has only issued or passed on and will only issue
or pass on in the United Kingdom any document received by it in
connection with the issue of the Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996, as amended, or is
a person to whom the document may otherwise lawfully be issued or
passed on.
(f) No action has been or will be taken by the Company or any
other person that would permit the offer or sale of the Notes or the
possession or the distribution of the Offering Memorandum or any other
offering or publicity material relating to the Notes in any
jurisdiction where action for that purpose is required. The Company
shall have no responsibility with respect to the rights of any person
to offer or sell Notes or to distribute the Offering Memorandum or any
other offering material relating to the Notes in any jurisdiction.
Accordingly, no Initial Purchaser shall offer, sell or deliver any
Notes, or distribute the Offering Memorandum or any other offering or
publicity material relating to the Notes, in any jurisdiction except in
compliance with applicable laws and regulations of that jurisdiction.
Each Initial Purchaser shall obtain any consent, approval or
authorization required for it to offer or sell Notes, or to distribute
the Offering Memorandum or any other offering or publicity material
relating to the Notes under the laws or regulations of any jurisdiction
where it proposes to make offers or sales of Notes, or to
7
<PAGE> 8
distribute the Offering Memorandum or any other offering material
relating to the Notes, in each case at its own expense, except for the
reasonable fees and disbursements of Counsel for the Initial Purchasers
relating to the registration or qualification of the Notes for offer
and sale under the securities or Blue Sky laws of the several states of
the United States.
(g) The Notes have not been and will not be registered under
the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. It represents that it
has not offered, sold or delivered the Notes, and will not offer, sell
or deliver the Notes (i) as part of its distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, within the United States or to, or for
the account or benefit of, U.S. persons, except in accordance with Rule
903 of Regulation S or Rule 144A under the Securities Act. Accordingly,
it agrees that neither it, its Affiliates nor any persons acting on its
or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Rule 901(b) of Regulation S with respect
to the Notes, and it, its Affiliates and all persons acting on its or
their behalf have complied and will comply with the offering
restrictions requirements of Regulation S.
(h) It represents and agrees that the Notes offered and sold
in reliance on Regulation S have been and will be offered and sold only
in offshore transactions and that such securities have been and will be
represented upon issuance by a global security that may not be
exchanged for definitive securities until the expiration of the
Distribution Compliance Period (as defined in Rule 902(f) of Regulation
S) and only upon certification of beneficial ownership of the
securities by a non-U.S. person or a U.S. person who purchased such
securities in a transaction that was exempt from the registration
requirements of the Securities Act.
(i) It agrees that, at or prior to confirmation of a sale of
Notes (other than a sale in accordance with Section 4(a) hereof), it
will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Notes from
it during the Distribution Compliance Period a confirmation or notice
to substantially the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "SECURITIES
ACT"), and may not be offered and sold within the United
States or to, or for the account or benefit of, U.S. persons
(i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and the date of closing of the offering, except
in either case in accordance with Regulation S (or Rule 144A
or another exemption from the registration requirements of the
Securities Act if available) under the Securities Act. Terms
used above have the meaning given to them by Regulation S."
It further agrees that it has not entered and will not enter
into any contractual arrangement with respect to the distribution or
delivery of the Notes, except with its Affiliates or with the prior
written consent of the Company.
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<PAGE> 9
(j) It agrees not to cause any advertisement of the Notes to
be published in any newspaper or periodical or posted in any public
place and not to issue any circular relating to the Notes, except such
advertisements that include the statements required by Regulation S.
Terms used in this Section 4 that have meanings assigned to
them in Regulation S are used in this Section 4 as so defined.
5. Agreements. The Company agrees with each Initial Purchaser
that:
(a) The Company will furnish to each Initial Purchaser and to
Counsel for the Initial Purchasers, without charge, during the period
referred to in paragraph (b) below, as many copies of the Offering
Memorandum and any amendments and supplements thereto as it may
reasonably request. The Company will pay the expenses of printing or
other production of all documents relating to the offering.
(b) At any time prior to the completion of the sale of the
Notes by the Initial Purchasers, the Company will not amend or
supplement the Offering Memorandum if the Initial Purchasers reasonably
object to such amendment or supplement within two business days after
receiving a copy thereof, and if at any time prior to the completion of
the sale of the Notes by the Initial Purchasers, any event occurs as a
result of which the Offering Memorandum, as then amended or
supplemented, would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it should be necessary to amend or supplement the
Offering Memorandum to comply with applicable law, the Company will
promptly notify the Initial Purchasers of the same, will prepare and
provide to the Initial Purchasers the proposed amendment or supplement
which will correct such statement or omission or effect such compliance
and will not publish such amendment or supplement if the Initial
Purchasers reasonably object to the publication of such amendment or
supplement within two business days after receiving a copy thereof.
(c) The Company will arrange for the qualification of the
Notes for sale by the Initial Purchasers under the laws of such
jurisdictions, if any, as the Initial Purchasers may reasonably
designate in writing prior to the date of this Agreement and will
maintain such qualifications in effect so long as reasonably required
for the distribution of the Notes; provided, however, that the Company
shall not be required in connection therewith to qualify to do business
in any jurisdiction where it is not now so qualified or to take any
action which would subject it to general or unlimited service of
process or taxation in any jurisdiction where it is not now so subject.
The Company will promptly advise the Initial Purchasers of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(d) The Company will not, and will not permit any of its
Affiliates to, resell any Notes that have been acquired by any of them.
(e) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any security,
under circumstances that would require the registration of the Notes
under the Securities Act.
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<PAGE> 10
(f) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of Regulation
D) in connection with any offer or sale of the Notes in the United
States, except pursuant to a registered public offering as provided in
the Registration Rights Agreement.
(g) So long as any of the Notes are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the
Company will, during any period in which it is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act, provide to
each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities,
upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the
Securities Act. This covenant is intended to be for the benefit of the
holders, and the prospective purchasers designated by such holders,
from time to time of such restricted securities.
(h) Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf will engage in any directed
selling efforts with respect to the Notes, except pursuant to a
registered public offering as provided in the Registration Rights
Agreement, and each of them will comply with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the
meanings given to them by Regulation S.
(i) The Company will cooperate with the Initial Purchasers and
use its best efforts to permit the Notes to be eligible for clearance
and settlement through DTC and, with respect to any Notes sold in
accordance with Regulation S, the Cedel Bank, societe anonyme ("CEDEL
BANK"), and the Euroclear System ("EUROCLEAR").
(j) The Company will not, until 90 days following the Closing
Date, without the prior written consent of the Initial Purchasers,
offer, issue, sell or contract to sell, or otherwise dispose of,
directly or indirectly, or announce the offering of, any senior debt
securities issued or guaranteed by the Company (other than (i) pursuant
to a registered public offering as provided in the Registration Rights
Agreement relating to the Notes, (ii) the solicitation of consents,
waivers or any other action by or from the holders of the Company's
debt securities outstanding immediately prior to the Closing Date,
(iii) the negotiation, syndication, arrangement or completion of, or
borrowings under, the Credit Facility (as defined in the Indenture),
(iv) the issuance of the Company's 11-1/2% Senior Notes due 2008 or (v)
the issuance of registered (a) Series B 9-1/2% Senior Notes due 2008,
(b) Series B 10-3/4% Senior Deferred Coupon Notes due 2008 and (c)
Series B 9-3/4% Senior Deferred Coupon Notes due 2008, in each case in
exchange for privately placed (a) 9-1/2% Senior Notes due 2008, (b)
10-3/4% Senior Deferred Coupon Notes due 2008 and (c) 9-3/4% Senior
Deferred Coupon Notes due 2008, respectively.).
(k) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, to pay all costs, expenses, fees and taxes incident to and
in connection with: (i) the preparation, printing, filing and
distribution of the Offering Memorandum (including, without limitation,
financial statements and supplements thereto), (ii) the preparation,
printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Registration
Rights Agreement and the Indenture, all Blue Sky Memoranda and all
other agreements, memoranda, correspondence and other documents printed
and delivered in connection herewith and with the sale of the Notes by
the Initial Purchasers to certain purchasers as set forth in Section 4
above,
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<PAGE> 11
(iii) the issuance and delivery of the Notes, (iv) the registration or
qualification of the Notes for offer and sale under the securities or
Blue Sky laws of the several states (including, without limitation, the
reasonable fees and disbursements of the Initial Purchasers' counsel
relating to such registration or qualification), (v) the preparation of
certificates for the Notes (including, without limitation, printing and
engraving thereof), (vi) the fees, disbursements and expenses of the
Company's counsel and accountants, (vii) all expenses and listing fees
in connection with the application for quotation of the Notes on
PORTAL, (viii) all fees and expenses (including fees and expenses of
counsel) of the Company in connection with approval of the Notes by DTC
for "book-entry" transfer and eligibility of settlement of transactions
in the Notes sold in accordance with Regulation S through Euroclear and
Cedel Bank, (ix) the fees and disbursements of the Trustee and the
registrars of the Notes (including fees and disbursement of their
counsel) and (x) the performance by the Company of its other
obligations under this Agreement.
6. Conditions to the Obligations of the Initial Purchasers.
The obligations of the Initial Purchasers to purchase the Notes shall be subject
to the accuracy of the representations and warranties on the part of the Company
contained herein at the date and time that this Agreement is executed and
delivered by the parties hereto (the "EXECUTION TIME") and the Closing Date, to
the accuracy of the statements of the Company made in any certificates pursuant
to the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Initial Purchasers
the opinion of Richard J. Lubasch, Senior Vice President, General
Counsel and Secretary of the Company, dated the Closing Date, to the
effect that:
(i) each of the Company and CableTel UK Group,
Inc. and any other subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act and is incorporated
under the laws of the State of Delaware (for purposes of this
Section 6(a) only, individually, a "SUBSIDIARY" and
collectively, the "SUBSIDIARIES") has been duly incorporated
and is validly existing as a corporation and is in good
standing under the laws of the State of Delaware with full
corporate power and authority to own its properties and
conduct its business as described in the Offering Memorandum,
and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction
which requires such qualification where failure so to qualify
would have a material adverse effect on the Company and its
subsidiaries taken as a whole;
(ii) all the outstanding shares of capital stock
of each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Offering Memorandum, all of the
outstanding shares of capital stock of the Subsidiaries are
owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, after due inquiry, any
other security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity
capitalization is as set forth in the Offering Memorandum;
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<PAGE> 12
(iv) the Indenture has been duly authorized,
executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that (i) enforcement thereof may
be limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally and (2)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and (ii) the waiver contained in Section 4.04 of the Indenture
may be deemed unenforceable;
(v) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof
by the Initial Purchasers, constitutes a valid and legally
binding obligation of the Company enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law) and (iii) the enforceability
of indemnification and contribution provisions may be limited
by Federal and state securities laws or the public policy
underlying such laws;
(vi) the Notes have been duly and validly
authorized and executed by the Company and, when duly
authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchasers as
contemplated by this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee), will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance
with their terms, except to the extent that (1) enforcement
thereof may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (y) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or
at law) and (2) the waiver contained in Section 4.04 of the
Indenture may be deemed unenforceable;
(vii) the statements set forth under the heading
"Description of Notes" and "Description of Certain
Indebtedness" in the Offering Memorandum, insofar as they
purport to constitute a summary of documents referred to
therein (and assuming that the documents referred to therein
are governed by the law of New York or Delaware) fairly
present such documents in all material respects;
(viii) this Agreement has been duly authorized,
executed and delivered by the Company;
(ix) no consent, approval, authorization or order
of any Delaware, New York or U.S. federal court or
governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as may be
required under the blue sky or securities laws of any
jurisdiction in connection with the purchase
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<PAGE> 13
and sale of the Notes by the Initial Purchasers (as to which
counsel need express no opinion) and such other approvals
(specified in such opinion) as have been obtained;
(x) the issuance and sale of the Notes by the
Company, the execution and delivery of the Indenture, the
Registration Rights Agreement and this Agreement by the
Company, compliance by the Company with the terms thereof and
the consummation of the transactions contemplated thereby will
not (a) conflict with the charter or by-laws of the Company,
(b) result in any violation of the General Corporation Law of
the State of Delaware, the laws of the State of New York or
the federal laws of the United States of America (the
"REQUIREMENTS OF LAW") or (c) constitute a breach of or an
event of default under the terms of any indenture or other
agreement to which the Company or any of its subsidiaries is a
party or bound which is listed on Schedule II hereto (except
that such counsel need not express an opinion as to any
covenant, restriction or provision of any such agreement with
respect to financial covenants, ratios or tests or any aspect
of the financial condition or results of operations of the
Company or any of its subsidiaries and such counsel may assume
that all such agreements or instruments are governed by the
law of New York or Delaware) or any judgment, order or decree
known to such counsel to be applicable to the Company or any
of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator
(collectively, the "ORDERS") of the United States or the
States of New York or Delaware having jurisdiction over the
Company or any of its subsidiaries which conflict, breach or
default will have a material adverse effect on the condition
(financial or otherwise), earnings, business or properties of
the Company and its subsidiaries taken as a whole or the
transactions contemplated by this Agreement; provided,
however, that such counsel's opinion expressed in this
paragraph may be based on such counsel's review of those
Requirements of Law which, in such counsel's experience, are
normally applicable to transactions of the type contemplated
by in this Agreement, but without having made any special
investigation concerning any other Requirements of Law, and
those Orders specifically identified to such counsel by the
Company as being Orders to which it is subject; provided,
however, that such counsel need express no opinion with
respect to the U.S. federal or state securities laws or blue
sky laws, antifraud laws and the rules and regulations of the
National Association of Securities Dealers, Inc.;
(xi) after due inquiry, such counsel does not
know of any legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is
or could be a party or to which any of their respective
property is or could be subject, which might result in a
material adverse effect on the business, financial condition
or results of operations of the Company and its subsidiaries,
taken as a whole;
(xii) the Indenture is in such form that would
not preclude qualification under the Trust Indenture Act, in
accordance with the Registration Rights Agreement;
(xiii) assuming (1) the accuracy of the
representations and warranties of the Company set forth in
Section 1 of this Agreement and of the Initial Purchasers'
representations and warranties set forth in Section 4 of this
Agreement, (2) the due performance by the Company of the
agreements set forth in Section 5 of this Agreement and the
due performance by the Initial Purchasers of the agreements
set forth in Section 4 of this Agreement, (3) compliance by
the Initial Purchasers with the offering and
13
<PAGE> 14
transfer procedures and restrictions described elsewhere in
this Agreement and in the Offering Memorandum, (4) the
accuracy of the representations and agreements made in
accordance with this Agreement and the Offering Memorandum by
the purchasers to whom the Initial Purchasers initially resell
the Notes and (5) that purchasers to whom the Initial
Purchasers initially resell the Notes receive a copy of the
Offering Memorandum prior to such sale, the offer, sale and
initial resale of the Notes in the manner contemplated by this
Agreement and the Offering Memorandum, do not require
registration under the Securities Act and the Indenture does
not require qualification under the Trust Indenture Act, it
being understood that such counsel does not express any
opinion as to any subsequent resale of any Note; and
(xiv) the Company is not required to be
registered as an "investment company" within the meaning of
the Investment Company Act, without taking account of any
exemption arising out of the number of holders of the
Company's securities.
Such counsel shall also state that, in the course of
preparation by the Company of the Offering Memorandum, such counsel has
participated in conferences with directors, officers and other representatives
of the Company, representatives of the independent public accountants for the
Company, representatives of the Initial Purchasers and representatives of
Counsel for the Initial Purchasers, at which conferences the contents of the
Offering Memorandum and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum and has made no independent check or verification thereof (except as
stated in paragraph (vii) hereof), on the basis of the foregoing (relying as to
materiality to a large extent upon the statements of directors, officers and
other representatives of the Company), no facts have come to such counsel's
attention which have caused such counsel to believe that the Offering
Memorandum, as of its date or as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need not express any opinion or belief with respect to the
financial statements and schedules and other financial and accounting data
included in or omitted from the Offering Memorandum).
Such opinion may be limited to the General Corporation Law of
the State of Delaware and the laws of the State of New York and the federal laws
of the United States and may be subject to customary assumptions, qualifications
and exceptions. In rendering such opinion, such counsel may rely as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the State of Delaware or the United States, to the extent such counsel
deems proper and specified in such opinion, upon the opinion of other counsel
who are satisfactory to Counsel for the Initial Purchasers.
All references in this Section 6(a) to the Offering Memorandum
shall be deemed to include any amendment or supplement thereto at the Closing
Date.
(b) The Company shall have furnished to the Initial Purchasers
an opinion of counsel reasonably satisfactory to the Initial
Purchasers, dated the Closing Date, to the effect that:
(i) Comcast UK Cable Partners Limited has been
duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization
14
<PAGE> 15
with full power and authority to own its properties and
conduct its business as described in the Offering Memorandum;
(ii) all the outstanding shares of capital stock
of Comcast UK Cable Partners Limited have been duly and
validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the
Offering Memorandum, all of the outstanding shares of capital
stock of such entity are owned by the Company either directly
or through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interests,
claims, liens or encumbrances;
(c) The Company shall have furnished to the Initial Purchasers
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Company, dated the Closing Date, to the effect that:
(i) each of the Company and CableTel UK Group,
Inc. (for purposes of this Section 6(c) only, individually, a
"SUBSIDIARY" and collectively, the "SUBSIDIARIES") has been
duly incorporated and is validly existing as a corporation and
is in good standing under the laws of the State of Delaware;
(ii) the Indenture has been duly authorized,
executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms, except to the extent that (i) enforcement thereof may
be limited by (1) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting creditor's rights generally and (2)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and (ii) the waiver contained in Section 4.04 of the Indenture
may be deemed unenforceable;
(iii) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof
by the Initial Purchasers, constitutes a valid and legally
binding obligation of the Company enforceable against the
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally, (ii) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law) and (iii) the enforceability
of indemnification and contribution provisions may be limited
by Federal and state securities laws or the public policy
underlying such laws;
(iv) the Notes have been duly and validly
authorized and executed by the Company and, when duly
authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Initial Purchasers as
contemplated by this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee), will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance
with their terms, except to the extent that (1) enforcement
thereof may be
15
<PAGE> 16
limited by (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (y)
general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and (2) the waiver contained in Section 4.04 of the Indenture
may be deemed unenforceable;
(v) the statements made under the heading
"Description of Notes" and "Description of Certain
Indebtedness" in the Offering Memorandum, insofar as they
constitute summaries of the provisions of the Indenture and
the Notes, fairly present such provisions in all material
respects;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) although the discussion in the Offering
Memorandum under the caption "Certain Federal Income Tax
Considerations" does not purport to discuss all possible U.S.
federal income tax consequences of the purchase, ownership and
disposition of the Notes, such discussion constitutes, in all
material respects, a fair summary of the U.S. federal income
tax consequences of the purchase, ownership and disposition of
the Notes under current law;
(viii) the issuance and sale of the Notes by the
Company, the execution and delivery of the Indenture, the
Registration Rights Agreement and this Agreement by the
Company, compliance by the Company with the terms thereof and
the consummation of the transactions contemplated thereby will
not (a) conflict with the charter or by-laws of the Company,
(b) result in any violation of the General Corporation Law of
the State of Delaware, the laws of the State of New York or
the federal laws of the United States of America (the
"REQUIREMENTS OF LAW") or (c) constitute a breach of or event
of default under the terms of any indenture or other agreement
to which the Company or any of its Subsidiaries is a party or
bound which is listed on Schedule II hereto (except that such
counsel need not express an opinion as to any covenant,
restriction or provision of any such agreement with respect to
financial covenants, ratios or tests or any aspect of the
financial condition or results of operations of the Company or
any of its subsidiaries and such counsel may assume that all
such agreements or instruments are governed by the law of New
York or Delaware) or any judgment, order or decree known to
such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator (collectively, the
"ORDERS") of the United States or the States of Delaware or
New York having jurisdiction over the Company or any of its
subsidiaries; provided, however, that such counsel's opinion
expressed in this paragraph may be based on such counsel's
review of those Requirements of Law which, in such counsel's
experience, are normally applicable to transactions of the
type contemplated by in this Agreement, but without having
made any special investigation concerning any other
Requirements of Law, and those Orders specifically identified
to such counsel by the Company as being Orders to which it is
subject; provided, however, that such counsel need express no
opinion in this paragraph with respect to the U.S. federal or
state securities laws or blue sky laws, antifraud laws and the
rules and regulations of the National Association of
Securities Dealers, Inc.;
16
<PAGE> 17
(ix) the Indenture is in such form that would not
preclude qualification under the Trust Indenture Act, in
accordance with the Registration Rights Agreement; and
(x) assuming (1) the accuracy of the
representations and warranties of the Company set forth in
Section 1 of this Agreement and of the Initial Purchasers'
representations and warranties set forth in Section 4 of this
Agreement, (2) the due performance by the Company of the
agreements set forth in Section 5 of this Agreement and the
due performance by the Initial Purchasers of the agreements
set forth in Section 4 of this Agreement, (3) compliance by
the Initial Purchasers with the offering and transfer
procedures and restrictions described elsewhere in this
Agreement and in the Offering Memorandum, (4) the accuracy of
the representations and agreements made in accordance with
this Agreement and the Offering Memorandum by the purchasers
to whom the Initial Purchasers initially resell the Notes and
(5) that purchasers to whom the Initial Purchasers initially
resell the Notes receive a copy of the Offering Memorandum
prior to such sale, the offer, sale and initial resale of the
Notes in the manner contemplated by this Agreement and the
Offering Memorandum, do not require registration under the
Securities Act and the Indenture do not require qualification
under the Trust Indenture, it being understood that such
counsel does not express any opinion as to any subsequent
resale of any Note.
Such counsel shall also state that, in the course of
preparation by the Company of the Offering Memorandum, such counsel has
participated in conferences with directors, officers and other representatives
of the Company, representatives of the independent public accountants for the
Company, representatives of the Initial Purchasers and representatives of
Counsel for the Initial Purchasers, at which conferences the contents of the
Offering Memorandum and related matters were discussed and, although such
counsel is not passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the Offering
Memorandum and has made no independent check or verification thereof (except to
the extent stated in paragraphs (v) and (vii) hereof), on the basis of the
foregoing, no facts have come to such counsel's attention which have caused such
counsel to believe that the Offering Memorandum, as of its date and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need not express any
opinion or belief with respect to the financial statements and schedules and
other financial and accounting data included in or omitted from the Offering
Memorandum).
Such opinion may be limited to the General Corporation Law of
the State of Delaware and the laws of the State of New York and the federal laws
of the United States and may be subject to customary assumptions, qualifications
and exceptions. In rendering such opinion, such counsel may rely as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the State of Delaware or the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel who are
satisfactory to Counsel for the Initial Purchasers.
All references in this Section 6(c) to the Offering Memorandum
shall be deemed to include any amendment or supplement thereto at the Closing
Date.
17
<PAGE> 18
(d) The Company shall have furnished to the Initial Purchasers
the opinion of Robert Mackenzie, Director of Legal Affairs of the
Company, dated the Closing Date, in the form previously approved by
counsel to the Initial Purchasers.
(e) The Initial Purchasers shall have received from Latham &
Watkins, Counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the
Notes, the Offering Memorandum (as amended or supplemented at the
Closing Date) and other related matters as the Initial Purchasers may
reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them
to pass upon such matters.
(f) The Company shall have furnished to the Initial Purchasers
a certificate of the Company, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Offering Memorandum, any
amendment or supplement to the Offering Memorandum and this Agreement
and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied hereunder at or prior to the
Closing Date;
(ii) since the date of the most recent financial
statements included in the Offering Memorandum, there has been
no adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
subsidiaries, which is material to the Company and its
subsidiaries taken as a whole whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated by the Offering Memorandum (exclusive
of any amendment or supplement thereto); and
(iii) no consolidated financial statements of the
Company prepared in accordance with U.S. generally accepted
accounting principles as of any date or any period subsequent
to June 30, 1998 are available.
(g) At the Closing Date, Ernst & Young LLP shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent auditors with respect
to the Company within the meaning of Rule 101 of AICPA's Code of
Professional Conduct and its interpretation and rulings and stating in
effect that:
(i) the consolidated financial statements and
financial statement schedules audited by them and included in
the Offering Memorandum comply as to form in all material
respects with the applicable requirements of the Exchange Act
and the related published rules and regulations
(ii) they have audited the consolidated balance
sheets of the Company and its subsidiaries as of December 31,
1996 and 1997, and the consolidated statements
18
<PAGE> 19
of operations, shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1997, all
included in the Offering Memorandum;
(iii) they have read the 1997 and 1998 minutes of
meetings of the shareholders and the Board of Directors and
other committees of the Company and its subsidiaries as set
forth in the minute books through a specified date not more
than five business days prior to the date of the letter, and
have inquired of certain officials of the Company who have
responsibility for financial and accounting matters;
(iv) with respect to the six-month periods ended
June 30, 1997 and 1998, (X) they have (1) performed the
procedures specified by the American Institute of Certified
Public Accountants for review of interim financial information
as described in SAS No. 71, "Interim Financial Information",
on the unaudited condensed consolidated financial statements
of the Company and its subsidiaries (the "UNAUDITED
FINANCIALS") included in the Offering Memorandum and (2)
inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether
the Unaudited Financials are stated on a basis substantially
consistent with that of the audited consolidated financial
statements of the Company and its subsidiaries included in the
Offering Memorandum and (Y) as a result of the procedures
performed in (X) above, nothing came to their attention that
caused them to believe that any material modifications should
be made to such Unaudited Financials for them to be in
conformity with generally accepted accounting principles;
(v) with respect to the period subsequent to June
30, 1998, management of the Company has informed them that
there were not any changes at a specified date not more than
five business days prior to the date of the letter, in the
long-term debt of the Company and its subsidiaries or
decreases in the capital stock of the Company as compared with
the amounts shown on the June 30, 1998, condensed consolidated
balance sheet referred to above, except in all instances for
changes, decreases or increases set forth in such letter, in
which case the letter shall be accompanied by an explanation
by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Initial Purchasers;
(vi) nothing came to their attention that caused
them to believe that any unaudited pro forma financial
statements included in the Offering Memorandum do not comply
as to form in all material respects with Regulation S-X of the
Securities Act or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation
of those statements; and
(vii) they have performed certain other specified
procedures as a result of which they determined that certain
information of accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Offering
Memorandum agrees with the accounting records of the Company
and its subsidiaries, excluding any questions of legal
interpretation.
19
<PAGE> 20
In rendering such letter or letters, Ernst & Young LLP may
rely upon the letters of Deloitte & Touche LLP and PriceWaterhouseCoopers LLP
with respect to certain historical financial information included in the
unaudited pro forma financial statements.
(h) At the Closing Date, Deloitte & Touche LLP shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent auditors with respect
to Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries within the meaning of
Rule 101 of AICPA's Code of Professional Conduct and its interpretation
and rulings and stating in effect that:
(i) the consolidated financial statements and
financial statement schedules audited by them and included in
the Offering Memorandum comply as to form in all material
respects with the applicable requirements of the Exchange Act
and the related published rules and regulations
(ii) they have audited the consolidated balance
sheets of Comcast UK Cable Partners Limited, ComTel UK
Finance, B.V. and Telecential and their respective
subsidiaries as of December 31, 1996 and 1997, and the
consolidated statements of operations, shareholders' equity
and cash flows for each of the three years in the period ended
December 31, 1997, all included in the Offering Memorandum;
(iii) they have read the 1997 and 1998 minutes of
meetings of the shareholders and the Board of Directors and
other committees of Comcast UK Cable Partners Limited, ComTel
UK Finance, B.V. and Telecential and their respective
subsidiaries as set forth in the minute books through a
specified date not more than five business days prior to the
date of the letter, and have inquired of certain officials of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries who have
responsibility for financial and accounting matters;
(iv) with respect to the six-month periods ended
June 30, 1997 and 1998, (X) they have (1) performed the
procedures specified by the American Institute of Certified
Public Accountants for review of interim financial information
as described in SAS No. 71, "Interim Financial Information",
on the unaudited condensed consolidated financial statements
of Comcast UK Cable Partners Limited, ComTel UK Finance, B.V.
and Telecential and their respective subsidiaries (the "D&T
UNAUDITED FINANCIALS") included in the Offering Memorandum and
(2) inquired of certain officials of Comcast UK Cable Partners
Limited, ComTel UK Finance, B.V. and Telecential and their
respective subsidiaries who have responsibility for financial
and accounting matters whether the D&T Unaudited Financials
are stated on a basis substantially consistent with that of
the audited consolidated financial statements of Comcast UK
Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries included in the
Offering Memorandum and (Y) as a result of the procedures
performed in (X) above, nothing came to their attention that
caused them to believe that any material modifications should
be made to such D&T Unaudited Financials for them to be in
conformity with generally accepted accounting principles;
20
<PAGE> 21
(v) with respect to the period subsequent to June
30, 1998, management of Comcast UK Cable Partners Limited,
ComTel UK Finance, B.V. and Telecential and their respective
subsidiaries has informed them that there were not any changes
at a specified date not more than five business days prior to
the date of the letter, in the long-term debt of Comcast UK
Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries or decreases in
the capital stock of Comcast UK Cable Partners Limited, ComTel
UK Finance, B.V. and Telecential and their respective
subsidiaries as compared with the amounts shown on the June
30, 1998, condensed consolidated balance sheet referred to
above, except in all instances for changes, decreases or
increases set forth in such letter, in which case the letter
shall be accompanied by an explanation by Comcast UK Cable
Partners Limited, ComTel UK Finance, B.V. and Telecential and
their respective subsidiaries as to the significance thereof
unless said explanation is not deemed necessary by the Initial
Purchasers; and
(vi) they have performed certain other specified
procedures as a result of which they determined that certain
information of accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries) set forth in
the Offering Memorandum agrees with the accounting records of
Comcast UK Cable Partners Limited, ComTel UK Finance, B.V. and
Telecential and their respective subsidiaries, excluding any
questions of legal interpretation.
(i) At the Closing Date, PriceWaterhouseCoopers LLP shall have
furnished to the Initial Purchasers a letter or letters, dated as of
the Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent auditors with respect
to Comcast UK Finance B.V. within the meaning of Rule 101 of AICPA's
Code of Professional Conduct and its interpretation and rulings and
stating in effect that:
(i) the consolidated financial statements and
financial statement schedules audited by them and included in
the Offering Memorandum comply as to form in all material
respects with the applicable requirements of the Exchange Act
and the related published rules and regulations
(ii) they have audited the consolidated balance
sheets Comcast UK Finance B.V. as of December 31, 1996 and the
consolidated statements of operations, shareholders' equity
and cash flows for each of the two years in the period ended
December 31, 1996, all included in the Offering Memorandum;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of
Comcast UK Finance B.V.) set forth in the Offering Memorandum
agrees with the accounting records of Comcast UK Finance B.V.,
excluding any questions of legal interpretation.
(j) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Offering Memorandum, there
shall not have been (i) any change or
21
<PAGE> 22
decrease specified in the letter or letters referred to in paragraph
(f) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries the effect of which is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impractical
or inadvisable to market the Notes as contemplated by the Offering
Memorandum.
(k) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Securities Act).
(l) Prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(m) On or prior to the Closing Date, the Indenture and the
Registration Rights Agreement shall have been executed substantially in
the form hereto delivered to you and shall have been delivered to you
and the Trustee.
(n) On or prior to the Closing Date, the Company shall have
consummated the sale of its 11-1/2% Senior Notes due 2008.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Initial Purchasers and Counsel for the
Initial Purchasers, this Agreement and all obligations of the Initial Purchasers
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Initial Purchasers. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will
be delivered at the office of Latham & Watkins, Counsel for the Initial
Purchasers, at 885 Third Avenue, New York, New York, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Notes
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Initial Purchasers in payment for the Notes on the Closing
Date, the Company will reimburse the Initial Purchasers upon demand for all
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Notes against appropriate receipts there for.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, each person who controls any
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act and the respective officers, directors,
partners, employees, representatives and agents of such Initial Purchaser or
controlling person thereof against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of
22
<PAGE> 23
them may become subject under the Securities Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Offering Memorandum, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Offering Memorandum or any information provided by the Company to any holder
or prospective purchaser of Notes pursuant to paragraph 5(g) hereof, or in any
amendment thereof or supplement thereto, in reliance upon and in conformity with
written information relating to any Initial Purchaser furnished to the Company
by or on behalf of any Initial Purchaser specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company, its directors, its officers, and
each person who controls the Company within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Initial Purchaser, but only with
reference to written information relating to such Initial Purchaser furnished to
the Company by or on behalf of such Initial Purchaser specifically for inclusion
in the Offering Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which any Initial
Purchaser may otherwise have. The Company acknowledges that the statements
relating to the Initial Purchasers set forth in the last paragraph of the cover
page and in the second and third sentences of the second paragraph, the fifth
paragraph and the eleventh paragraph under the heading "Plan of Distribution" in
the Offering Memorandum constitute the only information furnished in writing by
or on behalf of the Initial Purchasers for inclusion in the Offering Memorandum
(or in any amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action (including any
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
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 if (i) the
indemnifying party shall authorize
23
<PAGE> 24
the indemnified party in writing to employ separate counsel at the expense of
the indemnifying party, (ii) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (iii) the indemnifying party shall not have employed counsel
reasonably 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 named parties of any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded based upon the advice of such
counsel (with a copy to the indemnifying party) that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party (in any of which cases
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such indemnified parties, which firm shall be
designated in writing by the indemnified party, and that all such reasonable
fees and expenses shall be reimbursed as they are incurred upon written request
and presentation of satisfactory invoices). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against all losses,
claims, damages and liabilities by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. Notwithstanding the immediately preceding sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel, an
indemnifying party shall not be liable for any settlement of the nature
contemplated by the immediately preceding sentence effected without its consent
if such indemnifying party (i) reimburses such indemnified party in accordance
with such request to the extent that it considers such request to be reasonable
and (ii) provides written notice to the indemnified party substantiating the
unpaid balance as unreasonable, in each case, prior to the date of settlement.
An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act, by or on behalf of the indemnified party.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchasers agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "LOSSES") to which the Company
and one or more of the Initial Purchasers may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company and by
the Initial Purchasers from the offering of the Notes; provided, however, that
in no case shall any Initial Purchaser (except as may be provided in any
agreement among the Initial Purchasers relating to the offering of the Notes) be
responsible for any amount in excess of the purchase discount or commission
applicable to the Notes purchased by such Initial Purchaser hereunder. If the
allocation
24
<PAGE> 25
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Initial Purchasers shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Initial Purchasers in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Initial Purchasers shall be deemed to be
equal to the total purchase discounts and commissions received by the Initial
Purchasers from the Company in connection with the purchase of the Notes
hereunder. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Initial Purchasers. The Initial Purchasers' respective
obligations to contribute to this Section 8 are several in proportion to the
principal amount at maturity of Notes they have purchased hereunder, and not
joint. The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee and
agent of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Notes agreed to be
purchased by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the principal amount at
maturity of the Notes set forth opposite their names in Schedule I bears to the
aggregate principal amount at maturity of such Notes set forth opposite the
names of all the remaining Initial Purchasers in Schedule I) the Notes which the
defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase; provided, however, that in the event that the aggregate principal
amount at maturity of such Notes which the defaulting Initial Purchaser or
Initial Purchasers agreed but failed to purchase shall exceed 10% of the
aggregate principal amount at maturity of such Notes set forth in Schedule I,
the remaining Initial Purchasers that agreed to purchase such Notes shall have
the right to purchase all, but shall not be under any obligation to purchase
any, of such Notes, and if such non-defaulting Initial Purchasers do not
purchase all such Notes, this Agreement will terminate without liability to any
non-defaulting Initial Purchaser or the Company. In the event of a default by
any Initial Purchaser as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the non-defaulting
Initial Purchasers shall determine in order that the required changes in the
Offering Memorandum or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Initial
Purchaser of its liability, if any, to the Company or any non-defaulting Initial
Purchaser for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination by notice given by the Initial Purchasers to the Company, if (a)
after the execution and delivery of this Agreement and prior to the Closing Date
(i) trading generally shall have been suspended or materially limited on or by,
as the
25
<PAGE> 26
case may be, any of the New York Stock Exchange, the American Stock Exchange,
the National Association of Securities Dealers, Inc., the Chicago Board of
Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the Initial Purchasers, is material
and adverse and (b) in the case of any of the events specified in clauses (a)(i)
through (iv), such event, singly or together with any other such event, makes
it, in the judgment of the Initial Purchasers, impracticable or inadvisable to
market the Notes on the terms and in the manner contemplated in the Offering
Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Initial Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchasers or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof. and will survive delivery of and payment for the Notes. The provisions
of Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Initial Purchasers, will be
mailed, delivered or sent by facsimile (212-761-0086) and confirmed to them, at
Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036,
attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or sent by facsimile (212-906-8497) and confirmed to it at 110 East
59th Street, 26th Floor, New York, New York 10022, attention:
General Counsel.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and, except as expressly set forth in Section 5(h) hereof, no other person will
have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. Business Day. For purposes of this Agreement, "business
day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in The City of New York, New York are
authorized not to open or are not obligated by law, executive order or
regulation to open.
16. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
[Signature pages follow]
26
<PAGE> 27
If the foregoing is in accordance with your understanding of
our agreement. please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding agreement
between the Company and the Initial Purchaser.
Very truly yours,
NTL INCORPORATED
By: /s/ George S. Blumenthal
-------------------------------
Name: George S. Blumenthal
Title: Chairman
<PAGE> 28
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Donal A. Quigley
---------------------------
Name:
Title:
CHASE SECURITIES INC.
By: ___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: ___________________________
Name:
Title:
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
---------------------------
Name:
Title:
2
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AT MATURITY OF
NOTES
INITIAL PURCHASER TO BE PURCHASED
- ----------------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated ............................... $270,000,000
Chase Securities Inc. ........................................... 135,000,000
Donaldson, Lufkin & Jenrette Securities Corporation.............. 22,500,000
Goldman, Sachs & Co.............................................. 22,500,000
============
TOTAL .................................................. $450,000,000
</TABLE>
<PAGE> 30
SCHEDULE II
1. Amended and Restated Agreement of Reorganization and Plan of Merger,
dated as of May 28, 1993, among the Company, OCOM Corporation and
CableTel Merger, Inc.
2. Rights Agreement, dated as of October 1, 1993, between the Company and
Continental Stock Transfer & Trust Company, as Rights Agent.
3. Indenture, dated as of April 20, 1995, between the Company and the
Trustee, governing the Company's 12-3/4% Senior Deferred Coupon Notes
Due 2005, as amended by a First Supplemental Indenture, dated as of
January 22, 1996, as amended by a Second Supplemental Indenture, dated
as of October 14, 1998.
4. Indenture, dated as of January 30, 1996, between the Company and the
Trustee, governing the Company's 11-1/2 % Senior Deferred Coupon Notes
Due 2006, as amended by a First Supplemental Indenture, dated as of
October 14, 1998.
5. Indenture, dated as of June 12, 1996, between the Company and the
Trustee governing the Company's 7% Convertible Subordinated Notes Due
2008.
6. Indenture, dated as of February 12, 1997, between the Company and the
Trustee governing the Company's 10% Senior Notes Due 2007, as amended
by a First Supplemental Indenture, dated as of October 14, 1998.
7. Warrants to Purchase Common Stock issued by the Company to various
persons in the form included as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
8. NTL, Inc. 1993 Stock Option Plan.
9. NTL, Inc. 1993 Non-Employee Director Stock Option Plan.
10. OCOM Corporation 1991 Stock Option Plan.
11. Consulting Agreement between the Company and Insight Communications
Company, L.P.
12. Credit Facility between the Company and The Chase Manhattan Bank, dated
as of October 17, 1997, as amended by that certain letter agreement,
dated as of March 6, 1998.
13. Indenture, dated as of March 13, 1998, between the Company and The
Chase Manhattan Bank governing the Company's 9-1/2% Sterling Senior
Notes Due 2008.
14. Indenture, dated as of February 12, 1997, between the Company and The
Chase Manhattan Bank governing the Company's 10-3/4% Sterling Senior
Deferred Coupon Notes Due 2008.
15. Indenture, dated as of February 12, 1997, between the Company and The
Chase Manhattan Bank governing the Company's 9-3/4% Senior Deferred
Coupon Notes Due 2008.
<PAGE> 31
16. Share Exchange Agreement, dated as of June 16, 1998, among the Company
and the shareholders of Diamond Cable Communications Plc. set forth
therein.
17. Indenture, dated as of November 2, 1998, between the Company and The
Chase Manhattan Bank governing the Company's 11-1/2% Senior Notes Due
2008.
<PAGE> 1
Exhibit 4.1
Execution Copy
NTL INCORPORATED
$625,000,000
11 1/2% SENIOR NOTES DUE 2008
INDENTURE
Dated as of November 2, 1998
The Chase Manhattan Bank
Trustee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I........................................................................................................ 1
Section 1.01. Definitions..................................................................................... 1
Section 1.02. Other Definitions............................................................................... 13
Section 1.03. Incorporation by Reference of Trust Indenture Act............................................... 13
Section 1.04. Rules of Construction........................................................................... 14
ARTICLE II. THE NOTES............................................................................................ 14
Section 2.01. Form and Dating................................................................................. 14
Section 2.02. Execution and Authentication.................................................................... 16
Section 2.03. Registrar and Paying Agent...................................................................... 17
Section 2.04. Paying Agent to Hold Money in Trust............................................................. 17
Section 2.05. Holder Lists.................................................................................... 17
Section 2.06. Transfer and Exchange........................................................................... 18
Section 2.07. Replacement Notes............................................................................... 22
Section 2.08. Outstanding Notes............................................................................... 22
Section 2.09. Treasury Notes.................................................................................. 22
Section 2.10. Temporary Notes; Global Notes................................................................... 22
Section 2.11. Cancellation.................................................................................... 23
Section 2.12. Defaulted Interest.............................................................................. 23
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............................................................................ 24
Section 3.04. Effect of Notice of Redemption.................................................................. 25
Section 3.05. Deposit of Redemption Price..................................................................... 25
Section 3.06. Notes Redeemed in Part.......................................................................... 25
Section 3.07. Optional Redemption and Optional Tax Redemption................................................. 25
Section 3.08. Mandatory Redemption............................................................................ 25
Section 3.09. Asset Sale Offer and Purchase Offer............................................................. 25
ARTICLE IV. COVENANTS............................................................................................ 28
Section 4.01. Payment of Notes................................................................................ 28
Section 4.02. Reports......................................................................................... 28
Section 4.03. Compliance Certificate.......................................................................... 29
Section 4.04. Stay, Extension and Usury Laws.................................................................. 29
Section 4.05. Corporate Existence............................................................................. 29
Section 4.06. Taxes........................................................................................... 30
Section 4.07. Limitations on Liens............................................................................ 30
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock...................................... 30
Section 4.09. Restricted Payments............................................................................. 32
Section 4.10. Asset Sales..................................................................................... 35
Section 4.11. Transactions with Affiliates.................................................................... 37
Section 4.12. Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries...................... 38
Section 4.13. Change of Control............................................................................... 39
Section 4.14. Payment of Additional Amounts................................................................... 40
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V. SUCCESSORS............................................................................................ 40
Section 5.01. Merger, Consolidation or Sale of Assets......................................................... 40
Section 5.02. Successor Corporation Substituted............................................................... 41
ARTICLE VI. DEFAULTS AND REMEDIES................................................................................ 41
Section 6.01. Events of Default............................................................................... 41
Section 6.02. Acceleration.................................................................................... 43
Section 6.03. Other Remedies.................................................................................. 44
Section 6.04. Waiver of Past Defaults......................................................................... 44
Section 6.05. Control by majority............................................................................. 44
Section 6.06. Limitation on Suits............................................................................. 44
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................................................................ 45
Section 6.10. Priorities...................................................................................... 45
Section 6.11. Undertaking for Costs........................................................................... 46
ARTICLE VII. TRUSTEE............................................................................................. 46
Section 7.01. Duties of Trustee............................................................................... 46
Section 7.02. Rights of Trustee............................................................................... 47
Section 7.03. Individual Rights of Trustee.................................................................... 47
Section 7.04. Trustee's Disclaimer............................................................................ 47
Section 7.05. Notice of Defaults.............................................................................. 47
Section 7.06. Reports by Trustee to Holders.................................................................. 48
Section 7.07. Compensation and Indemnity...................................................................... 48
Section 7.08. Replacement of Trustee.......................................................................... 48
Section 7.09. Successor Trustee by Merger, Etc................................................................ 49
Section 7.10. Eligibility; Disqualification................................................................... 49
Section 7.11. Preferential Collection of Claims Against Company............................................... 50
ARTICLE VIII. DISCHARGE OF INDENTURE............................................................................. 50
Section 8.01. Termination of Company's Obligations............................................................ 50
Section 8.02. Option to Effect Defeasance..................................................................... 50
Section 8.03. Application of Trust Money...................................................................... 52
Section 8.04. Repayment to Company............................................................................ 52
Section 8.05. Reinstatement................................................................................... 52
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS.................................................................. 53
Section 9.01. Without Consent of Holders...................................................................... 53
Section 9.02. With Consent of Holders......................................................................... 53
Section 9.03. Compliance with Trust Indenture Act............................................................. 54
Section 9.04. Revocation and Effect of Consents............................................................... 54
Section 9.05. Notation on or Exchange of Notes................................................................ 54
Section 9.06. Trustee Protected............................................................................... 55
ARTICLE X. MISCELLANEOUS......................................................................................... 55
Section 10.01. Trust Indenture Act Controls.................................................................. 55
Section 10.02. Notices....................................................................................... 55
Section 10.03. Communication by Holders with Other Holders................................................... 55
Section 10.04. Certificate and Opinion as to Conditions Precedent............................................ 56
Section 10.05. Statements Required in Certificate or Opinion................................................. 56
Section 10.06. Rules by Trustee and Agents................................................................... 56
Section 10.07. Legal Holidays................................................................................ 56
Section 10.08. No Recourse Against Others.................................................................... 56
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 10.09. Counterparts and Facsimile Signatures......................................................... 57
Section 10.10. Variable Provisions........................................................................... 57
Section 10.11. Governing Law................................................................................. 57
Section 10.12. No Adverse Interpretation of Other Agreements................................................. 58
Section 10.13. Successors.................................................................................... 58
Section 10.14. Severability.................................................................................. 58
Section 10.15. Table of Contents, Headings, Etc.............................................................. 58
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1)................................................................................................ 7.10
(a)(2) ................................................................................................... 7.10
(a)(3).................................................................................................... N.A.
(a)(4).................................................................................................... N.A.
(a)(5).................................................................................................... 7.10
(b) ..................................................................................................... 7.08, 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.
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
iv
<PAGE> 6
INDENTURE, dated as of November 2, 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 11 1/2% Senior Notes due 2008 (the "INITIAL NOTES") and, if and when
issued in exchange for Initial Notes, the Company's 11 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.
"9 1/2% NOTES" means the Company's 9 1/2% Senior Notes due 2008 and the
Company's 9 1/2% Series B Senior Notes due 2008.
"9 3/4% NOTES" means the Company's 9 3/4% Senior Deferred Coupon Notes
due 2008 and the Company's 9 3/4% Series B Senior Deferred Coupon Notes due
2008.
"10% NOTES" means the Company's 10% Series B Senior Notes due 2007.
"10 3/4% NOTES" means the Company's 10 3/4% Senior Deferred Coupon
Notes due 2008 and the Company's 10 3/4% Series B Senior Deferred Coupon Notes
due 2008.
"11 1/2% DEFERRED COUPON 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-
<PAGE> 7
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.
"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
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<PAGE> 8
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 two days 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 two
days 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
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<PAGE> 9
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 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% 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
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<PAGE> 10
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) (pound sterling) 555 million and (ii) the amount of the aggregate
commitments thereunder as the same may be increased after March 13, 1998 as
contemplated by the Facilities Agreement as amended or supplemented to March 13,
1998, but in no event greater than (pound sterling) 875 million, 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.
"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.
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<PAGE> 11
"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 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.
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<PAGE> 12
"INITIAL PURCHASERS" means Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
Goldman, Sachs & Co.
"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).
"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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<PAGE> 13
"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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<PAGE> 14
"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 12 3/4% Notes, the 11 1/2% Deferred Coupon Notes,
the 10 3/4% Notes, the 10% Notes, the 9 3/4% Notes and the 9 1/2% 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% Deferred Coupon Notes, the 10 3/4% Notes, the 10% Notes, the
9 3/4% Notes and the 9 1/2% 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
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<PAGE> 15
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.
"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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<PAGE> 16
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of October
26, 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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<PAGE> 17
"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 November 2, 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> 18
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.
<TABLE>
<CAPTION>
DEFINED
TERM IN SECTION
- ---- ----------
<S> <C>
"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
"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
"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.S. GOVERNMENT OBLIGATIONS"................................. 8.02
</TABLE>
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
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<PAGE> 19
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 "L" 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
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<PAGE> 20
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 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.
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<PAGE> 21
(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 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.
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<PAGE> 22
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, if 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 Chase Manhattan Bank
Luxembourg S.A. to act as a Registrar and 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
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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.
(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 "Transfer
Restrictions" in the Company's Offering Memorandum dated October 26,
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
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<PAGE> 24
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 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
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<PAGE> 25
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.
(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
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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) Distribution Compliance Period. Prior to the termination
of the "DISTRIBUTION COMPLIANCE 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 distribution compliance 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
distribution compliance 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
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.
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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.
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.
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(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 to 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 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.
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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 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
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(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
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
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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;
(ii) the 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
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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 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
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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 of Notes and Other Qualified Notes that may be
purchased out of the Excess Proceeds 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)
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
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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 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
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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 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
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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, 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
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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 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);
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(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:
(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;
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(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 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 is 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 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 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
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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 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:
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(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 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)) that may be purchased out of
the Excess Proceeds (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 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, 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, 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
Notes and the Other Qualified Notes, the amount of Excess Proceeds will be reset
at zero.
(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
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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; or
(iii) 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:
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(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:
(i) Existing Indebtedness as in effect on the Issuance Date;
(ii) this Indenture and the Notes;
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(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.
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 principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase (the "CHANGE OF CONTROL
PAYMENT").
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(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).
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;
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(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 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;
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(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;
(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;
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(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
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 October 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 October 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 October 1 of the years (November 2 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.
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<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1998.......................................... 115.333%
1999.......................................... 113.416%
2000.......................................... 111.500%
2001.......................................... 109.583%
2002.......................................... 107.667%
</TABLE>
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;
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(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, 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.
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:
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(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.
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 April 20,
1995, between the Company and The Chase Manhattan Bank, as trustee, relating to
the 12 3/4% Notes, as amended, (b) indenture, dated as of January 30, 1996,
between the Company and The Chase Manhattan Bank, as trustee, relating to the 11
1/2% Deferred Coupon Notes,
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as amended, (c) indenture, dated as February 12, 1997, between the Company and
The Chase Manhattan Bank, as trustee, relating to the 10% Notes, as amended, (d)
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, (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.
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:
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(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
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,
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;
(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
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(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, 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.
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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 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
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(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 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.
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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.
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).
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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.
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
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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, 1999.
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.
Senior Vice President and 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 10.11. 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.
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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 and
General Counsel
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Andrew M. Deck
Name: Andrew M. Deck
Title: Vice President
<PAGE> 65
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 U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFF-SHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED
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<PAGE> 66
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE
IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM 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.
AS USED HEREIN, THE TERMS "OFF-SHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
A-2
<PAGE> 67
No. ________
$______
CUSIP No. [ ]/CINS No. [ ]
11 1/2% SENIOR 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 October 1, 2008, subject to the further provisions of
this 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 April 1, 1999
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated:_____________________
NTL INCORPORATED
by:________________________
by:________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 11 1/2% Senior
Notes due 2008 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:______________________________________
Authorized Officer
- --------
* Applicable to Global Notes Only
A-3
<PAGE> 68
[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
11 1/2% Senior Note due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "COMPANY"),
is the issuer of 11 1/2% Senior Notes due 2008 (the "NOTES"). The Notes will
accrue interest at a rate of 11 1/2% per annum. The Company promises to pay
interest on the Notes in cash semiannually on each April 1 and October 1,
commencing on April 1, 1999, to Holders of record on the immediately preceding
March 15 and September 15, respectively. Interest on the Notes will accrue from
the most recent date to which interest has been paid, or if no interest has been
paid, from November 2, 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 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 Note shall be increased to the extent necessary to pay
Additional Amounts as set forth in this Note.
2. Special Interest. The Holder of this Note is entitled to the
benefits of the Registration Rights Agreement relating to the Notes, dated as of
November 2, 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 Notes, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 180th day following the date of original issuance of the
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
220th day following the date of original issuance of the 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 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
180-day period in the case of clause (b) above and (iii) such 220-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 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 April 1, 1999,
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 Notes or
(iii) the date as of which all of the 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
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<PAGE> 69
amount of the 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 April 1, 1999, 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 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 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 Note after such deduction or withholding shall be not less than the
amounts specified in this Note to which the Holder of this 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 Note or the receipt of
amounts payable in respect of this 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 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 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 Note or, if different, the beneficial owner of the
interest payable on this 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;
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<PAGE> 70
(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 Note or withholding from the proceeds of a
sale or exchange of a 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 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 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 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 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 Note.
All references to principal amount or interest on the Notes in the Indenture or
the 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 Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date for the next interest payment date
even though Notes are canceled after the record date and on or before the
interest payment date. Holders must surrender 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.
5. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York, New York. Chase Manhattan Bank Luxembourg
S.A. will act as Paying Agent and Registrar in Luxembourg if and as long as the
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 Notes under an Indenture, dated as
of November 2, 1998 (the "INDENTURE"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the 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 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 Notes are unsecured
general obligations of the Company limited to $625,000,000 in aggregate
principal amount.
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7. Optional Redemption. Except as provided in Section 8 hereof, the
Notes are not redeemable at the Company's option prior to October 1, 2003.
Thereafter, the 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 October
1 of the years indicated below:
Year Percentage
---- ----------
2003..................................... 105.570%
2004..................................... 103.833%
2005..................................... 101.917%
2006 and thereafter...................... 100.000%
8. Optional Tax Redemption. (a) The 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 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 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 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 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
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<PAGE> 72
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 Notes to be redeemed at his address of record. The 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 Notes, the 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 Notes or
portions of them called for redemption.
If this 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 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 Notes. There are
no sinking fund payments with respect to the 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 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 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 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 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 principal amount or accreted value, as the case
may be, of the Notes and the Other Qualified Notes) that may be purchased out of
the Excess Proceeds, 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. 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, 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, then such remaining Excess
Proceeds will be allocated pro rata according to principal
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<PAGE> 73
amount or accreted value, as the case may be, to the Notes and each issue of the
Other Qualified Notes and, the Trustee will select the 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 Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered, and Notes may be exchanged, as
provided in the Indenture. The Registrar 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 Note or portion of a Note
selected for redemption (except the unredeemed portion of any Note being
redeemed in part). Also, it need not exchange or register the transfer of any
Note for a period of 15 days before a selection of Notes to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 4 of this
Note, the registered Holder of a 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 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 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 Notes by notice to the Company and the Trustee
may declare all the 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 Notes shall become
due and payable immediately without further action or notice. The Holders of a
majority in principal amount of the 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 Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding 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 Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a tender offer or exchange
offer for Notes), and any existing default may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes. Without
the consent of any Holder, the Indenture or the 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
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<PAGE> 74
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 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 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 Notes 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.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
21. Authentication. The 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 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.
Senior Vice President and General Counsel
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<PAGE> 75
ASSIGNMENT FORM
To assign this Note, fill in the
form below:
(I) or (we) assign and transfer this 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
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 Note)
Date: __________________
Signature Guarantee:* ____________________________________________
In connection with any transfer of any of the 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 Notes and the last date,
if any, on which such Notes were owned by the Company or any Affiliate
of the Company, the undersigned confirms that such Notes are being
transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Company or any subsidiary thereof,
(2) [ ] to a qualified institutional buyer in compliance with Rule
144A,
(3) [ ] inside the United States to an Institutional Accredited
Investor that, prior to such transfer, furnishes to the
Trustee a signed letter containing certain representations and
agreements relating to the restrictions on transfer of the
Notes (the form of which letter can be obtained from the
Trustee) and, if such transfer is in respect of an aggregate
principal amount of Notes of less than $100,000, an opinion of
counsel acceptable to the Company that such transfer is in
compliance with the Securities Act,
(4) [ ] outside the United States in compliance with Rule 904 under
the Securities Act,
(5) [ ] pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available) or
(6) [ ] pursuant to an effective registration statement under the
Securities Act.
- -------------------------------
* Signature must be guaranteed by a commercial bank, trust
company or member firm of the New York Stock Exchange
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<PAGE> 76
--------------------------
Signature
Signature Guarantee*
- --------------------------
Signature must be guaranteed
------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this 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.
NOTICE: To be executed by an executive officer
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<PAGE> 77
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 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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<PAGE> 78
[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:
<TABLE>
<CAPTION>
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Amount of decrease in Amount of increase Principal amount of Signature of Date of exchange
principal amount of in principal amount this Global Note authorized officer following such
this Global Note of this Global Note of Trustee or Notes decrease or increase
Custodian
<S> <C> <C> <C> <C>
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
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</TABLE>
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<PAGE> 79
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.
B-1
<PAGE> 80
No. ___________ $__________
CUSIP No. [ ]CINS No. [ ]
11 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 [ ]
$[ ] [or such other amount as is indicated on Schedule A hereof]**** on October
1, 2008, subject to the further provisions of this 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 April 1, 1999
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this 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> 81
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 11 1/2% Series B Senior Notes due 2008 described in the
within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________________
Authorized Officer
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<PAGE> 82
(FORM OF REVERSE OF EXCHANGE NOTE)
NTL INCORPORATED
11 1/2% Series B Senior Note due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "COMPANY"),
is the issuer of 11 1/2% Series B Senior Notes due 2008 (the "NOTES"). The Notes
will accrue interest at a rate of 11 1/2% per annum. The Company promises to pay
interest on the Notes in cash semiannually on each April 1 and October 1,
commencing April 1, 1999, to Holders of record on the immediately preceding
March 15 and September 15, respectively, at the rate of 11 1/2% per annum.
Interest on the Notes will accrue from the most recent date to which interest
has been paid on the Company's 11 1/2% Senior Notes due 2008, or the Notes, as
the case may be, or if no interest has been paid, from November 2, 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 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 Note shall be increased to the extent necessary to pay
Additional Amounts as set forth in this 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 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 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 Note after such deduction or withholding shall be not less than the
amounts specified in this Note to which the Holder of this 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 Note or the receipt of
amounts payable in respect of this 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 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
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<PAGE> 83
later, except to the extent that the Holder would have been entitled to
Additional Amounts had this 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 Note or, if different, the beneficial owner of the interest
payable on this 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 Note or withholding from the proceeds of a sale or
exchange of a 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 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 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 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 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 Note.
All references to principal amount or interest on the Notes in the Indenture or
the 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 Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date for the next interest payment date
even though Notes are canceled after the record date and on or before the
interest payment date. Holders must surrender 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.
B-5
<PAGE> 84
4. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar in the City of New York. Chase Manhattan Bank Luxembourg S.A. will act
as Paying Agent and Registrar in Luxembourg if and as long as the 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 Notes under an indenture, dated as
of November 2, 1998 (the "INDENTURE"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the 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 (Section)(Section) 77aaa-77bbbb) as in effect on the date of
the Indenture. The 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 Notes are unsecured
general obligations of the Company limited to $625,000,000 in aggregate
principal amount.
6. Optional Redemption. Except as provided in Section 7 herein, the
Notes are not redeemable at the Company's option prior to October 1, 2003.
Thereafter, the 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 October
1 of the years indicated below:
<TABLE>
<CAPTION>
<S> <C> <C>
Year Percentage
---- ----------
2003 ......................................... 105.570%
2004.......................................... 103.833%
2005.......................................... 101.917%
2006 and thereafter........................... 100.000%
</TABLE>
7. Optional Tax Redemption. (a) The 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 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 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
B-6
<PAGE> 85
in respect of the 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 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 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 Notes to be redeemed at his address of record. The 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 Notes, the 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 Notes or
portions of them called for redemption. If this 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 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 Notes. There are
no sinking fund payments with respect to the 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 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 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 Notes or portions thereof in authorized
denominations purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below.
B-7
<PAGE> 86
(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 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 principal amount or accreted value, as the case
may be, of the Notes and the Other Qualified Notes) that may be purchased out of
the Excess Proceeds 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. 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, 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 then any remaining Excess Proceeds
will be allocated pro rata according to principal amount or accreted value, as
the case may be, to the Notes and each issue of the Other Qualified Notes and,
the Trustee will select the 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 Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered, and Notes may be exchanged, as
provided in the Indenture. The Registrar 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 Note or portion of a Note
selected for redemption (except the unredeemed portion of any Note being
redeemed in part). Also, it need not exchange or register the transfer of any
Note for a period of 15 days before a selection of Notes to be redeemed.
12. Persons Deemed Owners. Except as provided in paragraph 3 of this
Note, the registered Holder of a 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 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 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 Notes by notice to the Company and the Trustee
may declare all the 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 Notes shall become
due and payable immediately without further action or notice. The Holders of a
majority in principal amount of the 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 Notes as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes issued under the Indenture may direct the Trustee in its exercise of any
trust
B-8
<PAGE> 87
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 Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a tender offer or exchange
offer for Notes), and any existing default may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes. Without
the consent of any Holder, the Indenture or the 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 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 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 Notes 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.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
20. Authentication. The 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).
B-9
<PAGE> 88
The Company will furnish to any Holder of the 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.
Senior Vice President and General Counsel
B-10
<PAGE> 89
ASSIGNMENT FORM
To assign this Note, fill in the
form below:
(I) or (we) assign and transfer this 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
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 Note)
Date: __________________
Signature Guarantee: **/ ______________________________
- ------------------
**/ Signature must be guaranteed by a commercial Bank, trust company or member
of the New York Stock Exchange.
B-11
<PAGE> 90
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 Note)
Date: ________________________
Signature Guarantee:***
- ---------------------
*** Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
B-12
<PAGE> 91
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:
<TABLE>
<CAPTION>
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
Amount of decrease in Amount of increase Principal amount of Signature of Date of exchange
principal amount of in principal amount this Global Note authorized officer following such
this Global Note of this Global Note of Trustee or Notes decrease or increase
Custodian
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
- ------------------------- --------------------- ---------------------- --------------------- ---------------------
</TABLE>
B-13
<PAGE> 92
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 11 1/2% Senior Notes due 2008 (the
"NOTES")
Reference is hereby made to the Indenture, dated as of
November 2, 1998 (the "INDENTURE"), between NTL Incorporated, as Issuer, and The
Chase Manhattan Bank, as Trustee.
This letter relates to $[ ] aggregate principal amount of
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 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 Notes and (i) with respect to transfers made in
reliance on Regulation S, does hereby certify that:
(1) the offer of the 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 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 Notes are being transferred
in accordance with Rule 144A under the Securities Act to a transferee that the
Transferor reasonably believes is purchasing the 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.
In addition, if the sale is made during a distribution
compliance period and the provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1)
of Regulation S are applicable thereto, we confirm
C-1
<PAGE> 93
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.
Senior Vice President and General Counsel
C-2
<PAGE> 94
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 11 1/2% Senior Notes due 2008
(the "NOTES")
Reference is hereby made to the Indenture, dated as of
November 2, 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
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 Notes in exchange for an equivalent beneficial
interest in the Rule 144A Global Note.
In connection with such request, and in respect of such Notes
the Transferor does hereby certify that such Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the 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 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.
Senior Vice President and General Counsel
D-1
<PAGE> 95
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 11 1/2% Senior Notes due 2008 (the "NOTES")
Reference is hereby made to the Indenture, dated as of November 2, 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 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 Notes.
In connection with such request, and in respect of such Notes, the
Transferor does hereby certify that such Notes are being transferred (i) in
accordance with the transfer restrictions set forth in the 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.
Senior Vice President and General Counsel
E-1
<PAGE> 96
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 11 1/2% Senior Notes due 2008 (the "NOTES")
Reference is hereby made to the Indenture, dated as of November 2, 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 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 Notes to the
undersigned.
In connection with such request, and in respect of such Notes we
confirm that:
1. We understand that the 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 Notes have not been registered under the Securities Act and that
(A) the 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 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.
- --------------------------
* Insert and modify if appropriate
F-1
<PAGE> 97
3. We are acquiring the 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 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 Notes
is, purchasing Notes having an aggregate principal amount of not less than
$100,000 and, if such transfer is in respect of an aggregate principal amount of
Notes of less than $100,000, we are providing an opinion of counsel acceptable
to the Company that such transfer is in compliance with the Securities Act.
5. We understand that (a) the Notes will be delivered to us in
registered form only and that the certificate delivered to us in respect of the
Notes will bear a legend substantially to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFF-SHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
F-2
<PAGE> 98
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFF-SHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
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 Notes, we will not do so unless:
(a) the Notes are sold to the Company;
(b) the Notes are sold to a qualified institutional buyer
in compliance with Rule 144A under the Securities Act;
(c) the Notes are sold outside the United States in
compliance with Rule 903 or Rule 904 under the Securities Act;
(d) the Notes are sold pursuant to an effective
registration statement under the Securities Act; or
(e) the 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.
Senior Vice President and General Counsel
F-3
<PAGE> 99
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 11 1/2% Senior Notes due 2008 (the "NOTES")
Reference is hereby made to the Indenture, dated as of November 2, 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 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 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 meaning of Rule 501(a) under the Securities Act
who are not natural Persons, estates or trusts); provided,
G-1
<PAGE> 100
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 Notes to which this
certificate relates.
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
Senior Vice President and General Counsel
G-2
<PAGE> 1
Exhibit 4.2
EXECUTION COPY
NTL INCORPORATED
$450,000,000
12-3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
INDENTURE
Dated as of November 6, 1998
------------------------
The Chase Manhattan Bank
Trustee
------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
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............................................................................31
Section 4.08. Incurrence Of Indebtedness And Issuance Of Preferred Stock......................................31
Section 4.09. Restricted Payments.............................................................................33
Section 4.10. Asset Sales.....................................................................................36
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
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
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......................................................................46
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.............................................................................................46
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......................................................................52
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.............................................................54
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.........................................................................................55
Section 10.01. Trust Indenture Act Controls..................................................................55
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.................................................56
Section 10.06. Rules by Trustee and Agents...................................................................57
Section 10.07. Legal Holidays................................................................................57
Section 10.08. No Recourse Against Others....................................................................57
Section 10.09. Counterparts and Facsimile Signatures.........................................................57
Section 10.10. Variable Provisions...........................................................................57
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Section 10.11. Governing Law.................................................................................58
Section 10.12. No Adverse Interpretation of Other Agreements.................................................58
Section 10.13. Successors....................................................................................58
Section 10.14. Severability..................................................................................58
Section 10.15. Table of Contents, Headings, Etc..............................................................59
</TABLE>
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1)................................................................................................7.10
(a)(2) ...................................................................................................7.10
(a)(3)....................................................................................................N.A.
(a)(4)....................................................................................................N.A.
(a)(5)....................................................................................................7.10
(b) .....................................................................................................7.08,
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.
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
iv
<PAGE> 6
INDENTURE, dated as of November 6, 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 12-3/8% Senior Deferred Coupon Notes due 2008 (the "INITIAL NOTES")
and, if and when issued in exchange for Initial Notes, the Company's 12-3/8%
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.
"9-1/2% NOTES" means the Company's 9-1/2% Senior Notes due 2008 and the
Company's 9-1/2% Series B Senior Notes due 2008.
"9-3/4% NOTES" means the Company's 9-3/4% Senior Deferred Coupon Notes
due 2008 and the Company's 9-3/4% Series B Senior Deferred Coupon Notes due
2008.
"10% NOTES" means the Company's 10% Series B Senior Notes due 2007.
"10-3/4% NOTES" means the Company's 10-3/4% Senior Deferred Coupon
Notes due 2008 and the Company's 10-3/4% Series B Senior Deferred Coupon Notes
due 2008.
"11-1/2% DEFERRED COUPON NOTES" means the Company's 11-1/2% Series B
Senior Deferred Coupon Notes due 2006.
"11-1/2% NOTES" means the Company's 11-1/2% Senior Notes due 2008 and
the Company's 11-1/2% Series B Senior Notes due 2008.
"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
October 1, 2003, with respect to any Note, the sum of (a) the initial offering
price (which is $555.05 per $1000.00 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
12-3/8% per annum of the initial offering price of such Note compounded
semiannually on each April 1 and October 1 from the date of issuance of the Note
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.
<PAGE> 7
"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.
"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.
"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.
-2-
<PAGE> 8
"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, 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 two days 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 two
days 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.
-3-
<PAGE> 9
"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.
"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
-4-
<PAGE> 10
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% 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) pound sterling555 million and
(ii) the amount of the aggregate commitments thereunder as the same may be
increased after March 13, 1998 as contemplated by the Facilities Agreement as
amended or supplemented to March 13, 1998, but in no event greater than pound
sterling875 million, 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.
"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
-5-
<PAGE> 11
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 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
-6-
<PAGE> 12
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 Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
Goldman, Sachs & Co.
"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).
"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.
-7-
<PAGE> 13
"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(w) 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).
"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
-8-
<PAGE> 14
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 12-3/4% Notes, the 11-1/2% Deferred Coupon Notes,
the 10-3/4% Notes, the 10% Notes, the 9-3/4% Notes, the 9-1/2% Notes and the
11-1/2% 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% Deferred Coupon Notes, the 10-3/4% Notes, the 10% Notes, the
9-3/4% Notes, the 9-1/2% Notes and the 11-1/2% 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.
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<PAGE> 15
"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.
"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
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<PAGE> 16
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.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of October
30, 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
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<PAGE> 17
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.
"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 November 6, 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.
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<PAGE> 18
"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 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.
<TABLE>
<CAPTION>
DEFINED
TERM IN SECTION
- ---- ----------
<S> <C>
"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
"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
"REFINANCING INDEBTEDNESS".................................... 4.08
"REGULATION S"................................................ 2.01
</TABLE>
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<TABLE>
<CAPTION>
DEFINED
TERM IN SECTION
- ---- ----------
<S> <C>
"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.S. GOVERNMENT OBLIGATIONS"................................. 8.02
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "institutional trustee" means the Trustee; and
"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 "L" 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 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 at maturity 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.
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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 at maturity 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 at maturity 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
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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 at maturity 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 at maturity. The aggregate principal amount at maturity 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, if 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 Chase Manhattan Bank
Luxembourg S.A. to act as a Registrar and 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.
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<PAGE> 23
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
at maturity 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.
(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 "Transfer
Restrictions" in the Company's Offering Memorandum dated October 30,
1998.
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<PAGE> 24
(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 at
maturity of the Rule 144A Global Note and to increase or cause to be
increased the principal amount at maturity of the Regulation S Global
Note by the aggregate principal amount at maturity 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 at maturity 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
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<PAGE> 25
reduced the Regulation S Global Note and to increase or cause to be
increased the principal amount at maturity of the Rule 144A Global Note
by the aggregate principal amount at maturity 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 at maturity 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 at maturity.
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 at maturity 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 at maturity 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 at maturity 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 at maturity. 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
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authenticate and deliver one or more Restricted Notes of the same
aggregate principal amount at maturity 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 at maturity, 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) Distribution Compliance Period. Prior to the termination
of the "DISTRIBUTION COMPLIANCE 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 distribution compliance 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
distribution compliance 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
any holder's status).
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<PAGE> 27
(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.
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 or Accreted Value, as applicable, of any Note
is considered paid under Section 4.01 hereof, such Note ceases to be outstanding
and interest on it ceases to accrue (or, if before October 1, 2003, the Accreted
Value of such Note ceases to increase).
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<PAGE> 28
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 at
maturity 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 to 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 at maturity 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.
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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 at maturity 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 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.
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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 at maturity thereof redeemed, and that, after the
redemption date, upon surrender of such Note, a new Note in principal
amount at maturity 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,
if any;
(f) that interest on Notes called for redemption ceases to
accrue on and after the redemption date (or, in the case of redemption
prior to October 1, 2003, the Accreted Value will cease to increase
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, if any, 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 at maturity 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 the Company shall commence an offer to
all Holders of the Notes to purchase Notes pursuant to Section 4.10
hereof (the "ASSET SALE OFFER") or pursuant to Section 4.13 hereof (the
"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 (if prior to October 1, 2003) or principal amount (if on or after
October 1, 2003) 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 (i) on or after October 1, 2003,
(ii) on or after an interest payment record date and (iii) 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:
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(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) the 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 (or, if
applicable, that the Accreted Value of any Note or portion thereof not
tendered or accepted for payment will continue to increase as provided
in such Notes);
(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 (or, if applicable, the
Accreted Value of any Note or portion thereof accepted for payment
pursuant to the Asset Sale Offer or Purchase Offer will cease to
increase after the Purchase Date as provided in such Notes);
(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 at
maturity 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, in the event of an Asset Sale Offer, if the
aggregate principal amount at maturity of Notes surrendered by Holders
exceeds the Offer Amount, 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 at maturity to the
unpurchased portion of the Notes surrendered.
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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 at
maturity at maturity 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 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, 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
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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 October 1, 2003, or the overdue
principal and premium, if any, if on or after October 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
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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 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.
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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 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;
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(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, 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:
(1) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; and
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(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 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 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
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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.
(c) Any Investment in a Subsidiary (other than the issuance,
transfer or other conveyance of Equity Interests 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.
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(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 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 Other Qualified Notes.
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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)) that may be purchased out of
the Excess Proceeds (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 outstanding principal amount thereof plus accrued and
unpaid interest, if any, to the date fixed for the closing of such offer (or, in
the case of repurchases of Notes prior to October 1, 2003, at a purchase price
equal to 100% of the Accreted Value thereof as of 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, 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, 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 Notes and the Other Qualified Notes, the amount
of Excess Proceeds will be reset at zero.
(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
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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; or
(iii) 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
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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.
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 principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase (or, in the case of
repurchases of Notes prior to October 1, 2003, at a purchase price
equal to 101% of the Accreted Value thereof as of the date fixed for
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
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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).
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;
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(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 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 at maturity 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
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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
(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
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(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 at maturity 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 (or the Accreted Value, if prior to October 1, 2003)
of, premium, if any, and interest (if on or after October 1, 2003) 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
at maturity 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 at
maturity 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 October 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 October 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 October 1 of the
years (November 6 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.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C> <C>
1998.......................................... 116.501%
1999.......................................... 114.438%
2000.......................................... 112.376%
2001.......................................... 110.313%
2002.......................................... 108.251%
</TABLE>
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.
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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 at maturity 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 or Accreted Value 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 at maturity 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 at
maturity 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 at maturity 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
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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.
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 at maturity of the then outstanding Notes.
ARTICLE VII.
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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.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
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(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 10.11, 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
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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 at maturity 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 at maturity 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 at maturity 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 April 20,
1995, between the Company and The Chase Manhattan Bank, as trustee, relating to
the 12-3/4% Notes, as amended, (b) indenture, dated as of January 30, 1996,
between the Company and The Chase Manhattan Bank, as trustee, relating to the
11-1/2% Deferred Coupon Notes, as amended, (c) indenture, dated as February 12,
1997, between the Company and The Chase Manhattan Bank, as trustee, relating to
the 10% Notes, as amended, (d) 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% 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% Notes,
(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% Notes and (g)
indenture, dated as of November 2, 1998, between the Company and The Chase
Manhattan Bank, as Trustee, relating to the Company's 11-1/2% Notes.
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 (or, if applicable, all amounts payable in respect
of Accreted Value) 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
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, if any, 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 (or, if
applicable, payments in respect of Accreted Value), premium, if any,
and interest, if any, 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
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<PAGE> 57
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;
(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
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Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal and interest, if any, 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, if applicable, payments
in respect of Accreted Value) 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
at maturity 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 (or, if applicable, payments in respect of Accreted
Value) 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 at maturity of the then
outstanding Notes. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in principal amount at maturity 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) alter the manner of calculating the Accreted Value of any
Note or 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, if
applicable, payments in respect of Accreted Value), or interest, if
any, on, any Note (except a rescission of acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount at
maturity 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 at maturity 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 at maturity 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.
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,
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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.
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:
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(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. 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.
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The reporting date for Section 7.06 hereof is March 15, of each year.
The first reporting date is March 15, 1999.
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.
Senior Vice President and 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 10.11. 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.
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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 and
General Counsel
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Andrew M. Deck
-------------------------------------
Name: Andrew M. Deck
Title: Vice President
<PAGE> 66
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 U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFF-SHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM
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<PAGE> 67
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM 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.
AS USED HEREIN, THE TERMS "OFF-SHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
[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 NOTE.
THE ISSUE DATE OF THIS NOTE IS NOVEMBER 6, 1998. THE ISSUE PRICE OF THIS NOTE IS
$555.05 PER $1000.00 OF INITIAL PRINCIPAL AMOUNT AT MATURITY. THIS NOTE IS
ISSUED WITH $444.95 OF ORIGINAL ISSUE DISCOUNT PER $1000.00 OF INITIAL PRINCIPAL
AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS NOTE IS 12.375%.
A-2
<PAGE> 68
No. ________
$_______
CUSIP No. [ ]/CINS No. [ ]
12-3/8% 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 October 1, 2008, subject to the further provisions of
this 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.
<TABLE>
<CAPTION>
<S> <C>
Interest Payment Dates: April 1 and October 1, commencing April 1, 2004
Record Dates: March 15 and September 15
</TABLE>
IN WITNESS WHEREOF, NTL Incorporated has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated:
-----------------------------------
NTL INCORPORATED
by:
--------------------------------------
by:
--------------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12-3/8% Senior
Deferred Coupon Notes due 2008 described in
the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------------
Authorized Officer
- --------
* Applicable to Global Notes Only
A-3
<PAGE> 69
[FORM OF REVERSE OF INITIAL NOTE]
NTL INCORPORATED
12-3/8% Senior Deferred Coupon Note due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "COMPANY"),
is the issuer of 12-3/8% Senior Deferred Coupon Notes due 2008 (the "NOTES").
The 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 12-3/8%, compounded semiannually, to an aggregate
principal amount of $450,000,000 by October 1, 2003. The Company promises to pay
interest on the Notes in cash semiannually on each April 1 and October 1,
commencing on April 1, 2004, to Holders of record on the immediately preceding
March 15 and September 15, respectively, at the rate of 12-3/8% per annum.
Interest on the Notes will accrue from the most recent date to which interest
has been paid on the Notes, or if no interest has been paid, from October 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 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 Note shall be increased
to the extent necessary to pay Additional Amounts as set forth in this Note.
2. Special Interest. The Holder of this Note is entitled to the
benefits of the Registration Rights Agreement relating to the Notes, dated as of
November 6, 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 Notes, (b) the Exchange Offer Registration Statement is not declared
effective prior to the 180th day following the date of original issuance of the
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
220th day following the date of original issuance of the 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 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
180-day period in the case of clause (b) above and (iii) such 220-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 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 April 1, 1999, 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
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<PAGE> 70
Registration Statement is again deemed effective, (ii) the date that is the
second anniversary of the original issuance of the Notes or (iii) the date as of
which all of the 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 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 April 1, 1999, 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 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 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 Note after such deduction or withholding shall be not less than the
amounts specified in this Note to which the Holder of this 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 Note or the receipt of
amounts payable in respect of this 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 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 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 Note or, if different, the beneficial owner of the
interest payable on this 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;
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<PAGE> 71
(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 Note or withholding from the proceeds of a
sale or exchange of a 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 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 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 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 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 Note.
All references to principal amount or interest on the Notes in the Indenture or
the 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 Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date for the next interest payment date
even though Notes are canceled after the record date and on or before the
interest payment date. Holders must surrender Notes to a Paying Agent to collect
principal and premium payments (or, if applicable, payments with respect to
Accreted Value). The Company will pay principal (or, if applicable, payments
with respect to Accreted Value), 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, (or, if
applicable, payments with respect to Accreted Value) 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 (or, if applicable,
payments with respect to Accreted Value), 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. Chase Manhattan Bank Luxembourg
S.A. will act as Paying Agent and Registrar in Luxembourg if and as long as the
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 Notes under an Indenture, dated as
of November 6, 1998 (the "INDENTURE"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by the Trust Indenture
A-6
<PAGE> 72
Act of 1939 (15 U.S. Code (Section)(Section) 77aaa-77bbbb) as in effect on the
date of the Indenture. The 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 Notes are unsecured
general obligations of the Company limited to $450,000,000 in aggregate
principal amount at maturity.
7. Optional Redemption. Except as provided in Section 8 hereof, the
Notes are not redeemable at the Company's option prior to October 1, 2003.
Thereafter, the 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 October
1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C> <C>
2003..................................... 106.188%
2004..................................... 104.125%
2005..................................... 102.063%
2006 and thereafter...................... 100.000%
</TABLE>
8. Optional Tax Redemption. (a) The 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,
in the case of redemption of the Notes prior to October 1, 2003, at a redemption
price equal to 100% of the Accreted Value thereof as of the date of redemption)
if after the date on which Section 3 of this 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 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 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 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
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<PAGE> 73
(or, in the case of redemption of the Notes prior to October 1, 2003, at a
redemption price equal to 100% of the Accreted Value thereof as of 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 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 Notes to be redeemed at his address of record. The 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 Notes, the 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 Notes or
portions of them called for redemption (and, if applicable, the Accreted Value
of the Notes called for redemption will cease to increase)
If this 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 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 Notes. There are
no sinking fund payments with respect to the 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 Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest to the
Purchase Date (or, in the case of repurchases of Notes prior to October 1, 2003,
at a purchase price equal to 100% of the Accreted Value thereof as of the
Purchase Date), Holders of 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 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
A-8
<PAGE> 74
required to make an offer (an "ASSET SALE OFFER") to all holders of the 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 principal
amount or accreted value, as the case may be, of the Notes and the Other
Qualified Notes) that may be purchased out of the Excess Proceeds, 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 (or, in the case of repurchases
of Notes prior to October 1, 2003, at a purchase price equal to 100% of the
Accreted Value thereof as of 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 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 Notes and Other Qualified Notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, then such remaining Excess
Proceeds will be allocated pro rata according to principal amount or accreted
value, as the case may be, to the Notes and each issue of the Other Qualified
Notes and, the Trustee will select the 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 Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered, and Notes may be exchanged, as
provided in the Indenture. The Registrar 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 Note or portion of a Note
selected for redemption (except the unredeemed portion of any Note being
redeemed in part). Also, it need not exchange or register the transfer of any
Note for a period of 15 days before a selection of Notes to be redeemed.
13. Persons Deemed Owners. Except as provided in paragraph 4 of this
Note, the registered Holder of a 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 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 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 at maturity of the then outstanding Notes by notice to the Company and
the Trustee may declare all the 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 Notes
(or, if applicable, the Accreted Value thereof) shall become due and payable
immediately without further action or notice. The Holders of a majority in
principal amount at
A-9
<PAGE> 75
maturity of the 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, if
applicable, the Accreted Value) that has become due solely because of the
acceleration. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount at maturity of the then outstanding 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 Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount at maturity of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing default may be waived with the
consent of the Holders of a majority in principal amount at maturity of the then
outstanding Notes. Without the consent of any Holder, the Indenture or the 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 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 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 Notes 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.
20. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
21. Authentication. The 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 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
A-10
<PAGE> 76
New York, New York 10022
Attention of: Richard J. Lubasch, Esq.
Senior Vice President and General Counsel
A-11
<PAGE> 77
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this 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
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 Note)
Date: __________________
Signature Guarantee: * ____________________________________________
In connection with any transfer of any of the 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 Notes and the last date,
if any, on which such Notes were owned by the Company or any Affiliate
of the Company, the undersigned confirms that such Notes are being
transferred:
CHECK ONE BOX BELOW
(1) / / to the Company or any subsidiary thereof,
(2) / / to a qualified institutional buyer in compliance with Rule
144A,
(3) / / inside the United States to an Institutional Accredited
Investor that, prior to such transfer, furnishes to the Trustee a
signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes (the form of
which letter can be obtained from the Trustee) and, if such transfer is
in respect of an aggregate principal amount at maturity of Notes of
less than $100,000, an opinion of counsel acceptable to the Company
that such transfer is in compliance with the Securities Act,
(4) / / outside the United States in compliance with Rule 904 under the
Securities Act,
(5) / /pursuant to the exemption from registration provided by Rule 144
under the Securities Act (if available) or
(6) / /pursuant to an effective registration statement under the
Securities Act.
- ------------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange
A-12
<PAGE> 78
--------------------------
Signature
Signature Guarantee*
- --------------------------
Signature must be guaranteed
- ------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this 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.
NOTICE: To be executed by an executive officer
A-13
<PAGE> 79
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 Note)
Date: ________________________
Signature Guarantee:**/
- ----------------------------
**/ Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-14
<PAGE> 80
[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 at maturity of this Global Note have been made:
<TABLE>
<CAPTION>
======================================================================================================================
Amount of decrease in Amount of increase Principal amount at Signature of Date of exchange
principal amount at in principal amount maturity of this authorized officer following such
maturity of this Global at maturity of this Global Note of Trustee or Notes decrease or increase
Note Global Note Custodian
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
======================================================================================================================
</TABLE>
A-15
<PAGE> 81
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 NOTE.
THE ISSUE DATE OF THIS NOTE IS NOVEMBER 6, 1998. THE ISSUE PRICE OF THIS NOTE IS
$555.05 PER $1000.00 OF INITIAL PRINCIPAL AMOUNT AT MATURITY. THIS NOTE IS
ISSUED WITH $444.95 OF ORIGINAL ISSUE DISCOUNT PER $1000.00 OF INITIAL PRINCIPAL
AMOUNT AT MATURITY. THE YIELD TO MATURITY OF THIS NOTE IS 12.375%.
B-1
<PAGE> 82
No. ___________ $__________
CUSIP No. [ ]CINS No. [ ]
12-3/8% 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 October
1, 2008, subject to the further provisions of this 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 April 1, 2004
Record Dates: March 15 and September 15
IN WITNESS WHEREOF, NTL Incorporated has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: ________________
NTL INCORPORATED,
by:____________________________________
by:____________________________________
**** Applicable to Global Notes only.
B-2
<PAGE> 83
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12-3/8% Series B Senior Deferred Coupon Notes due 2008
described in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, as Trustee
By: _____________________________________
Authorized Officer
B-3
<PAGE> 84
(FORM OF REVERSE OF EXCHANGE NOTE)
NTL INCORPORATED
12-3/8% Series B Senior Deferred Coupon Note due 2008
1. Interest. NTL INCORPORATED, a Delaware corporation (the "COMPANY"),
is the issuer of 12-3/8% Series B Senior Deferred Coupon Notes due 2008 (the
"NOTES"). The 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 12-3/8%, compounded semiannually, to an aggregate
principal amount of $450,000,000 by October 1, 2003. The Company promises to pay
interest on the Notes in cash semiannually on each April 1 and October 1,
commencing on April 1, 2004, to Holders of record on the immediately preceding
March 15 and September 15, respectively, at the rate of 12-3/8% per annum.
Interest on the Notes will accrue from the most recent date to which interest
has been paid on the Notes, or if no interest has been paid, from October 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 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 Note shall be increased
to the extent necessary to pay Additional Amounts as set forth in this 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 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 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 Note after such deduction or withholding shall be not less than the
amounts specified in this Note to which the Holder of this 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 Note or the receipt of
amounts payable in respect of this 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 Note (where
presentation is required) for payment on a date more than 30 days after
the date on which such payment became
B-4
<PAGE> 85
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 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 Note or, if different, the beneficial owner of the interest
payable on this 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 Note or withholding from the proceeds of a sale or
exchange of a 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 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 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 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 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 Note.
All references to principal amount or interest on the Notes in the Indenture or
the 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 Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on the record date for the next interest payment date
even though Notes are canceled after the record date and on or before the
interest payment date. Holders must surrender Notes to a Paying Agent to collect
principal and premium payments (or, if applicable, payments with respect to
Accreted Value). The Company will pay principal (or, if applicable, payments
with respect to Accreted Value), 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 (or, if applicable,
payments with respect to Accreted Value), premium, if any, and interest by check
payable in such money. It may mail an interest check to a
B-5
<PAGE> 86
holder's registered address. If a Holder so requests, principal (or, if
applicable, payments with respect to Accreted Value), 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. Chase Manhattan Bank Luxembourg S.A. will act
as Paying Agent and Registrar in Luxembourg if and as long as the 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 Notes under an indenture, dated as
of November 6, 1998 (the "INDENTURE"), between the Company and The Chase
Manhattan Bank, as Trustee. The terms of the 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 (Section)(Section) 77aaa-77bbbb) as in effect on the date of
the Indenture. The 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 Notes are unsecured
general obligations of the Company limited to $450,000,000 in aggregate
principal amount at maturity.
6. Optional Redemption. Except as provided in Section 7 herein, the
Notes are not redeemable at the Company's option prior to October 1, 2003.
Thereafter, the 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 October
1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003 ......................................... 106.188%
2004.......................................... 104.125%
2005.......................................... 102.063%
2006 and thereafter........................... 100.000%
</TABLE>
7. Optional Tax Redemption. (a) The 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,
in the case of redemption of the Notes prior to October 1, 2003, at a redemption
price equal to 100% of the Accreted Value thereof as of the date of redemption)
if after the date on which Section 2 of this 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 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
B-6
<PAGE> 87
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 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 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, in the case of
redemption of the Notes prior to October 1, 2003, at a redemption price equal to
100% of the Accreted Value thereof as of 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 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 Notes to be redeemed at his address of record. The 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 Notes, the 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 Notes or
portions of them called for redemption. If this 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 Note is registered at the close of business on
such record date (and, if applicable, the Accreted Value of the Notes called for
redemption will cease to increase).
9. Mandatory Redemption. The Company will not be required to make
mandatory redemption or repurchase payments with respect to the Notes. There are
no sinking fund payments with respect to the Notes.
B-7
<PAGE> 88
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 Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest to the
Purchase Date (or, in the case of repurchases of Notes prior to October 1, 2003,
at a purchase price equal to 100% of the Accreted Value thereof as of the
Purchase Date) . Holders of 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 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 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 principal amount or accreted value, as the case
may be, of the Notes and the Other Qualified Notes) that may be purchased out of
the Excess Proceeds 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
(or, in the case of repurchases of Notes prior to October 1, 2003, at a purchase
price equal to 100% of the Accreted Value thereof as of 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 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 Notes and Other
Qualified Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds then any remaining Excess Proceeds will be allocated pro rata according
to principal amount or accreted value, as the case may be, to the Notes and each
issue of the Other Qualified Notes and, the Trustee will select the 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 Notes are in registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered, and Notes may be exchanged, as
provided in the Indenture. The Registrar 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 Note or portion of a Note
selected for redemption (except the unredeemed portion of any Note being
redeemed in part). Also, it need not exchange or register the transfer of any
Note for a period of 15 days before a selection of Notes to be redeemed.
12. Persons Deemed Owners. Except as provided in paragraph 3 of this
Note, the registered Holder of a 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 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 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
B-8
<PAGE> 89
amount at maturity of the then outstanding Notes by notice to the Company and
the Trustee may declare all the 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 Notes
(or, if applicable, the Accreted Value thereof) shall become due and payable
immediately without further action or notice. The Holders of a majority in
principal amount at maturity of the 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, if applicable, the Accreted Value) that has become due solely because of
the acceleration. Holders may not enforce the Indenture or the Notes as provided
in the Indenture. Subject to certain limitations, Holders of a majority in
principal amount at maturity of the then outstanding 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 Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount at maturity of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing default may be waived with the
consent of the Holders of a majority in principal amount at maturity of the then
outstanding Notes. Without the consent of any Holder, the Indenture or the 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 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 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 Notes 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.
19. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THE INDENTURE AND THE NOTES WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS
THEREOF.
20. Authentication. The Notes shall not be valid until authenticated by
the manual signature of an authorized officer of the Trustee or an
authenticating agent.
B-9
<PAGE> 90
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 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.
Senior Vice President and General Counsel
B-10
<PAGE> 91
ASSIGNMENT FORM
To assign this Note, fill in the form below:
_____________________________________________________
(I) or (we) assign and transfer this 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
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 Note)
Date: __________________
Signature Guarantee: **/ ______________________________
**/ Signature must be guaranteed by a commercial Bank, trust company or
member of the New York Stock Exchange.
B-11
<PAGE> 92
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 Note)
Date: __________________
Signature Guarantee: *** ______________________________
*** Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
B-12
<PAGE> 93
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 at maturity of this Global Note have been made:
<TABLE>
<CAPTION>
______________________________________________________________________________________________________________________
Amount of decrease in Amount of increase Principal amount at Signature of Date of exchange
principal amount at in principal amount maturity of this authorized officer following such
maturity of this Global at maturity of this Global Note of Trustee or Notes decrease or increase
Note Global Note Custodian
<S> <C> <C> <C> <C>
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
______________________________________________________________________________________________________________________
</TABLE>
B-13
<PAGE> 94
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 12-3/8% Senior Deferred Coupon Notes due 2008
(the "NOTES")
Reference is hereby made to the Indenture, dated as of
November 6, 1998 (the "INDENTURE"), between NTL Incorporated, as Issuer, and The
Chase Manhattan Bank, as Trustee.
This letter relates to $[ ] aggregate principal amount at
maturity of 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 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 Notes and (i) with respect to transfers made in
reliance on Regulation S, does hereby certify that:
(1) the offer of the 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 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 Notes are being transferred
in accordance with Rule 144A under the Securities Act to a transferee that the
Transferor reasonably believes is purchasing the 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.
C-1
<PAGE> 95
In addition, if the sale is made during a distribution
compliance 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.
Senior Vice President and General Counsel
C-2
<PAGE> 96
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 12-3/8% Senior Deferred Coupon Notes due 2008
(the "NOTES")
Reference is hereby made to the Indenture, dated as of
November 6, 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 at
maturity of 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 Notes in exchange for an equivalent
beneficial interest in the Rule 144A Global Note.
In connection with such request, and in respect of such Notes
the Transferor does hereby certify that such Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the 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 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.
Senior Vice President and General Counsel
D-1
<PAGE> 97
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 12-3/8% Senior Deferred Coupon Notes due 2008
(the "NOTES")
Reference is hereby made to the Indenture, dated as of November 6, 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 at maturity of
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 Notes.
In connection with such request, and in respect of such Notes, the
Transferor does hereby certify that such Notes are being transferred (i) in
accordance with the transfer restrictions set forth in the 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.
Senior Vice President and General Counsel
E-1
<PAGE> 98
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 12-3/8% Senior Deferred Coupon Notes due 2008
(the "NOTES")
Reference is hereby made to the Indenture, dated as of November 6, 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 at maturity of
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 Notes
to the undersigned.
In connection with such request, and in respect of such Notes we
confirm that:
1. We understand that the 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 Notes have not been registered under the Securities Act and that
(A) the 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 Notes, and we are (or
any account for which we are purchasing under paragraph 4 below is) an
* Insert and modify if appropriate
F-1
<PAGE> 99
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 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 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 Notes
is, purchasing Notes having an aggregate principal amount at maturity of not
less than $100,000 and, if such transfer is in respect of an aggregate principal
amount at maturity of Notes of less than $100,000, we are providing an opinion
of counsel acceptable to the Company that such transfer is in compliance with
the Securities Act.
5. We understand that (a) the Notes will be delivered to us in
registered form only and that the certificate delivered to us in respect of the
Notes will bear a legend substantially to the following effect:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE
144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF LESS THAN $100,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFF-SHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
F-2
<PAGE> 100
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS EITHER OF THEM 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. AS USED HEREIN, THE TERMS
"OFF-SHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
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 Notes, we will not do so unless:
(a) the Notes are sold to the Company;
(b) the Notes are sold to a qualified institutional buyer
in compliance with Rule 144A under the Securities Act;
(c) the Notes are sold outside the United States in
compliance with Rule 903 or Rule 904 under the Securities Act;
(d) the Notes are sold pursuant to an effective
registration statement under the Securities Act; or
(e) the 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.
Senior Vice President and General Counsel
F-3
<PAGE> 101
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 12-3/8% Senior Deferred Coupon Notes due 2008
(the "NOTES")
Reference is hereby made to the Indenture, dated as of November 6, 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 at maturity
of 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 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
G-1
<PAGE> 102
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 Notes to which this certificate
relates.
cc: NTL Incorporated
110 East 59th Street
New York, New York 10022
Attn: Richard J. Lubasch, Esq.
Senior Vice President and General Counsel
G-2
<PAGE> 1
Exhibit 4.3
EXECUTION COPY
$625,000,000
11-1/2% SENIOR NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of November 2, 1998
by and among
NTL INCORPORATED
and
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of November 2, 1998 by and among NTL Incorporated, a Delaware
corporation (the "COMPANY"), and Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
Goldman, Sachs & Co. (each an "INITIAL PURCHASER" and collectively, the "INITIAL
PURCHASERS"). The Company proposes to issue and sell to the Initial Purchasers
(the "INITIAL PLACEMENT") $625,000,000 aggregate principal amount of its 11-1/2%
Senior Notes due 2008 (the "NOTES"). As an inducement to the Initial Purchasers
to enter into the purchase agreement, dated as of October 26, 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.
"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
<PAGE> 3
been paid, from November 2, 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 November 2, 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 November 2, 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.
"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
2
<PAGE> 4
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 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
3
<PAGE> 5
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 180 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 180 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 220 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 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:
4
<PAGE> 6
(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 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
5
<PAGE> 7
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:
(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 220 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
6
<PAGE> 8
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 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
7
<PAGE> 9
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.
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 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.
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<PAGE> 10
(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
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
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<PAGE> 11
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 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
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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.
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
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<PAGE> 14
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 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
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<PAGE> 15
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 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
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<PAGE> 16
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 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
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<PAGE> 17
(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.
(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. Incorporated;
(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.
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<PAGE> 18
(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
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.
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<PAGE> 19
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
and General Counsel
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Donal A. Quigley
---------------------------------
Name: Donal A. Quigley
Title: Executive Director
Registration Rights Agreement signature page
<PAGE> 20
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> 21
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> 22
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> 23
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
<PAGE> 1
EXHIBIT 4.4
EXECUTION COPY
$450,000,000
12-3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of November 6, 1998
by and among
NTL INCORPORATED
and
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of November 6, 1998 by and among NTL Incorporated, a Delaware
corporation (the "COMPANY"), and Morgan Stanley & Co. Incorporated, Chase
Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
Goldman, Sachs & Co. (each an "INITIAL PURCHASER" and collectively, the "INITIAL
PURCHASERS"). The Company proposes to issue and sell to the Initial Purchasers
(the "INITIAL PLACEMENT") $450,000,000 aggregate principal amount at maturity of
its 12-3/8% Senior Deferred Coupon Notes due 2008 (the "Notes"). As an
inducement to the Initial Purchasers to enter into the purchase agreement, dated
as of October 30, 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.
"ACCRETED VALUE" means, as of any date of determination prior to October
1, 2003, with respect to any Note or Exchange Note, the sum of (a) the initial
offering price (which shall be calculated by discounting the aggregate principal
amount at maturity of such Note, at a rate of 12-3/8% per annum, compounded
semiannually on each April 1 and October 1 from October 1, 2003 to the date of
issuance) of such Note, and (b) the portion of the excess of the principal
amount of such Note or Exchange 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 12-3/8% 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 Note or, with respect to the Exchange Notes, from the
last day on which the increase in the Accreted Value of the Notes was compounded
prior to the date of original issuance of such Exchange Notes through the date
of determination, computed on the basis of a 360-day year of twelve 30-day
months.
"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
<PAGE> 3
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.
"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 the Accreted Value of the Exchange
Notes will increase from the last day on which the increase in the Accreted
Value of the Notes was compounded prior to the date of original issuance of the
Exchange Notes, 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 the Accreted Value of the Exchange Notes will increase from the
last day on which the increase in the Accreted Value of the Notes was compounded
prior to the date of original issuance of the Exchange Notes, 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 (which registration statement may also relate to the exchange
offer for the Company's 11-1/2% Senior Notes due 2008 pursuant to the
Registration Rights Agreement dated November 2, 1998 between the Company and the
Initial Purchasers), 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 November 6, 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.
2
<PAGE> 4
"INITIAL PLACEMENT" has the meaning set forth in the preamble hereto.
"LOSSES" has the meaning set forth in Section 8(d) hereof.
"MAJORITY HOLDERS" means the Holders of a majority of the aggregate
principal amount at maturity 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 at maturity 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 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
3
<PAGE> 5
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 180 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 180 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 220 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 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;
4
<PAGE> 6
(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 at
maturity 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 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
5
<PAGE> 7
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 at maturity 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:
(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 220 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
6
<PAGE> 8
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 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;
7
<PAGE> 9
(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.
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
8
<PAGE> 10
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 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.
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(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 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
available to the public generally or through a third party without an
accompanying obligation of confidentiality;
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<PAGE> 12
(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.
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
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<PAGE> 13
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.
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
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<PAGE> 14
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 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
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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 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 on the initial offering price of such Notes 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 (which shall be 2.125% per
Note), 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) (which shall be $241,967,109.38) 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 in
connection with the Initial Placement, 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
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<PAGE> 16
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 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
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<PAGE> 17
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.
(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. Incorporated;
(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
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
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<PAGE> 18
(i) Notes Held by the Company, etc. Whenever the consent or approval of
Holders of a specified percentage of principal amount at maturity 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.
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<PAGE> 19
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
and General Counsel
MORGAN STANLEY & CO. INCORPORATED
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Donal A. Quigley
------------------------------------
Name: Donal Quigley
Title: Executive Director
Registration Rights Agreement signature page
<PAGE> 20
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> 21
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> 22
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> 23
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
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 20, 1998, in the Registration Statement (Form S-4)
and related Prospectus of NTL Incorporated for the registration of its 12 3/8%
Senior Deferred Coupon Notes due 2008 and 11 1/2% Senior Notes due 2008.
/s/ ERNST & YOUNG LLP
--------------------------------------
ERNST & YOUNG LLP
New York, New York
January 27, 1999
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of NTL Incorporated on Form
S-4 of our report dated February 27, 1998, appearing in the Prospectus, which is
part of this Registration Statement, on the consolidated financial statements as
of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997 of Comcast UK Cable Partners and subsidiaries.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
January 25, 1999
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of NTL Incorporation on
Form S-4 of our report dated February 27, 1998 (March 16, 1998 as to Note 3),
appearing in the Prospectus, which is part of this Registration Statement, on
the consolidated financial statements as of December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997 of Birmingham
Cable Corporation Limited and subsidiaries.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE
Birmingham, England
January 25, 1999
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of NTL Incorporated on Form
S-4 of our report dated February 27, 1998, appearing in the Prospectus, which is
part of this Registration Statement, on the consolidated financial statements as
of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997 of Cable London PLC and subsidiaries.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE
London, England
January 25, 1999
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated June 5, 1998 (except Note 10 as to which the date is
July 16, 1998) with respect to the financial statements of ComTel UK Finance
B.V., and of our report dated June 5, 1998 (except Note 9 as to which the date
is July 16, 1998) with respect to the combined financial statements of
Telecential Communications (Canada) Limited and Telecential Communications (UK)
Limited, included in the Registration Statement on Form S-4 relating to the
offer by NTL Incorporated to exchange its 11 1/2% Series B Senior Notes due 2008
and 12 3/8% Series B Senior Deferred Coupon Notes due 2008 for the related
series of its issued and outstanding 11 1/2% Senior Notes due 2008 and 12 3/8%
Senior Deferred Coupon Notes due 2008.
/s/ DELOITTE & TOUCHE
- ------------------------------------------------------
Deloitte & Touche
Chartered Accountants
Bracknell, England
January 26, 1999
<PAGE> 1
EXHIBIT 23.6
26 January 1999
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the inclusion in the Registration Statement of NTL
Incorporated on Form S-4, of our report, dated 5 June 1998, except for Note 10
as to which the date is 16 July 1998, on our audit of the Combined Financial
Information of ComTel UK Finance B.V. as of and for the year ended 31 December
1996. We also consent to the references to our firm under the caption "Experts".
/s/ COOPERS & LYBRAND
- ------------------------------------------------------
Coopers & Lybrand
Chartered Accountants
London, United Kingdom
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
NTL INCORPORATED
OFFER FOR ALL OUTSTANDING
11 1/2% SENIOR NOTES DUE 2008
IN EXCHANGE FOR
11 1/2% SERIES B SENIOR NOTES DUE 2008
AND
12 3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
IN EXCHANGE FOR
12 3/8% SERIES B SENIOR DEFERRED COUPON NOTES DUE 2008
PURSUANT TO THE PROSPECTUS, DATED , 1999
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To:
THE CHASE MANHATTAN BANK, AS EXCHANGE AGENT
In New York
<TABLE>
<S> <C> <C>
By Facsimile: By Mail, By Hand and Overnight Courier: Confirm by Telephone:
(212) 638-7380 The Chase Manhattan Bank Carlos Esteves: (212) 638-0828
(212) 638-7381 Corporate Trust-Securities Window (212) 638-0454
Room 234-North Building
55 Water Street
New York, New York 10041
In Luxembourg
By Facsimile: By Mail, By Hand and Overnight Courier: Confirm by Telephone:
(352) 46 26 85380 Chase Manhattan Bank Luxembourg S.A. Veronique Cridel:
5 Rue Plaetis (352) 46 26 85284
L-2338, Luxembourg
</TABLE>
Delivery of this instrument to an address other than as set forth above, or
transmission of this Letter of Transmittal via facsimile other than as set forth
above, will not constitute a valid delivery of this Letter of Transmittal.
The undersigned acknowledges that he or she has received and reviewed a
prospectus dated , 1999 (the "Prospectus") of NTL Incorporated, a
Delaware corporation (the "Company"), and this letter of transmittal (the
"Letter"), which together constitute the Company's offer (the "Exchange Offer")
to exchange (i) an aggregate principal amount of up to $625,000,000 of 11 1/2%
Series B Senior Notes due 2008 (the "11 1/2% New Notes") of the Company for a
like principal amount of the issued and outstanding 11 1/2% Senior Notes due
2008 (the "11 1/2% Old Notes"), and (ii) an aggregate principal amount at
maturity of up to $450,000,000 of 12 3/8% Series B Senior Deferred Coupon Notes
due 2008 (the "12 3/8% New Notes" and together with the 11 1/2% New Notes, the
"New Notes") of the Company for a like principal amount of the issued and
outstanding 12 3/8% Senior Deferred Coupon Notes due 2008 (the "12 3/8% Old
Notes" and, together with the 11 1/2% Old Notes, the "Old Notes" and together
with the New Notes, the "Notes") of the Company from the holders thereof.
Capitalized terms used but not defined herein have the meanings given to them in
the Prospectus.
For each Old Note accepted for exchange and not validly withdrawn, the
holder of such Old Note will receive a New Note having (i) in the case of
11 1/2% New Notes, a principal amount equal to that of the surrendered 11 1/2%
Old Notes, or (ii) in the case of 12 3/8% New Notes, a principal amount at
maturity equal to the surrendered 12 3/8% Old Notes, as
<PAGE> 2
applicable. If the Exchange Offer is not consummated by June 10, 1999 with
respect to the 11 1/2% Old Notes and June 14, 1999 with respect to the 12 3/8%
Old Notes, interest will accrue (in addition to the stated interest on the
11 1/2% Old Notes and in addition to the accrual of the original issue discount
and stated interest on the 12 3/8% Old Notes) from and including June 11, 1999
with respect to the 11 1/2% Old Notes and June 15, 1999 with respect to the
12 3/8% Old Notes. Such additional interest (the "Special Interest"), if any,
will be payable in cash semiannually in arrears each April 1 and October 1, to
holders of record on the immediately preceding March 15 and September 15,
respectively, at a rate per annum equal to 0.50% of the principal amount of the
11 1/2% Old Notes or the Accreted Value of the 12 3/8% Old Notes, as the case
may be (determined daily). The aggregate amount of Special Interest payable
pursuant to the above provisions will in no event exceed 1.50% per annum of the
principal amount of the 11 1/2% Old Notes or the Accreted Value of the 12 3/8%
Old Notes, as the case may be (determined daily). Upon the consummation of the
Exchange Offer after June 10, 1999 with respect to the 11 1/2% Old Notes and
June 14, 1999 with respect to the 12 3/8% Old Notes, the Special Interest
payable on the Old Notes from the date of such consummation will cease to
accrue. Following the consummation of the Exchange Offer, the interest terms
shall revert to the original terms set forth in the Notes. Except as otherwise
provided in the Prospectus, Holders of Old Notes accepted for exchange will be
deemed to have waived the right to receive any other payments or accrued
interest, if any, on the Old Notes. The Company reserves the right, at any time
or from time to time, to extend the Exchange Offer at its discretion, in which
event the term "Expiration Date" shall mean the latest time and date to which
the Exchange Offer is extended. The Company shall notify the holders of the Old
Notes of any extension by means of a press release or other public announcement
prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
This Letter is to be completed by a holder of Old Notes either if
certificates for such Old Notes are to be forwarded herewith or if a tender is
to be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in the Prospectus under "The Exchange
Offer -- Book-Entry Transfer" and an Agent's Message is not delivered. Tenders
by book-entry transfer may also be made by delivering an Agent's Message in lieu
of this Letter. The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation (as defined below), which states that the
Book-Entry Transfer Facility has received an express acknowledgment from the
tendering Participant, which acknowledgment states that such Participant has
received and agrees to be bound by, and makes each of the representations and
warranties contained in, this Letter and that the Company may enforce this
Letter against such Participant. Holders of Old Notes whose certificates are not
immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter to the Exchange
Agent on or prior to the Expiration Date, must tender their Old Notes according
to the guaranteed delivery procedures set forth in the Prospectus under "The
Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 1. Delivery
of documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
2
<PAGE> 3
List and check the appropriate box below the Old Notes to which this Letter
relates. If the space provided below is inadequate, the certificate numbers and
principal amount at maturity of Old Notes should be listed on a separate signed
schedule affixed hereto.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES 1 2 3
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL PRINCIPAL
AMOUNT AT AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE MATURITY OF AT MATURITY
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OLD NOTE(S) TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Notes
represented by the Old Notes indicated in column 2. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount at maturity of $1,000 and any integral multiple thereof. See Instruction 1.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF 11 1/2% OLD NOTES ARE BEING TENDERED
[ ] CHECK HERE IF 12 3/8% OLD NOTES ARE BEING TENDERED
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
Account Number
------------------------------- Transaction Code Number
-------------------------------
By crediting the Old Notes to the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting to the Exchange Agent a computer-generated message (an "Agent's
Message") in which the holder of the Old Notes acknowledges and agrees to be
bound by the terms of, and makes the representations and warranties contained
in, this Letter, the participant in the Book-Entry Transfer Facility confirms on
behalf of itself and the beneficial owners of such Old Notes all provisions of
this Letter (including any representations and warranties) applicable to it and
such beneficial owner as fully as if it had completed the information required
herein and executed and transmitted this Letter to the Exchange Agent.
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution which guaranteed delivery
3
<PAGE> 4
IF DELIVERY BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number Transaction Code Number
Name of Tendering Institution
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] 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:
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount at
maturity of Old Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Old Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact with full power of substitution, for purposes of
delivering this Letter and the Old Notes to the Company. The Power of Attorney
granted in this paragraph shall be deemed irrevocable from and after the
Expiration Date and coupled with an interest. The undersigned hereby further
represents that any New Notes acquired in exchange for Old Notes tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the undersigned, that
neither the holder of such Old Notes nor any such other person is engaged in, or
intends to engage in, or has an arrangement or understanding with any person to
participate in, the distribution (within the meaning of the Securities Act of
1933, as amended (the "Securities Act")) of such New Notes and that neither the
holder of such Old Notes nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act, of the Company.
The undersigned also acknowledges that this Exchange Offer is being made by
the Company in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC"), as set forth in no-action letters issued to
third parties, that the New Notes issued in exchange for the Old Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of such New Notes. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding with any person
to participate in, a distribution (within the meaning of the Securities Act) of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of
4
<PAGE> 5
the Securities Act. The undersigned acknowledges that in reliance on an
interpretation by the staff of the SEC, a broker-dealer may fulfill his
prospectus delivery requirements with respect to the New Notes (other than a
resale of an unsold allotment from the original sale of the Old Notes) with the
Prospectus which constitutes part of this Exchange Offer.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. The tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer -- Withdrawal Rights"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) in the name
of the undersigned or, in the case of a book-entry delivery of Old Notes, please
credit the account indicated above maintained at the Book-Entry Transfer
Facility. Similarly, unless otherwise indicated under the box entitled "Special
Delivery Instructions" below, please send the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
to the undersigned at the address shown above in the box entitled "Description
of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
5
<PAGE> 6
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be issued in the name of someone other than the
person or persons whose signature(s) appear(s) on the Letter below, or if
Old Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)
-------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
------------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be sent to someone other than the person or
persons whose signature(s) appear(s) on this Letter below or to such
person or persons at an address other than shown in the box entitled
"Description of Old Notes" on this Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)
-------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
6
<PAGE> 7
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Dated:
<TABLE>
<S> <C>
x , 1998
x , 1998
SIGNATURE(S) OF OWNER DATE
</TABLE>
Area Code and Telephone Number
- ---------------------------------------------------------------------
This Letter must be signed by the registered holder(s) as the name(s)
appear(s) on the certificate(s) for the Old Notes hereby tendered or on a
security position listing or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME AND FIRM)
Dated:
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
11 1/2% SENIOR NOTES DUE 2008
IN EXCHANGE FOR THE
11 1/2% SERIES B SENIOR NOTES DUE 2008
AND
12 3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
IN EXCHANGE FOR
12 3/8% SERIES B SENIOR DEFERRED COUPON NOTES DUE 2008
OF NTL INCORPORATED
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders (which term, for purposes of the
Exchange Offer, includes any participant in the Book-Entry Transfer Facility
system whose name appears on a security position listing as the holder of such
Old Notes) either if certificates are to be forwarded herewith or if tenders are
to be made pursuant to the procedures for delivery by book-entry transfer set
forth in the Prospectus under "The Exchange Offer -- Book-Entry Transfer" and an
Agent's Message is not delivered. Tenders by book-entry transfer may also be
made by delivering an Agent's Message in lieu of this Letter. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility to and
received by the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the tendering Participant, which acknowledgment states that
such Participant has received and agrees to be bound by, and makes the
representations and warranties contained in, this Letter and that the Company
may enforce this Letter against such Participant. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or facsimile hereof or
Agent's Message in lieu thereof) and any other documents required by this
Letter, must be received by the Exchange Agent at the address set forth herein
on or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes tendered hereby must
be in denominations of principal amount at maturity of $1,000 and any integral
multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
"The Exchange Offer -- Guaranteed Delivery Procedures." Pursuant to such
procedures, (i) such tender must be made through an Eligible Institution, (ii)
prior to the Expiration Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
or a Book-Entry Confirmation, together with a properly completed and duly
executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with
any required signature guarantees and any other documents required by the Letter
will be deposited by the Eligible Institution with the Exchange Agent, and (iii)
the certificates for all physically tendered Old Notes, in the proper form for
transfer, or Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter (or facsimile thereof or Agent's
Message in lieu thereof) with any required signature guarantees and all other
documents required by this Letter, are received by the Exchange Agent within
five NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
See the Prospectus under "The Exchange Offer."
8
<PAGE> 9
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes -- Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this letter, promptly after the
Expiration Date. ALL OF THE OLD NOTES DELIVERED TO THE EXCHANGE AGENT WILL BE
DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the Holder of the Old Notes tendered hereby,
the signature must correspond exactly with the name as written on the face of
the certificates or on the Book-Entry Transfer Facility's security position
listing as the holder of such Old Notes without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) or bond
powers must be guaranteed by a participant in a securities transfer association
recognized signature program.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) or bond powers must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR SIGNATURES ON BOND POWERS
REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF
A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK OR TRUST COMPANY
HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN "ELIGIBLE
INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE OLD NOTES ARE TENDERED: (I) BY A REGISTERED HOLDER OF
OLD NOTES WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS"
OR "SPECIAL DELIVERY INSTRUCTIONS" ON THIS LETTER OR (II) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder may designate hereon. If no such instructions are given,
such Old Notes not exchanged will be returned to the name or address of the
person signing this Letter.
9
<PAGE> 10
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment for taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which the TIN
to report. If such holder does not have a TIN, such holder should consult the
W-9 Guidelines for instructions on applying for a TIN, check the box in Part 2
of the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other person)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or an
Agent's Message in lieu thereof, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
10
<PAGE> 11
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the addresses indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the addresses and telephone numbers indicated above.
11
<PAGE> 12
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: NTL INCORPORATED
- --------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND
FORMW-9 CERTIFY BY SIGNING AND DATING BELOW.
TIN: --------------------------
(Social Security Number or
Employer Identification Number)
-------------------------------------------------------------------------------------------
PART 2 -- TIN APPLIED FOR [ ]
-------------------------------------------------------------------------------------------
Department of the PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") AND CERTIFICATION
Treasury Internal CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT
Revenue Service
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am
waiting for a number to be issued to me).
(2) I am not subject to backup withholding either because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding, and
(3) any other information provided on this form is true and correct.
SIGNATURE --------------------------------------------- DATE---------------------
- --------------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or dividends on your tax return and you have not been notified
by the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- ---------------------------------------------------
- ---------------------------------------------------
Signature Date
12
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY FOR
NTL INCORPORATED
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of NTL Incorporated (the "Company") made pursuant to a prospectus
dated , 1999 (the "Prospectus"), if certificates for Old Notes of
the Company are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Company prior to 5:00 p.m., New York City time,
on the Expiration Date of the Exchange Offer. Such form may be delivered or
transmitted by telegram, telex, facsimile transmission, mail or hand delivery to
The Chase Manhattan Bank (the "Exchange Agent") as set forth below. Capitalized
terms not defined herein are defined in the Prospectus.
<TABLE>
<S> <C>
The Exchange Agent is:
In New York
By Facsimile:
By Mail, By Hand and Overnight Courier: (212) 638-7380
(212) 638-7381
The Chase Manhattan Bank
Corporate Trust-Securities Window Confirm by Telephone:
Room 234, North Building
55 Water Street Carlos Esteves: (212) 638-0828
New York, New York 10041 (212) 638-0454
In Luxembourg
By Facsimile:
By Mail, By Hand and Overnight Courier: (352) 46 26 85380
Chase Manhattan Bank Luxembourg S.A. Confirm by Telephone:
5 Rue Plaetis
L-2338, Luxembourg Veronique Cridel: (352) 46 26 85284
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus, the undersigned
hereby tenders to the Company the principal amount of Old Notes set forth below,
pursuant to the guaranteed delivery procedure described in the Prospectus under
"The Exchange Offer -- Guaranteed Delivery Procedures."
Principal Amount at Maturity of Old Notes
Tendered:*
$
- ---------------------------------------------------
Certificates Nos. (if available):
- ------------------------------------------------------
Total Principal Amount at Maturity
Represented by Old Notes Certificate(s):
$
- ----------------------------------------------------
If Old Notes will be delivered by book-entry transfer to The Depository Trust
Company, provide account number.
Account Number
- ----------------------------------
* Must be in denominations of principal amount at maturity of $1,000 and any
integral multiple thereof. See Instruction 1 in the Letter of Transmittal.
[ ] CHECK HERE IF 11 1/2% OLD NOTES ARE BEING TENDERED
[ ] CHECK HERE IF 12 3/8% OLD NOTES ARE BEING TENDERED
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
2
<PAGE> 3
PLEASE SIGN HERE
<TABLE>
<S> <C>
X ------------------------------
- ------------------------------------------------------------
------------------------------
X DATE
- ------------------------------------------------------------
SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY
Telephone Number (including area code):
- -----------------------------------------------------------------------------------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s) of Old
Notes as their name(s) appear(s) on certificates for Old Notes or on a security
position listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
GUARANTEE
The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States, hereby guarantees that the certificates representing the principal
amount of Old Notes tendered hereby in proper form for transfer, or timely
confirmation of the book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures," together with one or more properly completed and duly executed
Letters of Transmittal (or facsimile thereof or Agent's Message in lieu thereof)
and any other documents required by the Letter of Transmittal in respect of the
Old Notes, will be received by the Exchange Agent at the address set forth
above, no later than five New York Stock Exchange trading days after the date of
execution hereof.
<TABLE>
<S> <C>
- --------------------------------------------------- ---------------------------------------------------
Name of Firm Authorized Signature
- --------------------------------------------------- ---------------------------------------------------
Address Title
- --------------------------------------------------- Name: -------------------------------------------
Zip Code (Please Type or Print)
Area Code and Tel. No. ----------------------- Dated: -------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES
FOR OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE> 1
EXHIBIT 99.3
NTL INCORPORATED
OFFER FOR ALL OUTSTANDING
11 1/2% SENIOR NOTES DUE 2008
IN EXCHANGE FOR
11 1/2% SERIES B SENIOR NOTES DUE 2008
AND
12 3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
IN EXCHANGE FOR
12 3/8% SERIES B SENIOR DEFERRED COUPON NOTES DUE 2008
To Our Clients:
Enclosed for your consideration is a prospectus dated , 1999
(the "Prospectus"), and the related letter of transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of NTL Incorporated
(the "Company") to exchange (i) an aggregate principal amount of up to
$625,000,000 of its 11 1/2% Series B Senior Notes due 2008 for a like principal
amount of its issued and outstanding 11 1/2% Senior Notes due 2008 (the "11 1/2
Old Notes") and (ii) an aggregate principal amount at maturity of up to
$450,000,000 of its 12 3/8% Series B Senior Deferred Coupon Notes due 2008 for a
like principal amount of its issued and outstanding 12 3/8% Senior Deferred
Coupon Notes due 2008 (the "12 3/8% Old Notes" and together with the 11 1/2% Old
Notes, the "Old Notes") upon the terms and subject to the conditions described
in the Prospectus. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the registration rights agreement in
respect of the 11 1/2% Old Notes, dated November 2, 1998 and the registration
rights agreement in respect of the 12 3/8% Old Notes, dated November 6, 1998,
each by and among the Company and the initial purchasers referred to therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes carried by us in your account but not registered in your name. A tender of
such Old Notes may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on , 1999, unless extended by the Company
(the "Expiration Date"). Any Old Notes tendered pursuant to the Exchange Offer
may be withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer -- Certain
Conditions of the Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Notes from the
holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
, 1999, unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. The Letter of Transmittal is furnished to you for information only
and may not be used directly by you to tender Old Notes.
<PAGE> 2
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by NTL
Incorporated with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF OLD NOTES TENDERED
------------------------------------------------------------
<S> <C>
11 1/2% Senior Notes due 2008 -----------------------------------------------------
12 3/8% Senior Deferred Coupon Notes due 2008 -----------------------------------------------------
[ ] Please do not tender any Old Notes held by
you for my account. -----------------------------------------------------
Dated: -------------------------, 1999 -----------------------------------------------------
SIGNATURE(S)
-----------------------------------------------------
-----------------------------------------------------
PLEASE PRINT NAME(S) HERE
-----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
ADDRESS(ES)
-----------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
-----------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NO(S).
</TABLE>
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
2
<PAGE> 1
EXHIBIT 99.4
NTL INCORPORATED
OFFER FOR ALL OUTSTANDING
11 1/2% SENIOR NOTES DUE 2008
IN EXCHANGE FOR
11 1/2% SERIES B SENIOR NOTES DUE 2008
AND
12 3/8% SENIOR DEFERRED COUPON NOTES DUE 2008
IN EXCHANGE FOR
12 3/8% SERIES B SENIOR DEFERRED COUPON NOTES DUE 2008
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
NTL Incorporated (the "Company") is offering, upon and subject to the terms
and conditions set forth in a prospectus dated , 1999 (the
"Prospectus"), and the enclosed letter of transmittal (the "Letter of
Transmittal"), to exchange (the "Exchange Offer") (i) an aggregate principal
amount of up to $625,000,000 of its 11 1/2% Series B Senior Notes due 2008 for a
like principal amount of its issued and outstanding 11 1/2% Senior Notes due
2008 (the "11 1/2% Old Notes") and (ii) an aggregate principal amount at
maturity of up to $450,000,000 of its 12 3/8% Series B Senior Deferred Coupon
Notes due 2008 of the Company for a like principal amount at maturity of its
issued and outstanding 12 3/8% Senior Deferred Coupon Notes due 2008 (the
"12 3/8 Old Notes" and together with the 11 1/2% Old Notes, the "Old Notes").
The Exchange Offer is being made in order to satisfy certain obligations of the
Company contained in the registration rights agreement in respect of the 11 1/2%
Old Notes, dated November 2, 1998 and the registration rights agreement in
respect of the 12 3/8% Old Notes, dated November 6, 1998, each by and among the
Company and the initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated , 1999;
2. The Letter of Transmittal for your use and for the information (or
the use, where relevant) of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Notes are not immediately available or time
will not permit all required documents to reach the Exchange Agent prior to
the Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Old Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to The Chase Manhattan Bank, the
Exchange Agent for Old Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON 1999, UNLESS EXTENDED BY THE COMPANY (THE
"EXPIRATION DATE"). THE OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE
WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
<PAGE> 2
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof or Agent's Message in lieu
thereof), with any required signature guarantees and any other required
documents, should be sent to the Exchange Agent and certificates representing
the Old Notes should be delivered to the Exchange Agent, all in accordance with
the instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Old Notes wish to tender, but it is impracticable for them to
forward their certificates for Old Notes prior to the expiration of the Exchange
Offer or to comply with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery procedures described
in the Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures."
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Old Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Old Notes pursuant to the Exchange Offer, except
as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to The Chase
Manhattan Bank, the Exchange Agent for the Old Notes, at its addresses and
telephone numbers set forth on the front of the Letter of Transmittal.
Very truly yours,
NTL INCORPORATED
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
